Expat Portable Pension: How Does It Work?

    As more industries today include a global workforce, planning for your retirement means you need to consider modern solutions, especially if you’re an expat. Fortunately, most countries in Europe allow expats to take advantage of their pensions wherever they are in the world. However, there are still some challenges to consider.

    The truth about expat pensions

    If you’re already planning for your retirement, you’ll need to plan significantly. For an expat, planning will require more thought and consideration. Of course, the main goal of planning is to ensure that you’re financially capable of covering your expenses and still living quite comfortably while enjoying your golden years. We’re all too familiar with the dilemma of growing old and not having enough money to pay for everyday expenses and health needs.

    Expats do have an advantage, especially when they’re employed favorably. In general, they are typically engaged in high-paying jobs or run businesses. However, it doesn’t erase the fact that planning for your retirement can be somewhat difficult when you’re not permanently living in one country for a long time.

    How to plan for your retirement if you’re eligible for a public pension

    According to Pensions for Expats, the rules vary depending on your home country and the country where you work. You could get a pension from your home country as well as your current country of residence. In the EU, for example, you’re eligible to receive a state pension from any country you’ve worked in within the region.

    Will you lose your pension if you change jobs?

    One of the primary issues affecting pension in European companies is that there’s a possibility to lose pension when you change employers. In such a case, the employee typically gets reimbursed only for their contributions.

    How difficult is it to move your pension to a different country?

    For expats who’ve worked in multiple countries over the years, managing a pension fund in each of these countries can be complicated. Even if all the countries are within the EU region, the regulatory differences could block you from taking advantage of other supplementary benefits. One specific factor that makes accumulating a pension as an expat a difficult journey is tax.

    Because of the different tax regulations that govern each country within the EU, there’s a possibility for one person’s pension to be taxed multiple times, thus making it unrealistic to move funds in and out of one country. The only time you will likely qualify for tax relief is when you invest your money in the country and decide to retire there.

    The issue of pension portability in the EU region isn’t likely to meet a favorable resolution in the coming years. For expats, building their pension funds will only have maximum returns if they stay with one employer or work in one country for an extended period. However, multiple employment posts and moving around from one country to another isn’t ideal as the small amount you accumulate paying for a pension scheme will be hard to transfer once you decide to retire or settle in your home country.

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