I could have sworn that I’d written a very similar post to this before, but I couldn’t find it. In any case, I get asked quite a few questions about expat finances from British people living overseas (especially the US) and I know that a few readers are expats living in the UK. I thought this information – whose discovery was inspired by a conversation I had with a friend the other day – might be useful to you.
Did you know that British National Insurance scheme (the one that qualifies you for your state pension) is reciprocal with a number of other similar schemes in other countries?
This means that if you are British and you work abroad you might be able to use your contributions there to qualify for a state pension over here, and vice versa.
The rules vary from country to country, but for example, if you have worked in the US and you haven’t paid NI for enough qualifying years to get a full British pension, you can treat the time that you spent paying Social Security to qualify. The amount you would get would be based on how many years you paid into both schemes, and the proportion of time you spent in each scheme.
Suppose you spent 10 years working and paying NI in the UK, and 20 years working and paying Social Security in the US. In the UK, they would calculate how much pension 30 years contributions would give you and pay one third (10/30) of that. In the US, they would calculate how much pension 30 years contributions would give you and pay two thirds (20/30) of that.
It works pretty much the same, as the agreement with the USA for all the countries in the EU – except of course that you could have worked in all 25 (or more) of them.
For Britons living in Canada, if you are not entitled to Canadian Old Age Security pension, you haven’t lived in Canada for more than 20 years, and you live in the UK for the 10 years prior to your retirement, your time in Canada is treated as if you paid contributions to the UK.
If you spent time in New Zealand, but return to the UK to retire, any time you lived in New Zealand will be treated as if you paid contributions in the UK, for the purposes of qualifying for the British State Pension.
Similarly, if you retire in New Zealand, any time you lived in the UK will be treated as if you paid contributions in New Zealand for the purposes of qualifying for New Zealand Superannuation. Any money you receive from the UK will be deducted from your Superannuation though.
If you are living in either New Zealand and Canada (or most other countries), once your State Pension starts being paid out it there will not increase. You can get more details from the Department for Work and Pensions, where you can also find information on the other reciprocal agreements with:
- Jersey and Guernsey
- Yugoslavia (and former republics)
Image by mandj98
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