Updated 26 May 2022
Do you dream of retiring abroad? Many UK pensioners choose to seek out the sun once they quit the nine-to-five. But if this appeals to you, remember that emigrating is a major life decision that can also affect your pension. Here are some of the questions you’ll need to discuss with your adviser.
As long as you’ve paid enough National Insurance, you can claim your State Pension while living abroad.
The main difference is that if the State Pension increases, you may not benefit from the extra amount if you’re living in certain countries. Unlike those who stay in the UK and receive the latest State Pension amount, yours might stay the same as when you emigrated. The difference might not be huge, but it’s one to factor in.
If you have your own workplace pension(s) or personal pension(s), you can still access these from another country once you reach a certain age. There may however be additional charges and administration involved in doing this, which is why some expats choose to transfer their UK pensions to a provider based in the country where they now live. If you want to transfer a pension overseas, you will need to find a Qualifying Recognised Overseas Pension Scheme (QROPS) with the help of a financial adviser who specialises in expat pensions.
If you choose to keep your pension in the UK, your income will fluctuate when exchange rates change. This can be good or bad for you, depending on the relative strength or weakness of the pound. Again, factor this in when making your retirement plans, and talk to your adviser about possible solutions (such as transferring your pension overseas).
Moving abroad can have many tax implications. Unless your new country of residence has a double-tax agreement in place, you could end up paying tax both there and in the UK. Also, things like capital gains tax vary from country to country. Make sure you ask about the effects of tax on your income, and your own tax responsibilities.
Expat finances are a highly specialised area, so not every financial adviser will be experienced in this area or qualified to help. You should also be more cautious when engaging an adviser overseas, as they may not be regulated as rigorously as those in the UK. You can find a UK-based expert in this area using our tool below – even if you have already moved abroad.