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Retiring Abroad and Claiming Your Pension

By: Garry Crystal - Updated: 18 Jul 2014 | comments*Discuss
Retiring Abroad Claiming Pensions State

Claiming a pension should not be too much of a problem for the millions of British people who retire abroad. State or occupational pensions can be claimed while living in a foreign country and there are some other UK benefits that can be claimed while enjoying the sunshine abroad.

Claiming Pensions While Living Abroad

It makes sense that if you have worked all your life in the UK then you should still be able to claim your pension abroad. State and occupational pensions can be claimed whilst living abroad and in fact very little changes with regards to these pensions. Moving to a country in the EU and claiming a pension should not be problem. Plus countries such as Australia and America do have an agreement with the UK, which means claiming pensions should also not be a problem.

Increases in State Pensions and Living Abroad

An issue to consider is the increase in state pensions. Those who have retired abroad permanently will only be eligible to a yearly increase if they are residing in a European Economic Area country. This rule will also apply to countries that have a special agreement with the UK.

Those considering moving to an EEA country should remember that these countries do have their own guidelines and the pension age may vary between countries. These details should be checked through the Pensions Service agency.

Claiming Pensions Abroad and Inflation

As crazy as it seems although some countries do have an agreement with the UK regarding claiming pensions this does not apply to inflation. Certain countries such as Canada and Australia are not index linked, meaning the pension will not rise with inflation. This rule has long been a bone of contention with retirees living abroad and is constantly being challenged. But until the rule changes pensions will be not eligible to rise in accordance with inflation in these countries.

Living Abroad and Pension Income Points to Consider

Many retirees choose their country abroad based on factors such as family already living in the foreign country or simply because they love a certain country. But there are one or two financial points to consider before heading off and relaxing in the sun. Points to consider and research should include:

  • Does the country have a reciprocal agreement with the UK regarding pensions?
  • Will my income be taxed twice, once in the UK and abroad?
  • Is there a good currency exchange rate in the country I am considering?
  • How far will my pension stretch abroad; is the cost of living abroad high?
  • How strong is the pound in my intended country?
  • Am I entitled to certain benefits abroad such as free medical care?

Other UK Benefits that May Apply Abroad

Pensions are not the only UK benefits that apply for retired people living abroad. For instance the winter fuel and heating allowance may still be claimable for those who have retired abroad. This may not apply in all countries abroad such as Canada, Australia, New Zealand and South Africa. Those considering claiming this benefit should bear in mind that to be eligible they will have to already be claiming in the UK before moving abroad. Claimants must be 60 and over and those who have forgotten to claim this benefit may be able to apply for back-dated payments.

How State Pensions Abroad Will be Paid

There are various ways that a state pension can be paid to UK individuals abroad. These can include credit transfer to a foreign bank or to the individuals own UK bank. A cheque can also be sent to the individual’s bank abroad. Occupational pensions may have slightly different payment processes and individuals should check for any restrictions such as payment only to UK banks. Those claiming occupational pensions should also check on charges that may be applicable when transferring the pension to a bank abroad.

Finances are of course one of the main considerations for those who are retiring abroad. Claiming a pension abroad may not be a problem depending on the country but there may be other considerations such as currency exchange and transfer fees to think about. Taking advice from a financial advisor would be advisable for those who are considering retiring abroad.

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[Add a Comment]
i am liveing in the uk since 2003 am i entile to the australian pension thanking you
doug - 4-Jul-13 @ 8:46 PM
i moved to australia in 1967 worked thair till i left in 2003 am i entile to the australian pension
doug - 4-Jul-13 @ 8:42 PM
I am 62 yrs old, i am on pension credits, i have asked the pension people how long i can exit the UK for while i am on pension credits, they say for up to 13 weeks, My question is at what age can I claim my state pension and at what age can i exit the uk as a pensioner. I want to retire to the Philippines. thank you.
tankman1010 - 16-Jan-13 @ 10:52 AM
Aproaching retirement time in Canada, considering having my UK occupational pension paid (using 2nd option) that is a reduced annual pension with a single commuted tax free lump sum. But with the tax treaty existing between the two countries, should the lump sum still be tax free? Thanks for any advice/comments from similar case readers.
woodstock - 1-Nov-12 @ 9:37 PM
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