Where should I retire?

[zbc]

Looking for advice or direction of any sort. Currently late 50s and enjoying my role but probably hope to retire in about 5 years time. I currently work in Luxembourg for a very large multinational and could potentially work almost anywhere in the world. I've moved a lot in my career, mostly in the UK and various parts of Europe but also briefly further afield. I have a comfortable amount of savings and will pay off my mortgage next year.

My question is where I should choose to be when I stop working and retire (and rest assured I'll take some professional advice somewhere before taking any really significant decisions). I'll probably go elsewhere again to live when I retire but AIUI my pension would be paid by the country where I last worked. I understand that anywhere in the EU would consider the years that I paid into the UK in calculating my years worked but I can't find anywhere a tool that compares between countries. Pretty sure that the UK doesn't make much sense as i don't have enough to build a large pension pot that might compensate for whatever else I could get in the EU somewhere. Left field option would just to go work a few years somewhere that pays a lot and just invest the cash as most national retirement options aren't really that amazing.

[fat80b]

zbc said:

Looking for advice or direction of any sort. Currently late 50s and enjoying my role but probably hope to retire in about 5 years time. I currently work in Luxembourg for a very large multinational and could potentially work almost anywhere in the world. I've moved a lot in my career, mostly in the UK and various parts of Europe but also briefly further afield. I have a comfortable amount of savings and will pay off my mortgage next year.

My question is where I should choose to be when I stop working and retire (and rest assured I'll take some professional advice somewhere before taking any really significant decisions). I'll probably go elsewhere again to live when I retire but AIUI my pension would be paid by the country where I last worked. I understand that anywhere in the EU would consider the years that I paid into the UK in calculating my years worked but I can't find anywhere a tool that compares between countries. Pretty sure that the UK doesn't make much sense as i don't have enough to build a large pension pot that might compensate for whatever else I could get in the EU somewhere. Left field option would just to go work a few years somewhere that pays a lot and just invest the cash as most national retirement options aren't really that amazing.

I'm a bit confused - you say savings, but not pension pot, but also large multinational (that presumably comes with a pension component)

• Have you any UK DC or DB pensions that you are going to take?

• And have you any non UK pension-like provision?

• And do you have the 35 years UK NI contributions required to get the UK state pension

If you are truly global in terms of options, there are various locations that are more / less tax efficient to withdraw pension amounts from the various pots....

[JuanCarlosFandango]

Surely the question is where do you want to retire? And what do you want to do?

[JQ]

I can't help but am also slightly confused.

Is the question - I don't have a personal pension and want to retire to the EU country with the best state pension by moving there pre-retirement age?

[Armitage.Shanks]

It would help if you told us what nationality status you have - UK citizen?

If UK citizen and want to enjoy the benefits of NHS healthcare and decent weather then Gibraltar would be my call albeit you don't get much for your money property wise. Also I believe they've just put a hold on automatic residency permits.

[WayOutWest]

I think the OP is referring to this:
https://europa.eu/youreurope/citizens/work/retire-...


Likely there are a large amount of variables to consider, not just the pension amount itself. Healthcare, tax, property costs etc. It sounds like it might be a bit of a headache to calculate, so agree that you might want to draw up a shortlist of countries you'd like to live in based on other factors first such as climate, culture, food, language, tax, etc.

I'd have a good search on youtube, it is great for stuff like this e.g. start here
https://www.youtube.com/watch?v=D8tgnp4v5IY

But once you watch a couple the algorithm will suggest loads more.

[rhlshrm2430]

You are in a great situation to make a decision without restrictions - the mortgage is virtually paid off, you have some reasonable savings and you are free to live literally anywhere. Your pension will be payable from each of the countries where you paid into a pension, not necessarily the country where you retire. And, your UK + EU years of service can be counted together for eligibility, which is advantageous.

Because there is not exactly a comparison tool, most people in your circumstance gravitate towards making a lifestyle, tax efficiency and health care access decisions. To be honest, if you like the work you do, undertaking one last high-earning time somewhere will give you even more flexibility.

[zbc]

Apologies for the confusion and thanks for the advice so far.

There are two separate questions here which I think has caused the confusion. The one I don't need help with is "where do I want to live when I retire?" because as noted it's quite personal and relies on all sorts of things. What I'm trying to understand is where I should be at the moment of retirement because that will impact which country will fund my state pension?

