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UK Pensions for Foreign Residents
Now that you have read the first two parts of our guide to social security in the UK, you should have a general idea of how pensions in the UK work. The big question remains, though: how does this affect expatriates?
If you move to the UK with the intent of settling there, you will obviously be treated more or less like a British citizen, provided you live and work there long enough. But if you are sent on a foreign assignment or just want to experience life in the UK for a few years, things are a little more complicated. A lot depends on your nationality and usual country of residence.
Harmonization for EU and EEA Nationals
If you are a national of an EU or EEA member state, your contributions to state pension systems throughout the EU will be harmonized. You have to apply for your state pension in the EU country where you have last worked before retiring. The pension offices of all EU member states will then exchange their information on your employment history within the EU and calculate your full pension based on this data.
For example, if you have worked for 40 years in total, 10 of them in the UK, 10 in France, and 20 in Germany, your pension will be distributed accordingly. You will get 25% of your national pension from Britain. The rest of your government pension will come from France and Germany, according to their respective pension formulas.
Social Security Agreements with Further Countries
Similar harmonization methods as those described above apply to citizens from selected countries with which the UK has entered into a social security agreement. These countries include:
- Jersey & Guernsey
- the Philippines
- the US
There are also social security agreements between the UK, New Zealand, and Canada. However, those regulations are a bit trickier. For instance, the principle of frozen pensions applies to nationals of these countries. The UK state pension you are entitled to will not be raised annually. It will always remain the same amount it was when you reached the official retirement age, regardless of the inflation rate. This equally applies to UK pensioners who move to these countries in their retirement years.
The social security agreements between the UK and Japan or South Korea, respectively, do not make any provisions for retirement benefits at all. They mainly save British people working in these countries (or Japanese and Koreans coming to the UK for work) from having to pay insurance contributions in both countries at the same time.
Before You Move
If you are planning to relocate to the UK, always contact your local pension office and ask how working there will affect your pension plan. In case of a social security agreement with the UK, they can explain the exact regulations for your personal circumstances. If you already live in the UK, you can also ask the National Pension Service.
If there is no such agreement, it may still be worth setting up an appointment. For example, you could or even should keep paying voluntary insurance contributions back home while you are in the UK.
Of course, all social security agreements only pertain to national pension schemes, like the state pension in the UK. To find out what happens with your company pension plan and/or your private pension scheme when you go abroad, please contact the respective insurance provider directly. And if you plan to live in the UK for a long while, maybe talk to local banks about retirement planning.
We do our best to keep this article up to date. However, we cannot guarantee that the information provided is always current or complete.