Hi all,

I am moving soon to Switzerland to live and work, but i don't want my years of N.I and Tax Contribution to the UK Government to get wasted taking into account that i have been working since i was 16.

I feared that if i stop paying them taxes i might not get any state pension when i get older.

Someone told me of "Voluntary Tax Contribution" has anyone heard of this??

Any input is gladly appreciated. Thank you.

check out link in the below:

http://www.hmrc.gov.uk/cnr/osc.htm

i guess it depends how old you are, but if you're under 40, i wouldn't bank on getting anything from the govt. the debt, pensions, demographics are totally ed. unfunded pensions are probably the biggest ponzi scheme in existence and unfortunately, i'm on the sucker end of it

Hi, Thanks for the link. I'm 26 yrs old, so you reckon i shouldn't expect anything from the UK Government then?

Don't be too hasty. You're only 26 and who knows what the future holds - you may wind up going back to the UK at some point. In order to protect your state pension entitlements you only have to pay voluntary national insurance contributions whilst you're non resident. You don't have to pay UK income tax. Give them a call on the number Phil MCR's link provides and discuss it with them, especially the implications of paying avs here.

Due to the Bi-lateral agreement any AHV (state pension) you pay here can be added to your British state pension. I started paying NI in England at the age of 14 and I've worked in Switzerland since 1981, my former payments from England will make up the deficiency (maybe 1 year )) in my state pension here in Switzerland.

It maybe a good idea for your partner to pay the minimal NI payments during your time here if she's not working.

Paying tax to two countries will be of no benefit to you. (IMO?

Does anyone know how private pension works in Switzerland?

I wanted to start paying a private pension, but i wanted it out of the UK if possible. Why? because the UK Policy is stupid and greedy. Imagine, they will still tax your private pension? WTF! They should take into consideration that the money you set aside for this pension, is your money that has already been taxed by them.

So any inputs on this is gladly appreciated. Thanks.

PBI: Not sure about voluntary tax, but from what I recently read in the link below, if the new Coalition govt. in the UK has its way, Britain may try to adopt the US system and require its own citizens to start filing/paying tax no matter where they live:

http://blogs.telegraph.co.uk/finance...s-style-taxes/

UGH! If that happens (I hope it doesn't), get ready for taxation without representation

precisely, the govt needs money and pension pots are a nice juicy target. i'd be surprised if they weren't raided (again) in the next few years.

I hope this doesn't happen. Otherwise, I will not hesitate giving away my British Citizenship and become a Swiss Citizen instead haha!

Can you get your UK years added to your Swiss years and thus get a bigger Swiss pension? Or is it only possible to get a separate UK pension, which is probably less attractive then a consolidated CH pension?

You are referring to Voluntary Class III NI Contributions. If you do not yet have eleven years of NIC contributions (just barely possible if you are 26) then you should probably pay voluntary contributions until you have that many years of credits. (The maximum number of years needed for the maximum basic state pension (not including income-based additions) will be 30 years. Contributions beyond that will be wasted.) You may choose to pay voluntary contributions for as many years as you like, up to 30.

All you need to know is here: http://www.hmrc.gov.uk/payinghmrc/class3nics.htm

The cost of additional years used to be around £350; it's now nearly doubled, but is still good value.

There are totalisation agreements between the UK and all EU/EEA/Swiss countries plus the USA. These relieve workers and the self-employed from double liability. Switzerland, but not the UK, does not allow voluntary contributions if an AVS participant resides in another EU/EEA country. If you do not have sufficient years of contributions in one of those countries that requires a minimum number of years (11 for the UK, 10 for the USA) then your contributions will be 'totalised' into one or more other countries. But you cannot get credit for the same year in two different countries, so if you have worked, say, in 2010 in both Switzerland and the UK those half-years can't be totalised. But they can be credited to two separate state pensions.

Ah, the innocence of youth. (I'm not much older than you )

Nah, mate, forget it. You need to start saving for yourself, using multiple life insurances to create a pension, and opt out of any government schemes. The chances of there being any sort viable pension by the time you retire are around zero and nada.

