Retirement planning for a 30-something Canadian in the UK

January 9, 2016 3:57 AM

I'm a Canadian citizen, resident and working in the UK, but I also want to go home eventually and to work more in Canada. How do I plan for old age and retirement?

I've been in the UK for 4 years. I want to continue working here for some time although it is hard to predict how long that will be for. I also I would like to work again and retire in Canada. Getting UK citizenship is not on the table. I'm early 30s, healthy, single with no dependents and no debt.

My possibly rational fear is that I will be 'stateless' for the purposes of getting a pension Canada Pension Plan and OAP because I haven't lived/worked in either country long enough, or that there are taxes loopholes or savings gotchas I'm not thinking of. I don't make much money (roughly equivalent to ~50,000 CAD per annum). I have a net worth of 50,000 CAD (split between cash and investments in the UK and Canada) and save each month.

What questions do I need to ask to start breaking down my vague worries about into answers? Here is my situation.

UK
- My employer pays into a compulsory, tiny pension plan. Will I lose access to this when I'm older or am I at a particular disadvantage here because I'm not British? What questions should I be asking my workplace pension provider?
- I have a small stocks and shares ISA I view as a long term investment and a plan to put some money into ETFs. When I move back to Canada do I have to cash out on these things and close those accounts?

Canada
- A tiny RRSP which I don't contribute to right now because I don't work in Canada
- Similarly, I can't contribute to the TSFA because I'm not working there
- Similar to what I do with my stocks and shares ISA

General
- Who do I turn to for advice? Should I look for a fee-based planner? In which case what country would that be in?
- What general reading should I be doing on retirement planning?
- Vis a vis being an expat, are there recommended books / Websites for those in my situation?

posted by psychic tee vee to Work & Money (2 answers total)

A few specific answers/clarifications:

UK Pension
I think the first questions to ask your UK pension provider is: are you required to transfer your pension to a private administrator when 1) your employment ends? 2) when your UK residency ends? Different plans have different rules about where your funds are stored and it's important to know how your funds transfer (i.e. lump-sum, annuity, etc).

ISA/TFSA
In general, these are based on your residence. When your UK residence ends, you would need to close the account. Similarly, you earn TFSA contribution room in Canada when your residency begins, regardless of whether you're working or not.

I would suggest pursuing investment strategies in Canada and the UK separately, since you have different objectives for each. e.g. your time horizon on UK investments is likely shorter than Canadian investments if you intend for your ultimate retirement to be in Canada. Keep in mind that although you can't hold an ISA in the UK after you return to Canada, you can certainly still hold investments that aren't in an ISA. Holding investments in multiple currencies also helps mitigate your risk against exchange fluctuation as well. When choosing an investment broker, you may want to heavily investigate their online services and make sure that they will be accessible easily from abroad. Similarly, although you can't access TFSA and RRSP plans at the moment in Canada, you can still hold self-directed investments in Canada.

I think the key here is to pursue separate financial advise in each country and be clear (with yourself) about how your objectives differ with the money that you put in each country.
posted by bkpiano at 6:09 PM on January 9, 2016

- What general reading should I be doing on retirement planning?

Anything and everything you see. There are lots of articles on the web about saving for retirement and they all come down to a few basic strategies:

1. Put as much into your retirement investments as you can. 10% of your monthly gross income is a low minimum.
2. Live beneath your means.
3. Invest in indexes, not individual stocks.
4. If you can use pre-tax money or have a match from your employer, do it.
5. The older you get, the more conservative your investments need to be.
6. Invest for the long term and ride out slight declines.

- Vis a vis being an expat, are there recommended books / Websites for those in my situation?

You might want to get a short-term subscription to the Wall Street Journal so you can read their past (very good) articles on retirement planning. I don't know if they have a Canadian or UK edition but their US edition has constant good advice, incuding articles on being a US expat which might be useful or get you to ask the right questions.
posted by ITravelMontana at 10:02 PM on January 9, 2016