Retiring abroad- Pensions

Retiring Abroad

Pensions

Probably one of the most important subjects for the retired looking to live abroad is their pension. It is essential that you ascertain what effect moving abroad has on your pension. Currency fluctuations will obviously affect your income. However the not so obvious can lead to a nasty shock some find out too late that they may not receive state pension rises. To receive pension rises you must live in the European Economic Area or one of the other 20 or so countries with which the UK has a social security deal. Elsewhere the pension may be frozen. So, someone retiring to Canada, Australia or New Zealand, for instance, who draws the full basic state pension when they left the UK will continue to receive these amount years on. Their income will not increase and rising living costs over the years will gradually reduce the value of their pension.

However, if you spend part of the year overseas but remain a UK resident, you will have the state pension paid in full.

Personal and company pensions are less affected. They will, on the whole, continue to be paid in full and overseas pensioners are, on the whole, entitled to any rises. But watch out for the catches. Some company schemes, for example, will pay a pension only to a UK bank. Also, while some annuity companies will transfer money overseas for free, some levy charges of around £15 for each overseas payment. This can bite chunks from an already denuded pension income. The National Association of Pension Funds says different company pension schemes work in different ways, so always check with your scheme before moving overseas.

Moving your pension to your new country

Those going overseas before drawing a private or company pension can try and get the whole fund transferred to a pension scheme in their new home country. This could avoid currency fluctuations and make your pension more stable. International transfers are a complex area. They must be approved by the Inland Revenue, which wants to make sure these transfers are not used to evade tax.

 Independent advice is essential.