Pension advice for an expat

asfidanken

Hi,

I have followed this forum for some time and I have found it extremely useful, so I'd really appreciate your view while I try to make sense of my pension savings.

Here is my current situation:

- I am 32, and I have been working in UK for the last 4 years for my current employer
- I am currently enrolled in a defined benefit scheme (contracted out of S2P) where, at the normal retirement date, the fund would pay 1/60 of my final pensionable pay per year of pensionable service. I contribute 9% of my salary
- The minimum length of service to qualify for a pension is 2 years
- The fund doesn't accept AVC

I am reasonably sure I will return to my country, Italy, within about 4 years, so here are my worries:

- While the defined benefit plan is very good should I stay in the UK until 65, I feel I will take little advantage from it.
- From the moment I leave the plan, say at age 36, the final pensionable pay will 'increase' at statuatory revaluation (2.5% a year?) until I am 65, therefore probably below real inflation.
- I am not accruing any contributions in Italy
- I feel I am not putting enough aside for my pension and I am missing on tax efficiency opportunities
- I am worried that at the age of retirement I will have a small pension in Italy, having started to contribute late, and a veeery small pension from the UK which also carries currency exchange risk

I considered starting an additional pension plan (stakeholder or PPP) which I could then transfer into an Italian Qrops but I have read on several websites that it is not worth for pension pots below £50,000... I guess in 4 years I would hardly put together more than £7000-8000.

I feel I have no real options of building a decent pension at the moment in my circumstances. Are there other options I should be considering? Are there any plans designed specifically for expats? Are there ways of consolidating pensions from different countries in an efficient and cheap way?


Thanks in advance for any suggestion you might have!

A.

Iancfp

You will have a reasonable base pension from the current final salary scheme - yes inflation may slightly erode its value but any transfer out to moneypurchased based scheme esp QROPs will mean a big loss in terms of guarantees and high charges.

Not sure why you think that with 30 odd years to save whether in UK or Italy you will end up with small pension

asfidanken

Iancfp wrote: »

You will have a reasonable base pension from the current final salary scheme - yes inflation may slightly erode its value but any transfer out to moneypurchased based scheme esp QROPs will mean a big loss in terms of guarantees and high charges.

Not sure why you think that with 30 odd years to save whether in UK or Italy you will end up with small pension

In Italy I would need 35 years of contributions for the full pension. By the time I get to that age, it can only get worse...

asfidanken

any suggestion anyone? Or really there are no private pensions options out there for foreigners who work in the UK for 5-10 years and are not millionaires?

atush

I would imagine you can open a second personal pension now and pay into it for the next 4 years. Transfer that into your italian pension perhaps.

But whatever you do, don't get rid of your defined benefit one. It will pay you better than any other one you are likely to find.

And dont forget, you will have x number of years into the UK state pension so will be drawing some portion of that too?

asfidanken

I have found these interesting documents so I am posting them here in case some other migrants are facing similar issues

International pension planning for migrants – part 1
scottishwidows.co.uk/Extranet/Literature/Doc/FP0108

International pension planning for migrants – part 2
scottishwidows.co.uk/Extranet/Literature/Doc/FP0109

atush

Links don't work.

But be reminded that these docs might be advertising for that frm.

Haven't read them yet so don't know.

Basically, as long as you legally work here in the UK and pay tax here, you can have a pension. What happens after you leave is another story and something to llokm into when talking to advisors about taking one out.

asfidanken

atush wrote: »

Links don't work.

You need to copy and paste into your browser and add "www" at the beginning. As I am new to the forum I am not allowed to post links... the system blocks them.

Thanks for the advice

Cook_County

As you are a non-dom you may find the UK answer would be to invest offshore and claim the remittance basis for as long as you stay.

The Italians will doubtless tax growth in any UK pension plan once you are resident there again. You may therefore want to transfer all UK pensions into a QROPS in Italy.

property.advert

Cook_County wrote: »

As you are a non-dom you may find the UK answer would be to invest offshore and claim the remittance basis for as long as you stay.

The Italians will doubtless tax growth in any UK pension plan once you are resident there again. You may therefore want to transfer all UK pensions into a QROPS in Italy.

How would the Italian authorities even know of the existence of an overseas pension scheme ?

Cook_County

property.advert wrote: »

How would the Italian authorities even know of the existence of an overseas pension scheme ?

Because it would be declared on the Italian tax return by the beneficiary of the plan.