US citizen thinking of relocating to UK - wondering about pension

I'm thinking of relocating to the UK. It involves a pay cut but I'd like the experience of living abroad. One of the big disadvantages is that I won't be able to contribute to my 401k.

That said, the idea of getting a UK pension does seem attractive and the value could be worth more than the 401k contributions if it's adjusted for inflation when I retire in 30 years or so.

So my question is - if I pay into the UK pension will I be able to collect it when I go back to the US? What if I only end up in the UK for a few years?

I'm very interested to know the answer to this and any other opinions on the subject.

I'm thinking of relocating to the UK. It involves a pay cut but I'd like the experience of living abroad. One of the big disadvantages is that I won't be able to contribute to my 401k.

That said, the idea of getting a UK pension does seem attractive and the value could be worth more than the 401k contributions if it's adjusted for inflation when I retire in 30 years or so.

So my question is - if I pay into the UK pension will I be able to collect it when I go back to the US? What if I only end up in the UK for a few years?

I'm very interested to know the answer to this and any other opinions on the subject.

The US/UK tax treaty covers pensions well. You will be able to get a UK pension paid to you in the US and it will only be taxed in the US.....no UK tax on it.

It's surprising to hear someone praising the UK pension industry. It is very unpopular and people tell horror stories of poor pension performance. The UK pension landscape is increasingly looking like that in the US, but you will notice that fees are higher.

If you are thinking about state pensions you are in for a shock. The UK state pension is generally less than US SS. Under the new laws everyone in the UK gets the same pension (no matter how much they pay into the system) of about $12,000/year. You won't be able to contribute to US SS while you are in the UK.

Thanks for the info... that's interesting. Is there a webpage describing that new law?

But to put this in perspective - I'm thinking of just being in the UK for a few years (although maybe I'll say there... who knows). Would I be collecting $12k a year? I can't believe that's the case, but if it were true it would be a pretty incredible deal.

I'm assuming that unlike with a 401k, you can't invest extra pension contributions (let me know if I'm wrong).

I think I found the answer - that if I don't have 10 qualifying years I won't get a pension: http://www.nidirect.gov.uk/index/information-and-services/pensions-and-retirement-planning/pensions-and-retirement/state-pension/new-state-pension-from-6-april-2016/reaching-state-pension-age-on-or-after-6-april-2016.htm [nofollow]

So this is a very bad deal. But I did find that the US has a an agreement that might allow me to get out of it and pay SS instead. Has anyone been successful in this? http://www.ssa.gov/international/Agreement_Pamphlets/uk.html [nofollow]

Thanks,

Lou

I think I found the answer - that if I don't have 10 qualifying years I won't get a pension: http://www.nidirect.gov.uk/index/information-and-services/pensions-and-retirement-planning/pensions-and-retirement/state-pension/new-state-pension-from-6-april-2016/reaching-state-pension-age-on-or-after-6-april-2016.htm

So this is a very bad deal. But I did find that the US has a an agreement that might allow me to get out of it and pay SS instead. Has anyone been successful in this? http://www.ssa.gov/international/Agreement_Pamphlets/uk.html

Thanks,

Lou

If you work for a US company in the UK there are ways to pay US SS tax rather than NI and continue paying into a 401k.....but 5 years is the max I think.

Would you be taking a job with your current company or an entirely new company?  Depending on the answer will affect how long you can stay in the UK.

Also remember the cost of living in the UK is higher than the US (of course YMMV depending on where you are relocating from).  A pay cut seems scary to me.

I'd definitely have to take a pay cut. I'm paid very well in the US - definitely on the high end of the range for my current job. And pay in the UK is on average lower, so I don't think they can match it. But my wife and I really want to travel within Europe as well as experience living overseas while we're young enough to enjoy it.

Plus they seem to have stricter working hours in the UK which helps justify the pay decrease - 37 hours a week with overtime vs. the 50-60 per week with no overtime that I'm working in the US. So I figure I can try it for a few years without much to lose. If the hardship is too much it should be easy to move back to the US within my current company.

The job isn't in London - it's in Cheltenham. So the cost of living seems higher than the US but not extraordinarily higher. Most of the increase is in the rent and with gas. But I'd be curious to get more opinions. It's a big life decision that I haven't made yet and the more opinions I can get the better.

I'd definitely have to take a pay cut. I'm paid very well in the US - definitely on the high end of the range for my current job. And pay in the UK is on average lower, so I don't think they can match it. But my wife and I really want to travel within Europe as well as experience living overseas while we're young enough to enjoy it.

Plus they seem to have stricter working hours in the UK which helps justify the pay decrease - 37 hours a week with overtime vs. the 50-60 per week with no overtime that I'm working in the US. So I figure I can try it for a few years without much to lose. If the hardship is too much it should be easy to move back to the US within my current company.

The job isn't in London - it's in Cheltenham. So the cost of living seems higher than the US but not extraordinarily higher. Most of the increase is in the rent and with gas. But I'd be curious to get more opinions. It's a big life decision that I haven't made yet and the more opinions I can get the better.

Will you be working for a US employer in Cheltenham? Can you tell us what you will be doing? or do you work for one of those non existent agencies?

I'm an manufacturing engineer + software developer and my company has a large division out there.

I'm an manufacturing engineer + software developer and my company has a large division out there.

You need to talk to your HR department about continuing to pay US SS while in the UK under the US/UK reciprocal agreement

One thing to be aware of is that you would be able to stay for a maximum of five years, then you would have to spend at least 12 months out of the UK before returning. 

My first few years here I worked for a U.S. company.  I continued to pay into SS as opposed to the UK NI system.

I'd definitely have to take a pay cut. I'm paid very well in the US - definitely on the high end of the range for my current job. And pay in the UK is on average lower, so I don't think they can match it. But my wife and I really want to travel within Europe as well as experience living overseas while we're young enough to enjoy it.

When I moved here 7 years ago, I moved for a job (I am also an engineer) and also took a huge pay cut.  I'm paid very well for the area I live in, but I'm still making less in equivalent US dollars than I did when I got my first proper engineering job.  Was it worth it to move the UK?
Hell yeah!    I didn't come for the money, for sure.  I came for the experience, the excitement, the adventure. Now, I'm British, I met my other half, and it's home.  

Also, despite the pay cut, in seven years, I was able to pay off $18,000 in US debt, all my student loans, develop a nice pot of savings, and pay into a decent UK pension pot (nothing like my 401k, but at least that's sitting there nicely growing slowly).  I've also been able to take holidays, never have to worry about health care (yay NHS!), drive a nice car (we only have one in our household), and eat good food. I'm currently building a nice eco friendly house in the coutntryside with my partner as well.   I've cut back on all the extra spending on things I don't need, I grow a lot of my own food and make my own wine/beer.  Having a paycut forced me to look at the important stuff and budget accordingly and I now live within my means. (My $18,000 of debt came from a time when I was not living within my means, a foolish young girl I was)

I'm incredibly fortunate and lucky, but I will never take this for granted, as I grew up quite poor and worked very hard, pushing my way through engineering school whilst working three jobs to get where I did. And you never know when life circumstances will change.  

So my long winded point is, if there is an opportunity to move, I say go for it!!!  You will find the UK is cheaper in a lot of areas (I couldn't believe how expensive it was food shopping in the US last time I was there) and the NHS comes from your taxes - so no extra health insurance premiums.  I also find things like car insurance cheaper.  

Good luck in your journey!!!