Transfer UK or Overseas State Pension Credits?
Published / Last Updated on 02/03/2023
Many of us have been internationally mobile at some point in our working lives. You may be a:
- UK citizen that is living in the UK now but worked overseas for a period and paid social security contributions overseas meaning you have built up state pension benefits overseas in addition to UK state pension benefits.
- UK citizen living overseas, having worked initially in the UK and built-up state pensions rights in the UK but now overseas and paid social security contributions overseas meaning you have built up state pension benefits overseas in addition to UK state pension benefits.
- Foreign national, living in UK or overseas now and at some point, paid UK National Insurance contributions to build up UK state pension rights.
Social Security Treaty:
The UK has signed reciprocal social security treaties with several countries. This means that your UK state pension rights will increase each year (usually inflation linked) and any overseas state pension rights should also increase, both whether you are living in UK or overseas.
If you live overseas and there is no reciprocal social security between the UK and where you live, you will not get any inflationary or other increases on UK State Pensions.
The UK has reciprocal social security treaties with EU countries and EEA countries (Iceland, Lichtenstein, Norway and Switzerland) and also some non EEA countries see: https://www.gov.uk/government/publications/reciprocal-agreements/reciprocal-agreements
Merging State Pensions?
When you reach your state retirement age in the country that you live in, your UK national insurance credits may be transferred to the overseas state pension scheme provided there is a reciprocal agreement to then build up credits in the country that you live for your state pension. The state pension provider then contacts the overseas state pension provider to match up the two pensions and work out which is the better uption for you.
Live in UK
- If you do not have 35 years credits at state pension age in the UK system and have overseas credits, the International Pensions Centre (UK) will contact the relevant overseas authority (if there is a reciprocal agreement) to work out whether you are better off transferring overseas credits to the UK system to uplift your UK state pension or keep them separate.
- If you already have 35 years credits at state pension in the UK system, then transferring overseas credits in will not improve your UK state pension and you will draw each state pension seperately.
Live Overseas
- Your overseas state pension provider will work out what credits you have with their state pension and request details of any UK state pension credits built up.
- If you do not have enough overseas credits in their state pension system and have UK credits (if there is a reciprocal agreement) they will work out if you are better off transferring UK credits to the overseas system to uplift your overseas state pension or keep them separate.
- If you already have maximum credits in the overseas system, then you will likely draw your UK and overseas state pensions seperately.
Merging state pension credits now seems to have changed with many people now having a UK state pension and seperate overseas state pension as many overseas pensions are more generous than the UK scheme. It appears now that in most cases, people are actually better off keeping what state pensions they have built up in each country separate although you will be advised at the time.
