British Expat in China - UK State Pension or Private Pension?

[david_loves_boats]

I’m wondering if anyone is in a similar situation to me or has any advice - I’ve been working in China for my whole adult life and I’d like to start preparing for my retirement. Since I’ve been here in China all this time, I haven’t made any National Insurance contributions in the UK. I understand that you need 30 years of NI contributions to qualify for a full state pension. Would it be worth it for me to start making voluntary contributions from here in China so that I can qualify for the pension 30 years later (I’m 35), or at this point would I be better off looking for a private pension plan? If a private pension plan is better, are there any that you could recommend?

Thank you for taking the time to read this any advice would be much appreciated!

 

[devyn]

@david_loves_boats As I understand, even if you paid all of the voluntary contributions, you wouldn't get a penny of that pension until you are 68 (and the pension age is continually rising).

I'm certainly no expert, but the state pension doesn't seem like great value. I'm investing in ETFs for the foreseeable future, and will eventually buy some kind of private pension product.

 

[david_loves_boats]

@devyn Thank you for your reply! Would you mind explaining what ETFs are and why that’s better value than the state pension? I’m so clueless about investments in general.

 

[devyn]

@david_loves_boats It's just a way of investing, with your money spread out over a lot of assets (minimising risk) and minimal costs. The most common one is the S&P500. Pretty much everything I know about it I learned from a book called 'Millionaire Expat' by Andrew Hallam, you should check it out.

 

[monoxidial]

@david_loves_boats i do both. Rely on your private but keep the state as something in your back pocket.

As an expat you are entitled to pay CL2 contributions which is about 135 gbp a year for state pension. Pretty cheap tbf.

 

[zachgreenlee]

@david_loves_boats I’m a fully qualified UK financial advisor.

Do both. The UK state pension in later life will not provide you with a decent quality of living - especially if you wish to retire to the UK. There are also questions around whether or not it will even exist by the time you retire due to how it is funded. I am a similar age to you and I work on the assumption that the UK state pension will not be available for me.

In terms of private pensions you can look at both International SIPPs and QROPS/ROPS. These will allow you to get your money back to the UK without paying an exorbitant amount to the UK taxman, or similarly if retiring to an alternative location (you’re young, who knows where you will be in 35 years).

I strongly suggest speaking with a professional financial planner about this and am happy to suggest a couple of names if you’d like who are based in China but conform to UK regulatory standards.

An ETF is an ‘exchange traded fund’ - they’re generally a way of buying an entire market rather than a select number of stocks. This means your money basically just increases in line with the stock market. Just buying an ETF from an online broker doesn’t consider how you will be impacted by tax at a later date at all though.

 

[david_loves_boats]

@zachgreenlee Very good advice thank you for your reply!

 

[david_loves_boats]

@zachgreenlee One of my worries is after making 30 years of NI contributions, I find out that I don’t qualify for a pension over some technicality or the policy changes entirely by that time.

 

[zachgreenlee]

@david_loves_boats Yeah without some massive increase in the tax take, the aging population means it’s just going to be unsustainable for UKGOV to maintain the state pension in its current form in the long run. Bit of an open secret, but one no party who wants to win an election is going to address.

 

[everson]

@david_loves_boats How do you invest as an expat either into these etfs if you aren’t resident in the uk anymore? I have one at the moment but fees are ridiculous and want to pull out in what I’m in at the moment

 

[devyn]

@everson As long as you maintain a UK bank account, you should be able to open an account at a site such as Degiro (the one I use) or Interactive Brokers. My account did get flagged a couple of years ago because I listed my country of residence as China, but after I explained my situation they seemed OK with it.

 

[zachgreenlee]

@everson What product/provider are you currently with?

Other users are correct that there are providers which will allow you to open accounts without being UK resident, but it’s worth having a look at the current setup too to see what can be done with this.