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I'm currently living in Cambridge, UK. My company contributes 5-15% of the salary to the pension. I'm planning to permanently move abroad in 3 years. I can opt out of the pension, or stay in the pension plan for now and take money out when I leave. In terms of tax, fees and benefits, which method is the better one?

  • Do you have to contribute to get matching? – Vicky Mar 28 at 16:32
  • I can say now, having a pension stuck in the UK while living abroad can be a real hassle, I have been in a similar situation and it can cause tax complications in the country you move to, is hard to get at, and most important, there is no way to cancel and close the account, even with a penalty before retirement age. Not necessarily best financially but I would personally say for the sake of future sanity, avoid opening a UK pension like the plague if you plan to move abroad. – Vality Mar 28 at 18:40
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Assuming that the "5-15%" means that they contribute 5%, and then they match whatever you contribute up to an additional 5% (so 15% possible total) then there would be no reason at all to opt out of the "free" 5% unless it is a trade-off versus another benefit that you would rather have instead.

For the remainder, how much free cash-flow do you have? In other words, can you afford to contribute 5% in order to get that additional 5% match? If you can, then you should at least consider it. Any fees you pay will be small in comparison to the contributions you get from the company. You won't pay tax on the money you put in and whether you pay tax on it when you get it out will depend on the situation at that time, but remember you're effectively getting a return of 100% on those contributions from the company matching, so it's unlikely to end up costing you.

In terms of what to do when you move abroad, you could either leave the pension pot here to accumulate until you are at least 55 (you can't withdraw from a pension before that age), or you could transfer it abroad. More information on those options is available from the Government.

Note I am not a financial advisor or tax advisor so please treat this advice as worth what you paid for it. Ideally, consult a real IFA!

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