They are legal Ponzi schemes, as stated above, and is the reason why governments have a real headache as they know there is not much they can do.

UK state pension, like its US counterpart but unlike most others, is skewed to benefit the low-paid.

The accusation that it is a Ponzi is predicated on the assumption that the British Government will either go bankrupt (not likely: we are not in a Greece situation where the country may go off the euro and devalue) or reduce benefits (again not likely because UK state pensions are paltry -- but still generous by comparison with NICs for the low paid.

Look at the numbers and ignore the political posturing.

wrong. those aren't the only ways that the pension scheme is ponzi-like, but even if they were:

1. the UK could easily go bankrupt. there is a massive structural deficit and the UK is already heavily in debt. there's a reason that the UK's AAA rating is at risk

2. pensions are either paltry or not. if they are paltry, then by definition, not enough and you need to make own provisions. if not paltry, then your argument that they are too small to reduce doesn't hold. anyway, pensions can always be reduced or raided. probably stealthier ways to do this by changing the way the pension is inflation indexed.

assuming you start work at 20 and retire at 65 (yeah, fat chance, watch the age get pushed further and further back) then 45 years is a long time for stuff to go wrong.

you just need to look at demographics to see that it will fall apart. but we can look to japan for an example - they are much bigger savers, but they will hit crunch time soon...

"accountants claim" . . . hmmmm.

(BTW - British expats still get representation though, through postal voting etc)

Ah, the ignorance of 30-somethings (in my case ).

Andy02, I don't doubt your words, save for the fact that the UK is unlikely to go bankrupt. After the events of the past couple of years, I don't discount that possibility. Before then, I might have. But no longer, especially given the current debt levels that the country has been saddled with and the lack of economic growth coming out of the recession compared to other European nations.

Granted, the country might not go technically bankrupt, but it is going to run out of money at some stage: older citizens, fewer jobs, no large-scale home-based industry to support the economy, more imports than exports etc.

Rather than going technically bankrupt, they might just cut certain support systems back completely - pensions is one such possibility, raising the working age (technically cutting back the pension contributions required while getting more money from workers - double bonus for the government!) is another. We've been hearing for a long while that "citizens" should start saving and topping up their State pensions as these will not be enough to survive on in the future.

I've long held the belief that I shouldn't rely on a UK State pension (not that I've worked much in the UK anyway) and decided not to bother topping up or contributing beyond my NI deductions at the time. Cynical maybe.

Regarding benefits in UK vs. NICs, are you comparing apples with apples? A GBP is worth more in an NIC, but not much in the UK. Genuine question: what's your view on the comparative basis for your statement?

I was in the periphery of the negotiation of the US-UK totalisation agreement in the 1970s. And I often provide (free) advice on how to "game" the system.

As I said, British state pensions are paltry, indeed among the lowest (considering cost of living) in the EU/EEA. But they are also the cheapest - indeed, you can get state pension credits for free (either because you are on benefit or because you are low-paid). But even if you pay voluntary Class III NICs it can be considered a bargain because it's inflation-proofed.

And it is unthinkable that the government would scale back basic pension. There is a means-tested add-on that might be cut back, and they might steal part of the earnings-related addition, but to cut back basic state pension would leave people to starve to death. It's only £95.25 a week: http://www.thepensionservice.gov.uk/...tre/pm/pm2.asp

The Government can always print money: that's the difference between the euro zone and the Sterling area (Britain and islands and a few colonies). Inflation may erode the value of a state pension but it will do the same to any private pension.

I do not pretend that the state pension is anything other than what it is: roughly £100 a week, not enough to live on. But that doesn't make it any less of an actuarial bargain.

I am reading up some of the topics and thought I would contribute my bit; however relevant.

CrazySniper
You are only 26, so probably are not planning your retirement at this stage and I wouldn't bother.
Just to make you feel better; retirement age in the Uk I am pretty sure will be 75 plus for you.
If you hold a UK passport, you know that you will always be able to run back to the UK and claim benefits.

