What does the U.K. do for retirement savings?

[frlcb]

There is an ISA, which is like a Roth IRA I think. There us also something called a SIPP, but I don't know exactly what it is. And you can start a private pension. But I have no idea if any of those are pre tax, I just remember my dh talking about them. Can you not take part of your salary and put it into your 401k if you are atill working for your US company?

[irish]

A contribution towards a company pension would generally be pre-tax, to encourage people to save for their retirement and not be relying fully on state pension. The same with other approved retirement savings plans as mentioned. I'm in Ireland not the UK, but things like this are based on the same principles in both countries.

[teatimefor2]

Aug 7, 2014 6:53:31 GMT -5 frlcb said:

There is an ISA, which is like a Roth IRA I think. There us also something called a SIPP, but I don't know exactly what it is. And you can start a private pension. But I have no idea if any of those are pre tax, I just remember my dh talking about them. Can you not take part of your salary and put it into your 401k if you are atill working for your US company?

The ISA is great, showing my MM side.  Basically you can put money into it, like a ROTH, and the growth is not taxed. You and your DH can both have one regardless if you are working or not.  It is capped annually with how much you can invest and that money is split between liquid cash and stocks.  Here is some information on the HSBC ISA: www.hsbc.co.uk/1/2/savings-accounts/cash-isa?HBEU_dyn_lnk=SavingsAccount_FilterTool_CasheISA_More_Btn.  The savings rates with the ISA are tied to the national rates, so they are the same for all banks.  However, different levels within the bank (premier customer, etc), means you may get a better rate.

Additionally, a lot of companies in the UK offer 401k, which they call pensions.  My company gave up to 3% my salary to my pension as long as I contributed the same.  Basically it worked exactly the same as a US 401K and as I recall it was pre-taxed.  Now the one important thing about this, is for the UK Pension, you cannot just transfer it into the US when you move back.  The HMRC (UK IRS) will say you can, and will list a host of US companies that you will help you do so, but there information is incorrect.  I have about $20K in a UK Pension sitting in a UK company, like Vanguard/Fidelity that I cannot do anything with expect let it ride the market until I hit retirement age.  It is free money and lowered by tax bill, so a net win.  However, it's a pain that I have to keep it in the UK.  For the ISA, you can just close your account and transfer that money to the US without issue.

I would also contact your US bank and see if they have a relationship with a UK bank.  I know BOA and Barclays do as well as HSBC as they have commercial arms in both countries.  This is beneficial as you will want to be able to move money between the two countries.  We always kept putting money into our US stock accounts, because we knew we would be in the US long-term, but we kept most of our liquid in the UK when we lived there.  

[lolo]

I contributed to a pension while in the UK. I absolutely don't recommend that because it is impossible to transfer to the US. In theory it is possible, but in practice, NO ONE can figure out how to do it, give advice, etc. So my money is just sitting there. I can either withdraw it and lose 75% of it or take it out and reinvest it. It sucks.