What Are My Pension Options If I Live Abroad?
You might be wondering what happens to your pension if you move abroad. You’re not alone! Plenty of people are considering moving overseas for various reasons, and many wonder how their pensions will fare in the process.
Here’s the good news:
There are several options at your disposal, so it’s worth exploring them thoroughly before making any decisions about whether or not to move.
Defined Contribution Pensions
If you have a defined contribution pension, such as from your employer or personal plan provider (such as a SIPP1), then the money will stay with them. This means that they’ll continue to manage it in line with their rules and regulations, which might be different for UK pensions than those enforced by other countries.
Defined Benefit Pensions
With a defined benefit pension, contributions are paid into an employee’s retirement fund until they retire and receive benefits in the future. These benefits are fixed and cannot fluctuate depending on performance or economic conditions like many retirement funds can do today. Most people would need to convert this scheme into one based on investment risk before moving overseas because the UK pension scheme does not allow for transfer abroad.
In the UK, you can be a member of two or more occupational pensions schemes (for example, a SIPP), then the money will stay with them. This means that they’ll continue to manage it in line with their rules and regulations, which might be different for UK pensions than those enforced by other countries.
Overseas Pension Scheme
Overseas pension schemes are typically run on behalf of companies operating overseas within a given country or region – this is known as expatriate benefits. They often provide some form of healthcare cover if required but not always – so check the terms and conditions before signing up.
To transfer your accumulated savings abroad, you may need to convert your retirement fund into another type based on investment risk, such as an annuity.
Can I Claim My UK Pension If I Live Abroad?
You can claim your UK pension if you live abroad as long as the country where you reside is a recognized jurisdiction for paying out pensions and that there are reciprocal arrangements with the UK.
Managing Your Pension From Abroad
There are several options for managing your pension from abroad. Your UK scheme might have an arrangement with international providers that will allow you to manage your pension fund while living overseas, or they may be able to provide information about local investment schemes in the country where you live.
How Do You Manage Your Pension If You Live in Europe?
If you live in Europe, there are several options available for managing your pension from abroad. Your UK scheme might have an arrangement with international providers that will allow you to manage your pension fund while living overseas, or they may be able to provide information about local investment schemes within the country where you live.
How Do You Manage Your Pension if You Live Outside Europe?
If you live outside Europe, options for managing your pension are more limited. Your UK scheme might be able to provide information about investment schemes in the country where you live, or they may be able to offer an International Personal Pension Plan (IPPP), which will allow access to funds while living overseas.
Do You Qualify For Tax Relief If You Live Abroad?
If you live abroad, your pension provider will need to be aware of the tax rules for that country. If you are a resident overseas and have been paying UK National Insurance contributions in recent years, then you may qualify for a full or partial refund on your contributions.
Expat Pension Tax
If you are an ex-pat pensioner, the tax relief on contributions may not be available to you. However, there is some good news for ex-pats over 65 years of age as they will qualify for a UK state pension, which can provide extra security in retirement.
What Happens To My State Pension if I Move Abroad?
If you move overseas, your State Pension payments will be backdated to when you left the UK. This is because there are arrangements with other countries to make sure that people living abroad get all their money from one country at a time. If you stay in one place for more than six months and draw your pension, then it’s worth checking what rules apply as this may affect how much income tax you have to pay on it.
Can You Claim the State Pension Living Abroad?
You can claim the State Pension2 living abroad if you’re eligible and it’s been paid for at least 25 years. If you have less than 25 years, then there will be a percentage reduction in your pension (known as ‘coordination’) to take account of each year that falls short of this total.
Got Questions? Check These First
Do I still get my pension if I move abroad?
If you move abroad, your entitlement to pension is still determined by the country you originally applied for it. However, if you stay in one place for more than six months and draw your pension out of one account while living outside the UK, then this may affect how much income tax you have to pay on that fund.
What do I do with my pension when I move abroad?
You can leave your pension with the UK scheme or transfer it to a foreign equivalent. If you choose to move abroad and take out a new private contract of any kind (including an insurance policy), this will affect what is paid from your pension fund in later years.
Do I pay tax on my pension if I live abroad?
You are only taxed on the income you receive from your pension. If, for example, you withdraw £100 per month, then this is all that will be deducted from your fund and any other sources of money such as investments or property rental income.
Can I access my UK pension if I live abroad?
Yes. If you are receiving a UK pension and you live abroad, it will be paid into your nominated overseas bank account or to the country’s equivalent of our Department for Work and Pensions (DWP).
That’s only the tip of the iceberg:
The one thing you can be sure of is that your pension will not vanish if you move abroad. After all, it’s yours – and no government has the right to take away what belongs to you.
Still, there are a few things worth considering when making this big decision. For example, if your money was invested in stocks or bonds before moving overseas, then those investments may have been affected by currency exchange rates as well as changes in the market while on foreign soil.
And some pensions might also require specific conditions for their use which could change depending on where they’re located – such as being subject to income tax laws or having restrictions about how much can be withdrawn each year (among other considerations).