Phil_MCR
You are spot on the NH Pension Scheme is a Ponzi Scheme.

Andy02
Some of what you say is true and I believe having read some of your posts that you certainly won't be dependent on UK state pensions.

Carlos_R
"Take out Multiple Life Insurances"
You are having a laugh; no 26 year old would be advised to take out anything like that especially with no dependents. I wonder how many of these funds/investments would be worth anything when they mature and what will they actually be worth in real terms. Buy a loaf of bead every week perhaps but read my theory below.


The UK Government finances will be F*ked for many years and will be drained as it is now by:
1) Social Welfare - scroungers and broken families
2) National Health - people living longer; exotic expensive drugs
3) Pensions - people living longer and having no private pensions

This is what is going to happen in my opinion:

1) Retirement age will be increased because people will be living longer.
I would guess someone who is 45 now, retirement age will be 70 plus.

2) There will be no basic state pension. It will be means tested. So pensions will be like Tax Credits at the moment. You will get from the Government what they decide you need to live on less what over pensions you took out.

3) Companies will not be contributing to employers pension schemes. They won't be able to afford them and it is not beneficial for the owners (shareholders) to pay employer pension contributions and if you look at (2) above, it is not even beneficial for the employee.

4) I think that the government realises that people will not bother taking private pensions out if they can see (2) and (3). So the solution will be that the government comes up with a scheme where you are deducted 10% of your Gross Salary by your employer or through your PAYE/NI scheme. This will be put into an authorised approved pension of your choice.
This will solve the governments problem of having to tell you that personal tax has gone up by 10% and gives jobs for the boys in the City of London playing and milking your dosh.

5) The government needs more tax anyway.
I expect the UK government to start charging tax on capital like Switzerland (say 0.2% on capital) because lets face it, the only people in the UK that will have money are those with assets as wages in real term will be going down.

Take a typical middle class UK person in his mid 40's
He may well have struggled to save for a deposit for a flat and then worked his way up the property market.
He may well have taken out a Private Pension Fund, not realising that it would be worth nothing in real terms at retirement and milked in commission and management fees.
Probably when he retires (I guess 70 plus) the UK government will say.
Oh, you were daft enough to buy your house; so you have no accomodation problems and you need £200 a week to live on but Oh, you were daft enough to take out a pension and that gives you £150 a week so we only need to give you £50 a week pension (means tested).
Later, when you can no longer look after yourself, you will be atken to a Nursing Home and when you drop dead, your house will be sold and the proceeds used to pay your nursing.

Take a Yobo.
He was unemployed half the time getting benefits and working for cash on the side.
Down the pup every Friday and Saturday night, drinking and doing drugs.
He lives in a subsidised council/housing association house.
He reaches retirement age.
Government has to pay his rent to the Housing Association and give him the full £200 a week to live on until he drops dead or goes to a Nursing Home.

Question? Who is the mug?

There will be people like myself that studied and worked hard and do not feel that we should continually subsidise these people (lets not talk about the pre-meditated teenage single mothers).

We have stopped making any contributions into a Personal Pension Plan and we will make sure that we have no assets on paper or blow the lot before we reach retirement age.








This makes me believe that it is better to have no assets on paper.

Cashboy has written the UK Pension Version of the Ten Commandments.....

I realise this is an old topic, but it’s been bothering me. There have been some good discussions on the future of the UK system, but could we look at the current situation for a moment for those retiring in the UK? I’m going to make some simple assumptions. First assumption: the cost of a qualifying year is roughly £625. Second assumption: one extra qualifying year gives you £169 a year extra on your State Pension (£3.25 a week).

If you ‘live’ on State Pension alone, you have (maximum) roughly £5,070 a year. You soon discover that you can’t ‘live’ in the UK on this amount. You require extra (means tested) benefits just for a basic lifestyle.

