Your Expat Pension: How Much is it Worth?

If you are a British national and have been living abroad for a number of years, you might be thinking about your pension and wondering where on earth to start with it all.

Perhaps you have lived in Malaysia or another country outside the UK for 10+ years, and wonder what happened to all those pensions you were contributing to when working back in the UK.

This article aims to help get you started on the process of finding out where your pensions are, and to help you find out what they are worth.

After all, knowing what you have will have a big impact on your planning for the future – whether you want to retire overseas or one day back in the UK.

Let’s start with one important first step: finding out the value of your state pension.

Finding out out your state pension

There are lots of different kinds of pensions, which can really complicate matters when you are trying to find out the value of your pension as a British expat.

However, one fairly easy thing to find out is your state pension – i.e. how much the British government will give you to live on when you retire. You can do this by going through the steps here on the UK government’s website. You will need to have made at least 10 years of National Insurance contributions in order to qualify for any sort of UK state pension.

So, if you have only contributed 7 years of NI it might be worth starting voluntary NI contributions if you are going be living overseas for a good few more years. Speak with your financial adviser to discuss whether this might be appropriate for your unique financial situation.

Remember, if you are entitled to receive a UK state pension when you retire then you need to consider how much it will be worth when it eventually arrives in your bank account. Exchange rates, inflation and banking fees can all play a part here.

So, you’ve made a good start to find out the total worth of your pension. However, there are other types of pensions you will also need to look at:

Finding your workplace pensions

As an expat, it can be intimidating to think about tracking down the pensions you built up when working back in the UK. Where do you even start with this?

At the outset, there are two important types of workplace pension which you need to know about. One is called a defined benefit pension (sometimes called a final salary pension). Here, your employer promises to pay you a salary when you retire. The precise amount you get will depend on a number of factors, such as your salary and years of service at the company.

The second type of pension is more common nowadays, and it’s called a defined contribution pension. Under this type of scheme, both you and your employer put money into a pension pot each month (usually expressed as a percentage of your salary).

It is usually easier to find out the value of the second type of pension because you are tracking down a pot of money which both you and your employer built up with the pension scheme provider. If the company you worked for is UK-based, then you can start the process of tracking down the pension pot using this online government service.

If the company is not UK-based, then you might need to contact them directly so they put you in touch with the person who administers the scheme. Since British expats often find themselves overseas due to employment with foreign companies, this is often the course they need to take.

This can be an easy or arduous process depending on the company, country and situation. If you need assistance with this, please contact us and our financial advisers here at Hebden Consulting will assist you.

With the first type of pension (defined benefit / final salary pensions), it can be harder to find out how much your pension is worth. That’s because you have not built up a pension “pot” in the same way you do when using a defined contribution scheme. Rather, your employer promises you a yearly income in retirement.

Once you have tracked down your final salary / defined benefit pension, there are ways to find out what the value of it would be if you were to transfer it into a defined contribution pension pot. You will need to speak to a pension transfer specialist in order to do this, however.

This leads us to the final type of pension you need to look at…

Finding your personal pensions

It is possible that you might have set up a pension on your own. Perhaps you were a sole trader once when you lived back in the UK, and you set up your own Self Invested Personal Pension (SIPP) whilst you were trading.

Once again, you can try tracking it down using the UK government website. You will need to know the name of your pension provider in order to use the tool, however.

Now to the logistics…

If you have made it this far, then you should have a much better idea of which pensions you have and how much they are worth. However, the challenge you will now face as a British expat is finding out how you will gain access to your pension money if you eventually retire overseas.

For instance, your state pension could be paid into a UK bank account or into a bank account where you will be living overseas. If you go for the former option and spend most of your time in your country of residence, then you will need to think about how you will be able to access your money. If you go for the latter option, then your money will be paid to you in the local currency. You will therefore need to factor in how exchange rates might affect you.

With your workplace and personal pensions, you might be better off combining your pension pots or moving one or more of them to a different scheme. It completely depends on your unique situation, pension schemes and your own financial goals.

If you would like help, then we invite you to book a free, no-commitment consultation with one of our pension specialists. We can help you sift through all of the complex issues and present some clear options to you.

The information is provided in good faith without any warranty and is intended for informational purposes only. It does not constitute investment advice, recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. For further details see our Regulatory Statement.