Pension and living abroad

Eribee

Hi

I'd appreciate your opinions.

I am 32 and have a company pension with a final salary pension scheme. I have been paying into this for 5 years, but am about to leave my job and go and live and work abroad for a few years. I won't be able to go back to my old job when I return.

I feel like I should try to pay into a stakeholder pension while I'm abroad, but I have read that I should be a UK resident to do that. Is that correct? In addition, I won't be earning as much as I do in the UK while I am working overseas.

I already have an ISA at it's limit for this tax year so would be unable to save any more in there for at least a year, so I think a stakeholder pension would be better.

I'd really appreciate it if you could confirm if a stakeholder pension that I pay into while overseas and hopefully transfer back into a company pension when I find work again in the UK is the answer.

Thank you

Baldur

Eribee wrote: »

I already have an ISA at it's limit for this tax year so would be unable to save any more in there for at least a year

If you are not resident & ordinarily resident in the UK for tax purposes, you will not be able to subscribe any new money to an ISA until you meet these requirements again.

See http://www.hmrc.gov.uk/leaflets/isa-factsheet.pdf

Moving abroad
You can only put money into an ISA if you are resident and ordinarily resident in the UK for tax purposes.
If you move abroad you cannot continue putting money into the ISA. However, you can keep existing ISAs and you will still get tax relief on investments held in them.
When you return, you can start putting money in again (subject to the normal annual limits).

There is one exception. Crown employees serving overseas (typically members of the armed forces and diplomats), or people married to or in a civil partnership with a Crown employee serving overseas, can open and subscribe to an ISA in the usual way.

DavidHayton

Hi! You didn't say where you were planning to go. There is a big difference between, say, Spain and Somalia.

If it wasn't for the benefits that come with them (e.g., employer contributions, tax relief), I don't think that many people would pay into restricted schemes such as pensions.

So you need to look at the tax regime in the country that you are going to. There is absolutely no point putting money into a UK pension scheme if your employer does not contribute and the local tax authorities ignore your contributions when they calculate your tax.

Having said all this, you should still be aiming to contribute towards your retirement. Depending on where you go in the world this might be a standard UK S&S trading account or a local pension scheme (you would need to check whether it is possible to transfer it into a UK scheme when you return).

Also consider whether you need to pay voluntary NI contributions to count towards your state retirement pension.

Best wishes
David