State pension from UK when a moving back to Italy after working only 10y in UK

the_learner

I am an Italian citizen who has been living in UK for the past 9.5 years. During this period I have always worked here and I haven't received any income from Italy or anywhere abroad.

I have also regularly contributed to a pension scheme that my company has setup and where the company contributes as well.

The question I have is what happens to my state pension contributions and my personal pension scheme in the event that I will leave the UK before I actually start getting retirement benefits?

For simplicity, let's say I am 37 and I will stay here in UK other 1 year (so that I will have a total of 10 full years of contributions in UK) and I decide to move back to Italy to work the remaining years until retirement.

When I retire, will I be eligible for a state pension from the UK that will cumulate with the one I will get in Italy? Having contributed only 10y I guess it will correspond to the minimum pension possible, but do we know how much that is currently?

Regarding the personal pension scheme I am wondering if I will still be allowed to take out 25% tax free even if I won't be in UK anymore.

nigelbb

Going forward you will need 35 years of contributions to receive a full UK state pension (currently £179.90/week). If you only have 10 years of contributions you will be entitled to a 10/35 pension ie £51.40. If you are leaving the UK you would be well advised to continue paying voluntary National Insurance contributions so that you do get a full 35/35 pension. If working abroad you will be entitled to pay Class 2 contributions of around £150 per year ie for a total of an extra £3,750 paid in over the next 25 years you will receive a pension of just over £9,350 a year. Given average life expectancy that's worth nearly £200,000.

If you are living in Italy when you start to draw from your personal pension it is Italian taxes that will be payable so forget about 25% tax free. I don't know how pension pots are taxed in Italy but it's not necessarily worse than the UK eg in France if you liquidate the whole pot in one go you only pay 7.5% income tax on 90% of the pot (& possibly 9.1% social charges if liable).

Silvertabby

Nigel - are you sure about the Class 2s?  I thought that was only for Brits (or someone normally resident in the UK) when temporarily working abroad.

nigelbb

Silvertabby said:

Nigel - are you sure about the Class 2s?  I thought that was only for Brits (or someone normally resident in the UK) when temporarily working abroad.

Absolutely certain. There is at least one member of this forum (@bostonerimus) who I believe has paid around  thirty years of Class 2 contributions while living & working in the USA & now has a full UK state pension.

It's all detailed in HMRC's leaflet NI38 "Social Security abroad". The basic rule is that you should have been employed & contributing for the three years prior to your departure from the UK & that you are employed or self-employed abroad. About five years ago when I paid some Class 2 for years that I worked in France HMRC didn't ask for any proof of my employment status but I understand from people who have bought added years more recently they have been more rigorous.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/947544/NI38_12_20.pdf

mark55man

to double check the double check the OP is an Italian citizen (sorry Nigel) but I'm not quite sure you addressed silvertabby's question.  I 100% agree if OP was Brit working/retiring abroad

PS Also may be impacted by Brexit

xylophone

I am an Italian citizen who has been living in UK for the past 9.5 years. During this period I have always worked here and I haven't received any income from Italy or anywhere abroad.
I have also regularly contributed to a pension scheme that my company has setup and where the company contributes as well.

What exactly does your state pension forecast say?

https://www.gov.uk/check-state-pension

nigelbb

mark55man said:

to double check the double check the OP is an Italian citizen (sorry Nigel) but I'm not quite sure you addressed silvertabby's question.  I 100% agree if OP was Brit working/retiring abroad

PS Also may be impacted by Brexit

Entitlement to a UK state pension has nothing to do with nationality & everything to do with contributions. The only qualification for paying voluntary NI contributions is that you should have lived in the UK for three years. It's all detailed in HMRC's leaflet NI38 "Social Security abroad" that I linked to earlier.

Brexit has changed nothing. Ongoing social security coordination was slipped into the EU-UK Trade and Cooperation Agreement signed last December.

Chickereeeee

Does this mean OP could get both UK and Italian full pensions on retirement? Could you wander around countries, working 3 years in each, pay Class2 NICs (or equivalent) gathering pensions (or is it only a UK thing)?

nigelbb

Chickereeeee said:

Does this mean OP could get both UK and Italian full pensions on retirement? Could you wander around countries, working 3 years in each, pay Class2 NICs (or equivalent) gathering pensions (or is it only a UK thing)?

It does indeed mean that that the OP could have a full UK state pension & if not a full Italian pension at least a very large percentage of one (depending on the rules for a full pension in Italy).

The UK state pension is probably the lowest in Europe but is remarkably generous when it comes to paying voluntary contributions to maximise pension. I looked at buying some extra years for my French pension & the equivalent known as buyback enables you to retire on your full pension a little earlier but costs thousands of euros per trimestre (quarter) & you can only purchase a maximum of three years.

Eldi_Dos

nigelbb said:

Going forward you will need 35 years of contributions to receive a full UK state pension (currently £179.90/week). If you only have 10 years of contributions you will be entitled to a 10/35 pension ie £51.40. If you are leaving the UK you would be well advised to continue paying voluntary National Insurance contributions so that you do get a full 35/35 pension. If working abroad you will be entitled to pay Class 2 contributions of around £150 per year ie for a total of an extra £3,750 paid in over the next 25 years you will receive a pension of just over £9,350 a year. Given average life expectancy that's worth nearly £200,000.

This reads more like a prospectus for a Ponzi scheme than a government policy,does not appear to be well thought through,thanks for posting

TVAS

Make sure the UK government and your former employer and pension scheme always have your address Italy. So when you move address ALWAYS inform them. 
Google state pension forecast and take it from there, you will have to register and at that point put in your UK address, when you move to Italy update it. 
Mi dispiace che ci lasci e che torni in Italia.