Foreign & UK pension advice
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Deanbark
Posts: 13 Forumite
My wife whom is German had to work in the UK for some years for her parent company (a German Multinational), whilst in the UK she had to contribute to both the UK state pension and a new UK based private pension (Fidelity).
We are in Germany now and her UK private pension is just sitting there as a lump sum. Given she currently pays German tax if she withdraws it early will she also have to pay UK tax? As soon as it hits her bank account the German authorities will want their share.
Can she transfer this private UK pension to her German private pension?
Must she wait until she is 65? And what about her UK state pension she contributed to, Its probably pretty small but can she access it as as well.
In short what are her options?
We are in Germany now and her UK private pension is just sitting there as a lump sum. Given she currently pays German tax if she withdraws it early will she also have to pay UK tax? As soon as it hits her bank account the German authorities will want their share.
Can she transfer this private UK pension to her German private pension?
Must she wait until she is 65? And what about her UK state pension she contributed to, Its probably pretty small but can she access it as as well.
In short what are her options?
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Deanbark said:My wife whom is German had to work in the UK for some years for her parent company (a German Multinational), whilst in the UK she had to contribute to both the UK state pension and a new UK based private pension (Fidelity).
We are in Germany now and her UK private pension is just sitting there as a lump sum. Given she currently pays German tax if she withdraws it early will she also have to pay UK tax? As soon as it hits her bank account the German authorities will want their share.
Can she transfer this private UK pension to her German private pension?
Must she wait until she is 65? And what about her UK state pension she contributed to, Its probably pretty small but can she access it as as well.
In short what are her options?
Transfers from UK to German pension schemes are possible, but she'll need to ask her UK pension providers if her German scheme is one to which a transfer can be made.
State pension: see https://www.gov.uk/international-pension-centreGoogling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1 -
https://www.stc-makler.de/pension-scheme-transfer/
may be worth a read.1 -
Cross border transfers of pensions are notoriously tricky, but if the UK/German double taxation treaty follows the usual rubric the UK pension will not be taxed in either the UK or Germany until withdrawals are made. Then if your wife is not a UK tax resident it will only be taxable in Germany. You might have to file some forms invoking the tax treaty exemption in the UK, but there's no need to move the pension and I would avoid QROPs as they can be expensive and just add another layer of complexity. Just leave the pension where it is if you are happy with it and use the tax treaty when you need it.
If there are sufficient NI contributions then your wife would get a UK state pension on retirement. You should also look into whether the NI contributions can be used within the German system, but after Brexit things might well have changed and I don't know if there is a UK/Germany reciprocal social security agreement.“So we beat on, boats against the current, borne back ceaselessly into the past.”2 -
I second the advice to leave the funds in the UK until its time to withdraw the funds to cover retirement costs.
Make sure the funds are invested rather than just sit as cash and lose value to inflation. She should be able to invest within her current pension scheme. Alternatively she should be able to transfer the funds to a UK SIPP and invest within the SIPP wrapper. That’s what I did with my company pension in the UK.0 -
bostonerimus said:Cross border transfers of pensions are notoriously tricky, but if the UK/German double taxation treaty follows the usual rubric the UK pension will not be taxed in either the UK or Germany until withdrawals are made. Then if your wife is not a UK tax resident it will only be taxable in Germany. You might have to file some forms invoking the tax treaty exemption in the UK, but there's no need to move the pension and I would avoid QROPs as they can be expensive and just add another layer of complexity. Just leave the pension where it is if you are happy with it and use the tax treaty when you need it.
If there are sufficient NI contributions then your wife would get a UK state pension on retirement. You should also look into whether the NI contributions can be used within the German system, but after Brexit things might well have changed and I don't know if there is a UK/Germany reciprocal social security agreement.
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Your wife should maximise her UK state pension by making voluntary National Insurance contributions. As she has been working in Germany she will be entitled to pay Class 2 contributions that cost about £150 for each added year. Each extra year buys an index-linked pension of around £250 per year. Given average life expectancy at retirement that's worth over £5,000. It's an amazing bargain. Full details in HMRC leaflet NI38 "Social Security abroad"
"https://www.gov.uk/government/publications/social-security-abroad-ni38She needs to check her pension forecast https://www.gov.uk/check-state-pension then contact the Future Pensions Centre to check exactly which years she should purchase to maximise her pension. https://www.gov.uk/future-pension-centre1 -
nigelbb said:Your wife should maximise her UK state pension by making voluntary National Insurance contributions. As she has been working in Germany she will be entitled to pay Class 2 contributions that cost about £150 for each added year.
Ie, has she gained this right by spending some time working in the UK, or by marrying a UK citizen (if @Deanbark is indeed a UK citizen)?0 -
@nigelbb btw the above post is not an inferred statement (ie she can't), it's a genuine question (can she).
I have three or four guys who work for us who are EU citizens (though now settled status in UK after living, working, & paying NI for a few years) if/when any of them move back to their countries of birth it would be nice to be able to advise the above if true.
They're good lads, hard working, if sometimes a little hard work!1 -
Hi all, yes I am a UK citizen, born in the UK and I have been fortunate enough to have always been in employment with full NI contributions paid. We met whilst she was working in the UK.
She worked in the UK for 3.5 years paying national insurance and she had to set up a new UK private pension plan linked to her German parent company. Her existing German company private pension I believe was frozen for the time she was away. Again I am confused why this had to be done. I would have thought she could have continued paying into her existing German fund after all it's the same company.
Regarding the state pension, she was advised some years ago by an advisor that she is not eligible for any sort of UK pension as the minimum time needed is 5 years of National Insurance contributions. I have no idea if this is correct.
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@Deanbark, yes I believe there is a minimum number of NI year paid before you qualify for any UK SP. To stop the admin on paying out really small pensions I would imagine.
The question though is could she pay voluntary NI in order to pass that 5 year mark, and also boost it up further. If she could it would be great value.
@nigelbb has implied she can, I suspect though that he didn't notice from the OP that she was German, and has given her the rights of a UK citizen working/living expat. I stand to be corrected though, which is why I wondered if she may have gained those rights by marriage or work history in UK.1
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