[zbc]

fat80b said:

I'm a bit confused - you say savings, but not pension pot, but also large multinational (that presumably comes with a pension component)

• Have you any UK DC or DB pensions that you are going to take?

• And have you any non UK pension-like provision?

• And do you have the 35 years UK NI contributions required to get the UK state pension

If you are truly global in terms of options, there are various locations that are more / less tax efficient to withdraw pension amounts from the various pots....

Large multinational has no significant private pension scheme in Luxembourg.
Yes I have some UK DC and DB pensions but not large as I've moved around a bit
Non-UK private pension similar. It exists but isn't huge.
Yes I have 35 qualifying years or I will do in 5 years time.

[zbc]

JQ said:

I can't help but am also slightly confused.

Is the question - I don't have a personal pension and want to retire to the EU country with the best state pension by moving there pre-retirement age?

Sort of this yes but once you retire you don't have to stay there to get their pension. There are sometimes qualifying periods but it's stuff like this I'm looking for a link to understand the options better. I appreciate it's a broad question without simple answers.

[zbc]

Armitage.Shanks said:

It would help if you told us what nationality status you have - UK citizen?

If UK citizen and want to enjoy the benefits of NHS healthcare and decent weather then Gibraltar would be my call albeit you don't get much for your money property wise. Also I believe they've just put a hold on automatic residency permits.

UK/French so could be anywhere. Healthcare is a good point that wasn't yet in my table but again not so critical to the country where I am when I stop working.

[zbc]

WayOutWest said:

I think the OP is referring to this:
https://europa.eu/youreurope/citizens/work/retire-...


Likely there are a large amount of variables to consider, not just the pension amount itself. Healthcare, tax, property costs etc. It sounds like it might be a bit of a headache to calculate, so agree that you might want to draw up a shortlist of countries you'd like to live in based on other factors first such as climate, culture, food, language, tax, etc.

I'd have a good search on youtube, it is great for stuff like this e.g. start here
https://www.youtube.com/watch?v=D8tgnp4v5IY

But once you watch a couple the algorithm will suggest loads more.

Thanks WayOutWest a great place to start

[Michael_B]

zbc said:

What I'm trying to understand is where I should be at the moment of retirement because that will impact which country will fund my state pension?

I don't believe that it will.

zbc said:

Yes I have 35 qualifying years or I will do in 5 years time.

If you have paid UK NI (which it appears you have from the information above) then the UK will fund/pay your state pension, wherever you are in the world. In some countries it will be index-linked, in other it will be frozen at the value on the date of your retirement.

If you have accumulated pension rights across different countries (including EU ones which all have their own separate pension laws and schemes) by you and employers having paid into them, then those amounts are then paid separately to you when you retire, regardless of where you are living at the time. Of course, local income tax rules (of the place where are living when receiving the pensions) will apply.

[loudlashadjuster]

OP, how long you have been working in Lux for?

At 10 years you gain access to the Luxembourgish state pension which is hugely advantageous compared to the UK state pension. If 10+ years I assume you would also have exercised your rights under A50.

Also, be very careful about where you are tax resident and where your money is when you actually retire. I know one former colleague of mine who moved back to his home (EU) country before his formal retirement date (had some accrued holidays) and got his pension pot transferred directly to a local bank there when he did. His local tax authority considered it liable for tax and gobbled 50% of it(!) which wouldn't have happened if he was in Lux and had deposited the money in a Lux bank.

That was an eye-opener for me and many people who work with me as it was assumed that EU countries harmonised in this way, but that is defintely not the case.

[zbc]

Michael_B said:

zbc said:

What I'm trying to understand is where I should be at the moment of retirement because that will impact which country will fund my state pension?

I don't believe that it will.

zbc said:

Yes I have 35 qualifying years or I will do in 5 years time.

If you have paid UK NI (which it appears you have from the information above) then the UK will fund/pay your state pension, wherever you are in the world. In some countries it will be index-linked, in other it will be frozen at the value on the date of your retirement.

If you have accumulated pension rights across different countries (including EU ones which all have their own separate pension laws and schemes) by you and employers having paid into them, then those amounts are then paid separately to you when you retire, regardless of where you are living at the time. Of course, local income tax rules (of the place where are living when receiving the pensions) will apply.

