Expat pension pitfalls

The Times - October 14, 2006

Mark Atherton says that most overseas workers find out about retirement provision too late and end up losing out. Travelling abroad to work as an expatriate can make your fortune - but it can also leave a nasty hole in your pension pot.

Overseas workers have traditionally lost out to their home-based colleagues when it comes to retirement provision, and this was even more true in the 1960s and 1970s.

Dennis Hall, of Yellowtail Financial Planning, an independent financial adviser, says that though pension provision was improving for the average UK employee, there was no real solution to the needs of the expatriate. He says: "Many UK companies sending employees abroad 40 years ago expected them to make their own pension provision out of their often higher, often tax-free, expatriate salaries. Inevitably many didn't."

In other cases, overseas workers believed that they would be receiving a pension from their employer, only to find at retirement that no such pension was forthcoming. On top of that, companies often chose not to make UK national insurance (NI) contributions on behalf of their expatriates, thus creating a further gap in their pension savings, which employees were expected to plug themselves.

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Huge thanks from Stephen and I for your extremely valuable advice which we will now pursue. We were really inspired after our meeting and just wish we'd met you years ago!

Sophie Stewart - London