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Pension or ISA for foreign national suggestions

rb621
Posts: 21 Forumite
My wife, Croatian, is now a full UK resident and at the moment has no pension provision. She did have some qualifying credit for the Croatian state pension but Croatia has recently increased the minimum years required to qualify for any part of their state pension so unless she returns and works there she gets nothing.
So in the UK, what pension provision is she entitled too currently, if any? She's not entitled to any benefits by the way. Although Croatia has joined the EU this year, I'm unsure what or when full EU integration starts.
She's a full-time mum, aged 44 and no doubt in 5 years or so will look for employment as we balance childcare and work.
I'm in a position where I could contribute to a pension for her out of my income, partly by reducing my pension contributions too perhaps as I guess its slightly more tax advantageous to build up both of our pension funds to the same level. Otherwise if my pension pot is so large (doubtful but hoping) as to attract tax on the income and she has nothing, seems a waste.
However, considering the time frame left of her working life, and some of that may well be part-time, the cost of pensions in general, are we better off just doing regular savings into an ISA? There at least she has some flexibility with the funds.
Its the usual dilemma for women / pensions / years out of the work system.
Thanks for any suggestions.
Richard.
So in the UK, what pension provision is she entitled too currently, if any? She's not entitled to any benefits by the way. Although Croatia has joined the EU this year, I'm unsure what or when full EU integration starts.
She's a full-time mum, aged 44 and no doubt in 5 years or so will look for employment as we balance childcare and work.
I'm in a position where I could contribute to a pension for her out of my income, partly by reducing my pension contributions too perhaps as I guess its slightly more tax advantageous to build up both of our pension funds to the same level. Otherwise if my pension pot is so large (doubtful but hoping) as to attract tax on the income and she has nothing, seems a waste.
However, considering the time frame left of her working life, and some of that may well be part-time, the cost of pensions in general, are we better off just doing regular savings into an ISA? There at least she has some flexibility with the funds.
Its the usual dilemma for women / pensions / years out of the work system.
Thanks for any suggestions.
Richard.
0
Comments
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Has she been getting child benefits in her name?
If yes, the years in which she has been getting them count for the UK state pension.0 -
EU pension rights law will apply to Croatia. So years of NI contributions paid or credited here should then count towards the minimum years requirement for a Croatian pension (and in reverse).0
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However, considering the time frame left of her working life, and some of that may well be part-time, the cost of pensions in general, are we better off just doing regular savings into an ISA? There at least she has some flexibility with the funds.
As has been noted, she'll fall under EU social security rules by the time she retires, so her periods of social security can be aggregated, preusming she pays some National Insurance here.
What do you mean precisely by "the cost of pensions in general"? It sounds like you might be making an important decision based on a misconception, so more information would be useful.
If she's a non-taxpayer, it can be advantageous for her to transfer savings into pension funds, getting tax relief on money that hasn't been subject to income tax. (This is, of course, a bit illusory, since the money was probably income taxed at some point when it was earnt, although not necessarily by the UK).
The "flexibility with funds" argument is somewhat illusory. Theoretically one can take ISA funds and spend them, but the need for a source of retirement income doesn't go away. One should seek to secure one's adequate retirement income first, and only subsequently look for fund flexibility. Having no access to spend funds is particularly important for the financially illiterate, or those who find it hard to plan for the likely but distant future.
Warmest regards,
FAThus the old Gentleman ended his Harangue. The People heard it, and approved the Doctrine, and immediately practised the Contrary, just as if it had been a common Sermon; for the Vendue opened ...THE WAY TO WEALTH, Benjamin Franklin, 1758 AD0 -
Also, as a a foreign national, she may be (dependiong on the year she became resident) get 3 years credit from age 16. I got that, despite not being resident in the UK at that age. This provision has now been scrap[ped (from 2012 I think but not sure). She will continue to get NICS if she receives CB in her name until your youngest child is 12.
So, if the CB is in your name, stop and get it switched to hers. And yes, if you pay basic rate tax, opening a pension for her is tax efficient as you can put up to 2880 in and it gets uplifted to 3600 by tax relief. However, it is best you continue with your pension unreduced int he meantime, esp if you pay HRtax.0
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