State Pension When Working Abroad

If you will be working abroad in the near future you ought to consider the consequences for your State Pension. For details of the State Pension system see State Pensions. Whilst you are working and earning money in the UK you will usually be paying National Insurance contributions automatically. Your National Insurance record keeps track of the contributions you have made and is used to calculate your entitlement to certain state benefits, including the State Pension. If there are gaps in your record from years spent travelling, studying, out of work or out of the country, your entitlement to these benefits may be affected.

If you are planning to work abroad for the short-term and aim to return to the UK for or before your retirement, you may wish to make voluntary National Insurance contributions. This is a system which allows you to make National Insurance contributions when you are not required to do so, in order to protect your right to state benefits, including the State Pension. For more information on voluntary contributions see National Insurance Contribution Classes.

If you are working abroad for five years or more, you will usually be required to make contributions to that country's social security system, and may thus earn the right to some state pension from that country when you reach retirement age. If you are working abroad in a country which is part of the European Economic Area, or EEA, or the European Free Trade Agreement, or EFTA, including: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain, Sweden, Turkey, and the United Kingdom, your pension will be subject to standardised European rules. If you earn money and make contributions to the social security system of one or more countries in the EEA, your state pension will be calculated by each relevant country in turn and then be paid to you in the country where you are resident as a pensioner. This ensures that no one is penalised for taking advantage of the opportunity to work in and contribute to a variety of European countries.

If you are working abroad in a country outside the EEA, such as Australia or the United States of America, you will usually be required to contribute to their social security system and may be entitled to a state pension from this country on retirement. However, countries outside the EEA have no general rules and regulations governing state pensions and you may wish to continue making National Insurance contributions in the UK if you are planning to return there for your retirement. If you have questions that your employer is unable to answer, contact the Pension Service on 0845 606 0265 for more advice.