Pension if starting career abroad

JTR__

Hello there,

I will be graduating in June of this year and intend to teach ESL abroad (I am looking to pursue this long-term, but am setting 2 years as a minimum to see if it is what I really want to do as a career).

Whilst I have had part-time/summer jobs before, I have not had to think seriously about my pension plans until now. I am initially going to a country that does not have a social security arrangement with the UK, and so am uncertain as to what options are available for me to plan for retirement. I don't think I would be allowed to contribute to the state pension long-term, but due the uncertainties of temporary (and initially low-paying) contracts I'm not sure how feasible private pensions are.

If anyone has any experience of this, or any advice on where to look for further information please let me know.

Thank you for your time!
JTR__

FatherAbraham

JTR__ wrote: »

Hello there,

I will be graduating in June of this year and intend to teach ESL abroad (I am looking to pursue this long-term, but am setting 2 years as a minimum to see if it is what I really want to do as a career).

Whilst I have had part-time/summer jobs before, I have not had to think seriously about my pension plans until now. I am initially going to a country that does not have a social security arrangement with the UK, and so am uncertain as to what options are available for me to plan for retirement. I don't think I would be allowed to contribute to the state pension long-term, but due the uncertainties of temporary (and initially low-paying) contracts I'm not sure how feasible private pensions are.

If anyone has any experience of this, or any advice on where to look for further information please let me know.

Thank you for your time!
JTR__

Pension-fund-based retirement saving and investing is principally about referring taxation. It's very important to note that withdrawals from pension funds by UK-resident pensioners are liable to income taxation, after a 25% tax-free lump sum has been taken.

You really should reveal where you're going to be earning your employment income, since it is highly relevant to your question. If there are sensible retirement-investing options there, you should consider using them - taxation treaties between the UK and many other countries recognize the tax-sheltered nature of funds deposited into pension funds.

One daft thing which some British folks do is to earn tax-free income working as ex-pats, then contrive to pay it into a UK-based pension fund, making it liable to UK income tax when withdrawn. That's a good way to throw 15% of one's money away.

JoeCrystal

While you may not want to do a private pension scheme, it may be worth looking into making voluntary NI contribution to build up your entitlement to the UK state pension although I have no idea what the rules are around this.

Johnnyboy11

If you open a personal pension before you leave the UK, you can save £2,880 that tax year and for the following five tax years, and get £720 (20% tax relief) automatically credited by HMRC each year. Free money, what's not to like?

Johnnyboy11

FatherAbraham wrote: »

...One daft thing which some British folks do is to earn tax-free income working as ex-pats, then contrive to pay it into a UK-based pension fund, making it liable to UK income tax when withdrawn. That's a good way to throw 15% of one's money away.

Not sure I agree with that, assuming you get 20% tax relief credited on your pension contributions.

Johnnyboy11

JTR__ wrote: »

Hello there,

I will be graduating in June of this year and intend to teach ESL abroad (I am looking to pursue this long-term, but am setting 2 years as a minimum to see if it is what I really want to do as a career). JTR__

Worth investing in professional advice on how to become and remain UK non-resident for UK tax purposes. As a minimum, you need to complete a full tax year overseas to pass one of the Automatic Overseas Tests (See HMRC RDR3), and limit your time visiting and/ or working in the UK. If you leave in June, then that tax year is split and your first available full tax year will be 2020/21. If you repatriated before 6th April 2021 then you'd have remained UK resident and liable for UK income tax on your worldwide earnings.

atush

Johnnyboy11 wrote: »

If you open a personal pension before you leave the UK, you can save £2,880 that tax year and for the following five tax years, and get £720 (20% tax relief) automatically credited by HMRC each year. Free money, what's not to like?

This was what I was going to say

Also open S&S isas before you go

FatherAbraham

Johnnyboy11 wrote: »

If you open a personal pension before you leave the UK, you can save £2,880 that tax year and for the following five tax years, and get £720 (20% tax relief) automatically credited by HMRC each year. Free money, what's not to like?

Two things.

The first is that the £3600 in the UK pension scheme is gross, and liable to income taxation on withdrawal. That means you are possibly overstating the amount of free money in the analysis.

The second is that by focusing on the benefits of the system which you're familiar with, you may be completely overlooking far better benefits in the retirement-saving system of the destination country of the original poster.

FatherAbraham

Johnnyboy11 wrote: »

Not sure I agree with that, assuming you get 20% tax relief credited on your pension contributions.

I was thinking more of the case where that assumption doesn't hold, because of the amount contributed, or the length of time non-resident.