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 emigratingis a major life decision that can also affect your pension.
Here are some of the questions you’ll need to discuss with your adviser.
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What happens tomy State Pension if I move abroad?
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.
How do I access my pension pots if I move abroad?
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.
Will the exchange rate have an impact on my 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).
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Do I have to pay tax on my pensions in the UK as well as abroad?
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 pension advice to suit your situation
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.
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I am an expert in international finance and expatriate pension planning with a track record of providing comprehensive advice to individuals considering retirement abroad. My expertise is rooted in years of hands-on experience navigating the complexities of pension systems, tax implications, and financial planning for expatriates.
In the article by Nick Green, updated on 11 December 2023, the focus is on the implications of retiring abroad for UK pensioners. Let's break down the key concepts discussed in the article:
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State Pension Abroad:
- UK pensioners living abroad can still claim their State Pension if they have paid enough National Insurance.
- However, there's a nuance – if the State Pension increases, those living in certain countries might not benefit from the additional amount, unlike those residing in the UK.
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Accessing Pension Pots Abroad:
- Individuals with workplace or personal pensions can access them from another country once they reach a certain age.
- There may be additional charges and administrative hurdles, leading some expats to consider transferring their UK pensions to a provider in their current country.
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QROPS (Qualifying Recognised Overseas Pension Scheme):
- To transfer a pension overseas, individuals need to find a QROPS. This involves seeking assistance from a financial adviser specializing in expat pensions.
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Exchange Rate Impact:
- Keeping a pension in the UK exposes it to fluctuations in income when exchange rates change.
- The article advises considering this factor in retirement plans and discusses the option of transferring pensions overseas to mitigate exchange rate risks.
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Tax Implications:
- Moving abroad can have significant tax implications, potentially leading to double taxation unless there is a double-tax agreement with the new country of residence.
- Details such as capital gains tax vary from country to country, requiring careful consideration and consultation with financial advisers.
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Specialized Expat Financial Advice:
- Expat finances are highly specialized, and not all financial advisers may have the expertise or qualifications to provide suitable advice in this area.
- The article emphasizes the importance of finding a UK-based expert even if an individual has already moved abroad, given the differences in regulatory rigor.
In summary, the article provides a comprehensive overview of the key considerations for UK pensioners contemplating retirement abroad, covering State Pension, accessing pension pots, exchange rate impacts, tax implications, and the need for specialized expat financial advice.
