It is possible you may run into some complications when you come to retire and wish to claim your State Pension depending on the countries where you have worked and paid social security contributions in. Like the UK, each country has a minimum period in which Social Security contributions must be made for an individual to be entitled to their full State Pension, so if your employment has seen you working in numerous countries for shorter periods of time, it may be that you have not reached the minimum period in any one country.
Specific rules are in place so that if you are an individual who has been well travelled throughout your employment, then you may be able to take into account contributions made in other countries when calculating your State Pension entitlement.
What country would I claim my State Pension in?
You must apply to start receiving your State Pension in either the country you live in or where you last worked. If you have not worked in the country you live in, you must then apply to the country where you last worked or your application will be automatically forwarded to this country. The relevant country is then responsible for collating your records from all countries you have made contributions in.
It may be useful to carry out a review of your State Pension position to determine your entitlement prior to contacting the relevant authorities to request that your pension payments begin.
What happens if I haven’t completed the required period in the country I live in?
If you live in, and have also spent time working and made social security contributions in another country in the European Economic Area, Switzerland or a country that has a social security agreement in place with the UK, it will be possible to consider your contributions made in all qualifying countries when calculating your State Pension entitlement. This will mean you have accumulated pension rights in these other countries and your pension will be calculated differently than if you had remained in one country throughout your working life.
How is my State Pension calculated if I have accumulated pension rights?
Your State Pension will be calculated based on the contributions made in each qualifying country you have worked in and made Social Security contributions in. If you have not reached the minimum contribution period in one country, your periods completed in other countries will also be taken into account to determine the amount you would have received if you worked in the relevant country for the full period. The amount you are then entitled to receive will be pro-rated based on your actual time spent working there with the remainder being allocated to any other qualifying countries.
When will I start to receive my State Pension?
You will start receiving your State Pension when you have reached retirement age in the country which is paying your pension. Therefore if you are entitled to State Pension from a country where the retirement age is 65 and also a country where the age is 67, you will not receive all of your entitlement at the same time. It may then be useful to find out what countries in which you have pension rights to determine the amounts you will receive and when.
How will the State Pension I receive be taxed?
Your State Pension will be taxed depending on the country where you are resident. In some cases your pension may be taxed in the country where it originates from and the country where you live, however it is normally possible to claim tax relief to get some or all of the tax paid in one country back. This will depend on if there is any agreements in place between the two countries.
It is unclear how and if this system will apply following Brexit however, we look forward to receiving updates from HMRC surrounding the guidance currently in place.
If you wish to review your entitlement to State Pension in line with your movements and social security contributions, or if you have any concerns on your State Pension position please contact Megan McDonald (email@example.com for more information.