Pension Advice For Offshore Oil Workers In Scotland

How does offshore oil and gas work impact my UK state pension entitlement?

It depends how you’re employed. If you’re employed by a company where part of your role is to go offshore and you’re paying National Insurance in the UK, it’s not really going to have much impact on your state pension. You should be on track as long as you’ve made enough National Insurance contributions.

If, for any reason you’re not making National Insurance contributions whilst working, or perhaps you have been working abroad, that could have an impact. It’s important to understand what basis you’re employed on – and you can do a state pension forecast through HMRC.

What are the specific pension challenges and opportunities for those working on a rotational shift pattern?

Some people in this situation are fully employed in the UK, paying National Insurance. Although they’re working on a rotational basis, they are classed as full-time employees, in which case it doesn’t make very much difference.

But if you’re self-employed or employed by a company outside the UK, you should take advice. Make sure that your state pension contributions are up to date, if that’s something you’re relying on for retirement.

If you’re employed, there’s a good chance you’ll have a workplace pension. If you’re self-employed, there will be no pension unless you make your own arrangements to avoid relying exclusively on the UK state pension.

Do my years working abroad in the North Sea count towards my UK pension?

If you were domiciled and tax resident in a different country, that’s different from being a UK resident and working abroad in offshore oil. That’s important to understand.

It’s quite common for oil workers to have had a period of time out of the UK, and there’s definitely a chance you won’t have been contributing to the state pension during those years.

If it’s just a couple of years, it’s probably not a big deal. But if there was a substantial amount of time where you weren’t paying National Insurance in the UK, you might want to understand the impact, and potentially take action to mitigate that.

Working abroad is not necessarily an issue, but the devil’s in the detail.

How does fluctuating income in the offshore sector affect pension contributions and planning?

I’m assuming this question is about people working as contractors or in self-employment.

You would expect people in full-time employment not to have volatile, fluctuating income.

If you’re self-employed or a contractor, again, the devil’s in the detail. Are you being paid net, with National Insurance paid by your employer? That shouldn’t be a major issue.

If you are paid exclusive of tax, where it’s your responsibility to report and pay tax, you will still have to pay National Insurance. That should keep your state pension on track. But it’s down to you to make private pension arrangements beyond that.

What are the latest changes in legislation regarding retirement for offshore workers?

There’s not necessarily specific legislation here, but a lot of my clients are affected by the North Sea oil industry winding down. So instead of being employed out of Aberdeen, for example, they are now employed in other locations around the world.

They may very well be working at home in the UK within those roles. But it’s definitely worth considering the structure of your income, whether you’re contributing to the state pension, and if private pension contributions are being made. If so, which country are they being made in? It would be worth getting advice around those contracts.

What types of pension schemes are available to offshore oil workers in Scotland?

Theoretically, any pension scheme is available. Obviously, you will only get a workplace pension if you’re employed.

Personal pensions and SIPPs (Self-Invested Personal Pensions) are certainly available, assuming that you’re resident and domiciled for tax purposes in the UK. Anything different about that might impact your ability to contribute to a pension in the UK – or certainly how much you can contribute. That’s definitely something to get individual advice on.

Should I transfer my final salary pension if I am an offshore worker?

This is a really important question. We might have people who are starting to think about retirement now, who were employed when the oil industry was really booming.

They might not have looked at some of these pension schemes for some years and they might be quite old. That’s not a bad thing, as older style pensions can have a lot of benefits and features you might not be aware of.

If they don’t offer those benefits and features, there might very well be an argument for transferring them and consolidating your arrangements.

Having said that, I’ve seen a lot of clients with certain death benefits or guaranteed annuity rates that are very beneficial and couldn’t be replicated in the modern market. So before you do anything, getting personalised advice is critical.

How do I trace old pensions from previous employers in the offshore industry?

This is a big question for everybody. People who have changed jobs quite a lot can lose track of pensions – there might not be that much money in them, but it’s still your money.

The advice I would give any young person is to make notes on where you’re paying into pensions so you can remember them all.

There was a lot of consolidation of oil companies in the North East, so you might have started off with one company and ended up in two or three different companies down the line. That will have had an impact on pensions, too.

But if you remember the company you worked for and rough dates of that employment, that’s a big help. Somebody like myself can help to trace that.

If you’ve got absolutely no idea, the HMRC website should give you a breakdown of when National Insurance was paid on your behalf by an employer – that can be a useful way to track things down.

What is the maximum I can pay into a pension each year as a high earning offshore worker?

As it stands at the moment, you can pay up to £60,000 per tax year into a UK pension, but only if you have earned £60,000. If your salary was £30,000, you would only be able to put £30,000 in.

For somebody running a limited company who works offshore and is paid through the limited company, they may receive their income as a mixture of salary and dividends. Dividends are not classed as earned income, so the salary part gives the maximum they can contribute to a pension.

How does a self-invested personal pension or SIPP specifically benefit an offshore worker with multiple income streams?

It really depends on what those multiple income streams are. Often there might be a number of different contracts, but ultimately they’re accounted for in the same way.

You might work for three or four different companies and invoice them through your own limited company. The rules around SIPPs are the same as for everybody. You would need clarification of those multiple income streams and personalised advice.

If I’m a Scottish resident working for a non-UK oil company, which country’s pension rules apply to me?

It very much depends on how you’re being paid. Although a business might have a head office abroad, they will often employ and transact within the UK, in which case you might be paid in UK sterling and all the usual rules apply.

If you’re being paid in a different currency or your money is going to a different country, you need advice. It can have an impact on whether you qualify to put money into a UK-based pension at all.

How does my tax residency status affect my pension contributions and withdrawals?

It’s likely to have an effect, and you should definitely get advice.

Have you got anything else to add before we return for part two?

I think we’ve covered everything – it’s been a real brain teaser.