Personal pensions for people who split their time between countries

Nellyfunk

I am a UK citizen, 25 years old, who currently lives in the US. I am researching personal pension options for myself but have come across a little trouble with regards to my residential status. I plan to move back to the UK early in 2017 and spend 3 years in the country. I then will move back to the US for a number of years. Basically, i do not know where i will settle and so think it sensible to start a UK-based personal pension. I know that i can not pay into my ISA whilst in the US but i have no idea about pensions. Can anyone recommend a well-established, UK-based personal pension scheme that i can pay into no matter where i reside? Obviously, i would need to be able to access this pension upon retirement, regardless of my residency. Alternatively, can anyone provide me with any advice as to the best way to plan for retirement if i plan to live in both the UK and US at different times of my life? Any advice will be greatly appreciated.

xylophone

http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/52677/52680/52701/52713/

http://adviser.royallondon.com/pensions/technical-central/information-guidance/overseas/contributions-to-registered-schemes-for-overseas-individuals/

may be worth a look.

TheTracker

Generally the tax efficiencies of pension contributions arise as a displacement of tax you would have otherwise incurred, usually at point of income, so it doesn't really make sense to be able to contribute to a UK pension with US income.

Particularly if you think you will retire in the UK, then for the 3 years I would try to time your employment here, eg mid tax year to establish residency as late as possible, such that your pension contributions in the UK are maximally beneficial to pension tax relief by being able to contribute as much as you can to it. Or vice versa if the US is seen as more likely.

Having worked for a number of years in the US and also elsewhere, the best advice comes from expat peers, so specialist is the circumstance. But be careful of snake oil peddlers.

atush

Pay into pension in both countries, while tax resident in either? Esp if the employer contributes for you.

Esp pay into a pension while in the UK for the 3 year period.

zisaai

In general you can only receive tax relief on UK and US pension contributions if you have taxable income in the corresponding country so you should consider setting up pensions in both the UK and US.

For the US if you are employed then it is likely that you employer will provide a 401k pension plan. Contribute at least the minimum to receive matching contributions from your employer. If you are self employed or your employer does not provide any form of pension then check out Vanguard. They are a very large, low cost provider of pensions.

From memory if you establish a UK pension scheme before becoming non-resident, you can contribute the standard £2,880 and receive the tax relief contribution from HMRC for up to five years after you become non-resident.

Depending on your circumstances, the US taxes you on your worldwide income. As a result you can make US pension contributions on UK income if you are subject to US taxes. This is a complex area but a Roth IRA can be an attractive option particularly if you may retire in the US. This is a pension where the contributions are paid with taxed income but the pension is paid out tax free.