UK Pension - worth it or should I opt out?

Hi everyone, firstly thanks to everyone who has helped me out with advice over the years on this forum, I really appreciate it!

I've finally landed a full-time job, and I have no idea whether or not I should participate in the pension scheme offered or opt out. Employer would pay 4% and I'd pay 4%, on a 25k salary.

I may have to move back to the US in 3 years' time, when my current visa expires. (And if not then, there's still a fair chance I will move out of the UK before retirement age.) It looks like I might be able to transfer my pension funds over to a US account at that point, but I'm really not clear on what I can and can't do - I have an IRA, could I roll it into that? Will I pay tax (in the UK or US) if I did this? I'm just wondering if it's even worth it to participate in a pension plan for just a few years - I worry that the tax savings and extra 4% from the employer might be offset by fees and taxes in having to transfer the money to a US account.

Thanks!

You won’t be able to transfer it to an IRA when you move back. I would be reluctant to leave 4% on the table however so would sign up anyway. What is the  penalty for early withdrawal? Typically it is 10% so you would probably still be ahead of the game but you almost certainly could hang onto it even after you return. Just have to continue to file an FBAR once a year.

Cancel that comment above,  looks like an early cash out is not worth it.

https://www.pensionbee.com/pensions-explained/pension-withdrawal/early-pension-release

Early pension release, or pension unlocking, means withdrawing money from your pension before the minimum age of 55 (57 from 2028). It's worth noting that if you’re looking to withdraw early HMRC will charge you up to 55% tax on whatever you withdraw, unless you meet specific conditions. As early pension release has such a costly penalty, no reputable pension provider would let you withdraw a pension early.

Remember that HMRC add tax relief at 20%, (may change Thursday though). I wouldn’t even consider trying to transfer out of the U.K. and into an IRA. Just leave the pension in the U.K. and take after 59.5, to avoid a 10% early withdraw Penalty. There are ways to avoid the 10%, but you’d need to check out exceptions on IRS form 5329. A U.K. pension is considered qualified by the IRS.

I've always considered participation in an employer pension plan as being something of a 'no brainer' I'm a former FD/CFO (now retired and drawing my own pensions) and have always encouraged employees' participation in any employer sponsored scheme - even if it did cost the company more - I can't ever recall a single employee coming to me and saying it was poor advice.

Consider this:

The cost to you (based on a £25k salary) is £800 per year after 20% tax relief (£25,000 x 4% x 80%).

For this, you get £1,000 in the scheme (your gross contribution) plus your employer match of another £1,000 - so £2,000 per annum. Even forgetting any investment growth, this is a return that you would be hard pressed to receive anywhere else.

Yes, there are tax considerations when you finally take the pension or transfer it elsewhere and others can advise on mitigating the tax impact - but I would state that it is very unlikely that any tax payable would negate the investment return.