As an expat moving to Belgium, should you take your retirement savings with you? Get advice on your pension transfer options in Belgium.
When moving to another country, you have two options in regards to your retirement savings: leave them where they are in your home country, or bring them with you.
Which is the right decision depends on your own circumstances – such as how long you’re planning on being in Belgium – and whether your home country has any agreements with Belgium in terms of pension taxation.
In this guide, expat finance expert Dave Deruytter of ING Belgium explains the key things you need to consider before transferring your pension savings to Belgium.
With over 50 years of experience in advising expats on their finances, ING offers a range of banking, insurance and financial services to professionals moving to Belgium - from bank accounts to mortgages and advice on the Belgian pension system.
Belgian pension transfers: does your country have a reciprocal agreement?
Belgium has agreements with some countries which prevent savers from being punitively taxed when they move their pensions.
For example, if you’re moving from the UK, many Belgian pension schemes fall under the QROPS scheme. This means that you’ll only need to pay 25% tax on the transfer if you live outside the European Economic Area (EEA) or plan to do so within the next five years.
While moving your pension under this kind of scheme will allow you to consolidate your savings, you will lose any regulatory protections on offer in your home country and you could face a big tax bill should you try and revert your plan back if you return to your home country.
Dave says: “Before considering a pension transfer, you should take independent professional advice on how the taxation systems on retirement savings work in your home country and Belgium, as transfers from some countries can incur charges and a clash of systems can result in double taxation.”
Things to consider before transferring pensions to Belgium
Maintaining your pension pots
Maintaining pension pots in different countries can be a complicated matter. This is because taxation on retirement savings varies significantly from country to country. So as well as keeping on top of where your savings pots are, you’ll need to be sure you stand to get a good deal before transferring.
Dave says: “Pension planning is a very long-term business, and there additional complexities in this area for expats. It’s crucial to always keep a good filing system and ensure you’re on top of your different policies.”
“Serial expats who regularly move countries might find it doesn’t make sense to constantly move their pensions.”
Knowing when you plan to move home and retire
In some cases, you might be better sticking with what you know and keeping your pension savings in your home country, especially if you believe you could be returning home in the next few years.
Dave says: “There are many good reasons to keep your pensions in your home country. An important question to ask is this: how can you be sure you’ll still be in Belgium by the time you reach pension age?”
“For many expats, it’s rarely a good idea to move pensions. If you’re unsure, leave your savings where they are and then take legal advice when you get closer to pension age.”
Leaving your pensions in your home country
If you choose not to transfer your pensions, they’ll continue to be held by your provider until you claim them upon retirement. For example, UK citizens can request a payment of up to 25% of the value of their pension as a lump sum from age 55, before using the remainder in their retirement.
Depending on where you’re moving from, you may or may not be able to continue paying into a pension in your home country. If you are, you might find that your tax relief is limited as you now reside abroad.
Types of pension in Belgium
“There are three main pension pillars in Belgium: state, company, and private, and each comes with its own regulations and complexities”, says Dave.
State pension agreements are relatively well governed from country to country in the European Union, and some countries outside of the EU have their own reciprocal arrangements.
If you’re moving to Belgium from outside of the EU, you can speak to the Belgian overseas social security department for advice.
Company pensions can be difficult to manage, especially for those who change employer or move from country to country regularly. Expats who do this will need to keep clear records of their pots in each country.
Private pensions are the easiest type to transfer if there are no fiscal advantages related to keeping them in your home country. Some pension schemes will have conditions that make it difficult to transfer your private pensions elsewhere.
Learn all you need to know about retirement saving in Belgium in our guide on Belgian pensions and your entitlements.
Dave Deruytter is head of expatriates at ING Belgium and has first-hand experience of living as an expat around Europe. Dave boasts more than 30 years of experience in expat financial advice on everything from bank accounts to insurance and real estate.Explore transferring a foreign pension