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Pensions

It is likely that most would-be emigrants will have various assets that they will want to transfer to their new country of origin. Many will want to transfer their cash holdings but, depending on the exchange rate at the time, may choose to leave a portion back in your home country, pending an improved rate. Arguably, one of the biggest considerations will be what to do with your pension (if you have one, of course).  

Transferring your assets
 
Australia, New Zealand, Canada and the United States all have different rules and regulations for transferring pensions and as everyone’s individual circumstances are different there is no one-size-fits-all answer to what action you should take.
 
However, the important thing to note regarding pensions is that it should be possible to transfer them to your new homeland if you wish to do so – although you may find that in some instances the available transfer value of your pension will be less than the actual fund.
 
With this in mind, before making a decision about what to do with your pension, or indeed any other assets you are thinking about transferring, you should talk to a financial advisor who is fully regulated in both the UK and the country you are intending to emigrate to.
 
It’s also worth noting that should you be looking to transfer a state pension to either Australia, New Zealand or Canada, your pension will be frozen either at the value you first draw it or, if you are already drawing it, at the value you are receiving at your date of emigration. Those looking to move to America won’t be subjected to frozen pensions.
 
International pensions

In addition to transferring your UK pension to your new country of residence, there may be a possibility that you will also be eligible to qualify for a federal or state pension in your new home country as well – especially if you plan to be spending a majority of your adult life in that particular country.
 
Each of the ‘big four’ long-haul emigration destinations, along with all EU countries, operate pension schemes of one sort or another, with the qualifying criteria for these schemes being slightly different for each country.
 
Obviously the information provided here should be used a guide only, and it is essential to seek independent financial advice from an expert before deciding on any course of action.
 
Australia offers two chief sources of retirement income – Superannuation and the Age Pension.
Superannuation is funded by Australian employers, who must pay 9.5 percent of an employee’s ordinary time earnings into a ‘retirement fund’. The type of fund differs for each employer, but must be registered and approved by the Australian government. It is important to note that Superannuation funds are not final-salary schemes, so your income when you retire is dependent on the performance of your funds. It is possible for you to add your money to the fund, in addition to the 9 percent from your employer. The Age Pension is funded by taxpayers and paid to you by the government.
 

New Zealand also offers two main retirement schemes. The country’s Superannuation scheme is paid by the government to all eligible people in New Zealand – to be eligible you must have lived in New Zealand for at least 10 years since you turned 20, with five of these years being since you turned 50 (you do not need to have been classed as a ‘permanent resident’ for this duration).
 
Superannuation in New Zealand is part of your taxable income, with the amount you eventually receive governed by your earnings. It is important to note that British citizens can use National Insurance payments to make themselves eligible for New Zealand Superannuation, while you should also be aware that if you’re drawing a pension from the British government this will also affect your New Zealand superannuation.

The other major New Zealand retirement scheme is KiwiSaver – a government backed, voluntary, savings plan. All New Zealand residents are entitled to join KiwiSaver. You can choose to contribute 3%, 4% or 8% of your gross wage to KiwiSaver and must stay in the scheme for at least a year. What’s more, you are entitled to a compulsory employer contribution to your KiwiSaver account at a minimum of 2% of your gross salary.

When you reach 65 years of age you are entitled to withdraw any funds that are in your account as a lump sum – although as New Zealand has no retirement age you can continue working and withdraw your funds at a later date.
 
Canada’s major retirement scheme is the Canadian Pension Plan (CPP).  As with Australia’s Age Pension and KiwiSaver, you will not be enrolled automatically into CPP so will need to apply yourself to join. 
 
You can qualify for a CPP retirement pension if you have worked in Canada and made at least one valid contribution to the scheme. You must be 60 years of age to start receiving your pension. However, the CPP will reduce your pension amount by a set percentage for each month that you take it before age 65.
 
In addition to the CPP scheme, most Canadian pensioners – at least those who have lived in the country for at least ten years since they turned 18 – should also be entitled to receive the Old Age Security (OAS) Pension. You must be 65 or older to receive payments through this scheme. You do not necessarily need to have ever been employed in Canada to receive payments through this scheme, although this will obviously impact on the amount of money you are entitled to. Once you reach the age of 65, you will need to apply to start receiving your OAS pension.
 
The United States offers a number of different retirement plans for its residents – far too many to mention in this article – but perhaps the closest the country has to what we in the UK would recognise as a ‘pension’, is the ‘Defined Benefit Plan’.
 
Through Defined Benefit Plans, employers pay their employees a specific benefit for life when they reach retirement age (the age at you retire can be specified in the plan and therefore the fund cannot be touched until you reach this age, although commonly the age of retirement is 65).
 
The benefit is calculated in advance using a formula based on age, earnings, and years of service.
The Spanish pension system is based upon earning related schemes which cover both employed and self-employed people. In Spain, you can claim a pension at the age of 65, although only people who have contributed towards the scheme for 35 years will be eligible for a full pension. If you don’t qualify for a full pension then what you will receive will be proportional to the number of years you have contributed towards the scheme.
 
The amount you will receive is calculated depending on how much money an individual has earned in the 15 years prior to retirement.
 
A Spanish state pension is payable to expats who have lived in the country for 15 years and paid income tax and social security contributions in this time.

Finally, the main French pension system – Caisse Nationale d’Assurance Vieillesse – is similar to Spain’s in that it is determined by your earnings through employment. You will be eligible to start contributing towards a basic state pension when you first register with social security.
Only people who have contributed to the scheme for at least 160 terms (quarter-years) will be eligible for a full pension. At present, a full pension is worth 50 percent of your average earnings in your 19 highest paid years, although this will soon be raised to 25 highest paid years. As with Spain, those who don’t qualify for a full pension will receive an amount that is proportional to the number of terms they have been contributing for.
 
It is worth noting that each country in the EU adds together the insurance contributions from all EU countries. Then each country sees how much state pension (if any) a person would get if the insurance contributions had all been paid into that country's own social security scheme. Each country pays part of a person's pension; how much depends on how much has been paid into its scheme.
 
Once again, it is essential to be aware that, no matter what country you are planning to emigrate to, you should take advice from a financial expert before joining any pension schemes. It is also worth noting that some companies or professions may offer their own private pension schemes, just like they do in the UK.
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