Have I understood this correctly?

kunekune

I lived, and worked, in New Zealand from 1986 until 2006, with a brief 2 year period in the UK. I worked in the UK from 1983 (when I graduated) to 1986, for a bit under two years between 1995-97 and then returned here in August 2006. I am now 46 (eek) and have very little by way of a pension fund, although for the last year I have been paying into the Universities Pension Fund and, presumably, will continue to do so for about 20 years until I retire. That is a final salary scheme (so far) and I expect promotions, etc. It will provide some income but not enough to live on.

My understanding of the situation is that I might just turn out to be lucky. I have not paid enough contributions for the normal UK state pension. However, there is a reciprocal agreement with NZ, which has a non-contributory state-pension, which means, I think, that I get the full UK state pension on retirement because I would be entitled to a NZ pension if I was still in NZ.

So the worst case scenario is that we get the state pension plus whatever other pensions we've managed to put together over the next 18 or so years (hubby is on the other kind of scheme, working for a bank). But does anyone know whether I have got this completely wrong??? Our ability to 'save like mad' is affected by the fact we do not own a house (nor do we have a mortgage or any debt) and our children are young, just 5 & 8, so we will be paying parental costs right up to retirement. We hope to pay extra years into my pension scheme (which seems the safer of the two) but it isn't impossible to get around the 20 years we were away.

The emergency plan is that we sell up here in our mid-60s, at which point we're likely to be mortgage-free house-owners, and go and take our NZ pension, either in NZ or Oz, plus transfer any UK pensions on top.

But

I am worried I have misunderstood how it works, and our (already precarious) position is worse than I think.

CIS

You need to speak to the Overseas Pension Forecastinf (now called 'Residency') regarding any State Pension you may be able to claim under these circumstances

You can download the application form CA3638 (PDF 206K) and send it to HMRC Residency Newcastle. If you cannot download the form you can call HMRC Residency and ask them to send it to you. If you are in the UK please ring 0845 915 4811 or call 44 191 203 7010 if you are calling from overseas.

EdInvestor

kunekune wrote: »

My understanding of the situation is that I might just turn out to be lucky. I have not paid enough contributions for the normal UK state pension.

Not yet you haven't, but after 2010 the rules change and you will only need a total of 30 years to get the full basic state pension on your UK contributions.So you may not need to count any NZ contributions towards your UK record.

Check how many years you have already clocked up here :

www.thepensionservice.gov.uk

I would agree you also need to find out how the reciprocal agreement works, AFAIK it's not a "straight swap".

kunekune

I have only paid NI here from 1983-1985, 1995-1997 and 2006 onwards. I am 46 already so will never hit the 30 years. On the other hand, since I finished uni the first time in 1983, I have never been unemployed and have paid my taxes in one country or another. I was a full-time student again 1990-1991 and again 1992-1993 but in the end have a pretty solid working history. I would hope that I can at least get the basics. LIke all people who have spent a lot of time in education I have less working years in my history ... and since I went into academia, not a particularly wonderful salary, so it hasn't been easy to pay extra in.

I will check out the other links: thanks. The 30 year rule sounds a good change. If I look at my lifetime employment history over two countries, I will definitely have 30 years of employment in my history, probably more (retirement isn't something I plan to do if I can avoid it, old academics don't retire they just reduce their teaching).

EdInvestor

You can pay voluntary contributions in arrears for 10 years back to 1996 if necessary @ about 400 pounds a year. What is your retirement age (see the link)?

kunekune

66

Are voluntary contributions to the state scheme a better deal than purchasing additional years in a final salary scheme like the one I'm in? Discounting future pay settlements/inflation, etc, my salary at retirement will be at least £55K, and I will have been in the scheme 21 years plus any purchased additional years.

EdInvestor

kunekune wrote: »

66

Are voluntary contributions to the state scheme a better deal than purchasing additional years in a final salary scheme like the one I'm in?

Almost certainly.The state pension (87 pounds a week for the basic, there is a second earnings linked pension on top) is Govt guaranteed, index linked for RPI and has a 100% spouse's pension. You'd have to save up a pot of at least 160k to buy it on the open market.

The only disadvanatge from your point of view is that for residents of certain countries (incl NZ) it is not-index linked for inflation.However it seems that you come and go fairly regularly, so that if you did retire initially to NZ and then came back to live in the UK (or Europe), your pension would be uprated to the correct level immediately (though you wouldn't get any "back pay" for the years you were away).

kunekune

Thank you so much. I now know what questions to ask before making decisions about how to prioritise the money we have available. Much as we love New Zealand, we're likely to stay here now as we had our children late, and so they will be barely independent when we hit retirement age. However, depending on the figures we receive, that plan could always change. Martinborough is always a possibility.