How to manage your pensions as an expat

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Expats travel the world, but can their pensions travel with them? ING discusses pension planning for expats. [Contributed by ING Belgium]

Banking in Belgium – INGExpats travel the world, but what happens to their state pension, company pension and private pension when they move abroad?

For a local employee who stays all his or her career in one country with the same employer, things are already not so easy to understand, to plan for, or to optimise. Thus pension matters are exponentially more complex for expats, and the more countries they live and work in, or the more employers they work for, the more difficult planning becomes. By pension age, your first employer may not be around anymore or have changed name a few times.

On the state pension side, things are reasonably well organised within the European Union and with the countries your home country has Social Security Treaties with. For other countries there may be a special state pension scheme, for example, DOSZ-OSSOM (now called DIBISS) in Belgium. Still it is a big administrative hassle to keep all your pension data from all those different countries up to date; and when you will qualify for your pension it takes time before you actually get your pay out in bits and pieces from all the different pension administrations involved.

On the company pension side, fewer companies that one would think have the situation fully under control. They will typically either make a 'pension promise' (not to be recommended from a company perspective) or an 'international pension scheme' often offshore (not always easy to run and not always easy to compare with what the peers in the home country will receive). It gets particularly complex when you change employer or when you often move between countries. The issue is always the same: keeping track of the pension bits and pieces you have built up with the different employers in different countries, and learning how to comply with local and international regulations and the taxation of the payments in the pension scheme, income in the scheme and, last but not least, the eventual pay out of the pension form the company pension fund.

The private pension is the easiest one if there are no fiscal advantages related to it. Then in fact it concerns regular savings and investments for a future purpose, income after retirement. Yet many countries offer fiscally facilitated private pension schemes these days, partly because they are short of funds and keep on lowering the amount of state pension they promise or keep on increasing the age at which one can take his or her state pension.

Quite a few expats take out these fiscally facilitated private pension schemes but the conditions linked to them sometimes pose problems when the expat moves to another country. All in all, good administration is the key to as painless as possible retirement for expats. Start with preparing for your pension today or at as young age as possible.

Contributed by Dave Deruytter, Head of Expats and Non-Residents / ING Belgium

ING Bank Belgium

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