This week's expert: Yvonne Sonsino
BBC News Online's Ask the Expert column gives readers a chance to have their financial questions answered.
A number of readers have e-mailed over recent weeks about state pensions in Europe.
They would like to know how working abroad will affect their UK state pension entitlement. If you pay into another European country's state pension system, what will you get out, if anything?
This week, Yvonne Sonsino, European Partner, Mercer Human Resource Consulting explains how it works.
Yvonne Sonsino writes:
The free movement of labour between European Union (EU) countries is at the centre of the European ideal.
In particular, employees of multinational companies are increasingly expected to be flexible and move to different countries.
One of their big concerns is what this movement means for their state pension.
The way pension benefits from different state pension systems are treated depends largely on the social security agreement between the countries involved.
A social security agreement can be bilateral, covering only two countries, or multilateral, covering many.
The most important multilateral social security agreement in Europe is the European Economic Area (EEA) agreement contained in Regulation 1408/71 of the Treaty of Rome.
From May 2004*:
This covers all EU countries (see information box), and three European Free Trade Agreement (EFTA) countries (Iceland, Lichtenstein, and Norway).
The basic rule is that employees should participate in the social security (insurance) system of the country in which they are resident.
In practice, when an employee continues on a home employment contract they can remain covered under their 'home' country system.
Most countries impose a five-year limit for this procedure. After this time, employees usually either return home or become permanently localised into the host country and join that country's social security (insurance) system.
If you stay in a country for less than five years and you remain on a home employment contract, you will probably be able to remain in your home country social security system and your pension claim should be relatively straightforward.
For everybody else, social security contributions in one EEA country can count towards elgibility for benefits in another under what is known as a "totalization" agreement.
Most countries have a minimum contribution period. For example, unless you have contributed to the UK system for around 10 years, you will not qualify for any UK state basic pension at retirement age.
However, under the EEA agreement, contributions made in other countries can count towards this ten years, filling the gap in your contributions record.
The relative 'generosity' of state pensions and the contribution levels in different countries are highly diverse.
When a person eventually retires, they should be able to benefit from any increases in pension benefits made in the countries in which they made contributions.
For migrant workers (i.e. EU nationals who move between member states) portability of social security benefits between member states is guaranteed in principle.
You need to apply directly to the authority in the appropriate country, probably the country in which you retire. You should in theory then be able to get benefits from your contributions in another country.
For the purposes of the agreement, countries will liaise with each other, swapping details of your contribution records.
The following websites and addresses provide further information to how and when to apply to get your pension or a forecast of your pension:
The Department for Work and Pensions produces a useful leaflet on 'Your Social Security insurance, benefits and healthcare rights in the EEA' which is on their website at
For help, advice and pension forecasts, you can write to:
Centre for Non-Residents
Benton Park View
You can also phone or fax the Centre for Non-Residents' Helpline (Newcastle) on:
Tel: 0845 915 4811
Fax: 0845 915 7800
(UK calls and faxes will be charged at local rates except for some mobile phones).
If you are phoning or sending a fax from outside the UK, dial the international code, then:
Tel: 44 191 225 4811
Fax: 44 191 225 7800
The Inland Revenue is a good source of information on social security contributions, including the position for employees going abroad (see link to the department's website on the right).