Therefore you save, or invest, and sacrifice whilst below pension age. Upon retirement, the result is a yearly income of £17,500, or a total income of £22,500 a year. Because you’re age 65, your personal allowance is roughly £9,500 and you’ll pay 20% tax on the remainder (£2,600 tax). You’re now only slightly worse off financially than the average UK worker. You probably won’t qualify for any means tested benefits.

The trouble is you don’t really fancy a lifestyle “only slightly worse than the average UK worker”. You sacrifice more. The result is a yearly income of £24,000 a year, or a total of £29,000 a year including the State Pension. There is one problem though. Your personal allowance is now only £6,475 a year (standard personal allowance) even though you’re 65 or older. You’re now paying £4,505 a year in taxes, or almost 90% of your State Pension. The extra £6,500 of income has only netted £4,600 after taxes.

But your spouse refuses to fly Ryanair on holiday. So, more sacrifice for a retirement income of £50,000 a year. It would be comprised of a £40,000 pension, £5,000 UK State Pension, and £5,000 in taxable interest on a fair amount of savings. You’ve now followed the Government(s) advice and provided adequately for your retirement, and have some savings as well. It’s also £9,330 a year in taxes, with the last £6,125 of income at the 40% rate (that’s 40% tax on all your taxable savings income, plus. At least your ISAs aren’t taxed for now).

At these income levels, you’re not only paying yourself for your own State Pension but you’re also paying nearly a full State Pension (in benefits) for your next door neighbour who has by choice never worked a day in their life. You now understand some of the motives behind the Governments need for you to be able to provide for yourself in retirement. You’re struggling to understand how, simply as a self-sufficient pensioner, you are suddenly part of the large group that is a financial burden on society. It appears to be the other way around.

I agree with Andy02, the UK Government will not want old age “benefits” of some description to disappear. The UK has too many people locked into a “benefits lifestyle”. I recently heard (Michael Portillo, I think, on the “This Week” programme) that 1/3 of all UK households depend on benefits for at least 50% of their income. Well, he was a Tory. He would point that out. As Andy02 said, the UK and US systems are skewed to benefit the low paid.

To some extent, I agree with Cashboy. “Who is the mug?” There’s a lot of sacrificing going on in some of those scenarios, and not by your next door neighbour. (Let me quickly say that I support benefits for those who have found themselves in unfortunate circumstances. Many do deserve assistance.)

And finally for the OP, crazysniper. Obviously, you will decide which of the above scenarios you want to live in. If it’s £5,000 a year only, then the extra £3 a week won’t matter. You’re “guaranteed” a basic amount if your total income and assets are low enough (pension credits). If you have one of the other scenarios in mind, it is a pretty “paltry” sum. Even so, every Pound counts. But it’s not automatically £3 a week, (and for simplicity) it can be only £1.80 a week, or less, thanks to tax. Once retired, and provided you’ve sacrificed (or should that be “planned wisely”), tax brackets and inflation will be your real concerns.

Go for your 2055 equivalent of the £50,000 scenario. You won’t have to fly Ryanair or whoever it is then, and you can imagine that with your tax payments you’re actually helping to prevent a few fellow old age pensioners from starving. Realistically though, it’s tax revenues, and won’t be used to pay pensions. It will just barely cover the expense of some MPs fact finding mission to Greece to discover ways of stopping these damned old age pensioners from being such a drain on the system. Most depressing of all, in the future we’ll look back on this situation as the good ol’ days. Most worrying of all, I sound like some right wing Republican!

I know there’s nothing new here, and I apologise. It just seems that looking at the actual figures clarifies the likely possible pain for anyone planning to provide for their own retirement. Once all your income (from pensions, savings, investments, etc.) reaches £28,930 a year (with the reduction starting at £22,900), you’re treated for income tax purposes equal to anyone else who is working. The Chancellor has no intention of rewarding you in any way for your valuable diligence, even if you are on a State Pension. Any tax proposal that increases the income tax for those workers affects you equally, such as a change in thresholds or an increase in tax rates. This is not meant to discourage those who are planning for a self-sufficient retirement. It’s simply a reality check.