Yes but as I still have a few more years to work I could arrange it to qualify for a pension from several different countries. Luxembourg is almost certain to be the most advantageous but I'm just looking for a tool or some central resource that would help me make a decision.

[zbc]

loudlashadjuster said:

OP, how long you have been working in Lux for?

At 10 years you gain access to the Luxembourgish state pension which is hugely advantageous compared to the UK state pension. If 10+ years I assume you would also have exercised your rights under A50.

Also, be very careful about where you are tax resident and where your money is when you actually retire. I know one former colleague of mine who moved back to his home (EU) country before his formal retirement date (had some accrued holidays) and got his pension pot transferred directly to a local bank there when he did. His local tax authority considered it liable for tax and gobbled 50% of it(!) which wouldn't have happened if he was in Lux and had deposited the money in a Lux bank.

That was an eye-opener for me and many people who work with me as it was assumed that EU countries harmonised in this way, but that is defintely not the case.

I've previously worked in Lux for about 6 years and am now here again for the last 6 months. During all that time I've been a frontalier and lived in France. I'm pretty sure that I should just work long enough to qualify for my 10 years in Lux badge but I'd also like to do something more interesting work wise which probably wouldn't be in Lux. If I was going to lose a few k per year I would accept that but if it's 20k maybe not. I suspect it's somewhere in the middle but would like to work out what.

Second point is a very good one. I'm aware of some of these issues and know I need to be careful on this point so will be taking advice.

[loudlashadjuster]

Well, the max Lux state pension is a frankly astonishing €10,884 per month, so compared to the max UK figure of about £950 there is a big difference, yes.

[leef44]

loudlashadjuster said:

Well, the max Lux state pension is a frankly astonishing 10,884 per month, so compared to the max UK figure of about £950 there is a big difference, yes.

I was astonished by this amount so did a bit of research. That is the maximum state pension income for those who have paid in 40 years at the maximum ceiling contribution. That contribution rate currently sits at 13,500 per month.

The contributions are bigger than the state pension income to ensure the financial sustainability and social equity of the overall pension system. So it's worth putting this into context when comparing to the UK system which is unsustainable.

[loudlashadjuster]

leef44 said:

loudlashadjuster said:

Well, the max Lux state pension is a frankly astonishing 10,884 per month, so compared to the max UK figure of about £950 there is a big difference, yes.

I was astonished by this amount so did a bit of research. That is the maximum state pension income for those who have paid in 40 years at the maximum ceiling contribution. That contribution rate currently sits at 13,500 per month.

The contributions are bigger than the state pension income to ensure the financial sustainability and social equity of the overall pension system. So it's worth putting this into context when comparing to the UK system which is unsustainable.

Yes, it is a big number. But even without the full amount paid-in, many people I know here are still easily looking at 3-5x the pension they'd have gotten in the UK.

[Michael_B]

loudlashadjuster said:

Yes, it is a big number. But even without the full amount paid-in, many people I know here are still easily looking at 3-5x the pension they'd have gotten in the UK.

Perhaps linked to the fact that employee, employer *and* the government all put in 8% each, so 24% of gross salary obviously helps fund quite a generous scheme

Here in Switzerland the state pension does have an earnings-related element, though not as massive as Luxembourg. The minimum monthly state pension for the full 44 years contributions is the equivalent of 1'350 and the maximum 2'700. But that is for a contribution of a measly 4,35% each from the employer/employee and nothing from the state.

As the above amounts would barely cover most people's rent*, let alone other living costs, there is also an obligatory workplace DC pension, where the employer must match the employee's contribution upto certain percentages for certain age groups. This is quite flexible and tax-efficient; each time I renegotiated my salary, I demanded that the company to pay proportionally more into my pension until reaching the legal maximum. For the past twelve years, the company pays 22% of gross salary into the scheme and I pay nothing, although if I like I can put in another 10% and deduct that from taxable income.

From the sound of it, the Luxembourg arrangement is a sort of combination of the two, plus hefty state support on top.

* Only 18% of the population are owner-occupiers in Geneva, in the country as a whole it is 36%, everyone else rents.

Edited by Michael_B on Monday 24th November 16:59