Pension planning: keep up with the paperwork if you work abroad

Sponsored: If you’ve lived and worked in more than one country, finding the right retirement strategy can be complex.

It’s all too easy to ignore retirement planning when you’re busy working. Early saving and planning is the key to maintaining a decent standard of living in retirement.

In Belgium, the pension age will rise to 66 by 2025 and 67 by 2030, for both men and women. Belgium is also changing the way it calculates pension entitlements by introducing a points system. In the UK the pension age looks as though it will be increased to 70 for those currently in their 20s. It is almost impossible to know what these pensions will be worth by the time we actually reach retirement age.

Generally, it is difficult to rely on a state pension as this only guarantees a minimum income while the cost of living continues to increase. The ideal situation is to have a combination of state and company pensions, and it’s likely you will also need a diverse portfolio of personal savings and investments.

So, for the global nomad, it is imperative to keep an accurate record of current accumulated pension benefits, whether state, company-related or personal, together with all the relevant reference numbers. Try and find out how much is likely to be paid out either as income or a capital sum and when this is likely to be. It’s possible that one country could pay out at 65, one at 68 and another at 70!

In Belgium, the occupational pension is seen as complementary to the state scheme and therefore cannot be accessed until you draw your state pension at age 65, 66 or 67. In the UK, by contrast, you can access your company pension from age 55, but your state pension, depending upon your age, only at 65, 66, 67 or 68.

There are a number of unknowns which are never helpful for expat workers trying to maintain a successful retirement strategy. One of these is the effect of inflation. Others include the effects of currency fluctuations and taxation. Not only is the level of tax in your home country difficult to predict in the future as governments look to raise revenue, but it is difficult to predict exchange rates either at the time of taking a lump sum or if receiving an income.

Additionally, pension entitlement accrued in one country but drawn in another could be subject to a double taxation agreement. It is therefore important to know whether any pension assets are deemed taxable in the country from where they are paid, or in the country where you have decided to retire and are therefore tax resident.

Taxation also rears its head when looking at personal assets. As a global nomad, you may find that what can be tax-efficient in one country is completely unsuitable in another. This may not even be in the country where you decide to retire but in the country of your next posting. Every country will look at assets in a completely different light. What may be liable for capital gains tax in one country may be deemed to be income in another.

For the global nomad trying to consider all of this, combined with the considerations set out above, it is likely that some helpful guidance on planning for the future would be welcome.

The Fry Group Belgium provide pension, wealth and retirement advice. They regularly run retirement planning workshops for those who have worked outside their home country. These workshops address a range of practical issues, including structuring a secure and tax-efficient income in retirement.


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