Retiring abroad

Many people dream of retiring abroad or travelling long term. If you’re thinking of retiring abroad, it’s important to understand how your pensions might be affected.

Your State Pension

You can claim your State Pension if you live abroad, but Pension Credit - a benefit which tops up your weekly income - stops when you move overseas permanently.

When you move, you must let the International Pension Centre know (and the Northern Ireland Pension Centre if you’re from Northern Ireland). You should also contact HMRC to ensure you pay the right amount of tax.

Your State Pension can be paid to a UK bank or building society account or to an overseas account in the local currency. Just as in the UK, you can choose to defer your State Pension and get extra State Pension.

For information on how to claim your State Pension abroad, see:

To find out more about deferring your State Pension read our guide on the State Pension.

State Pension increases when you’re abroad

If you live in the UK, your State Pension usually rises each year. But if you move overseas, you’re only entitled to an annual increase if you live in:

  • the European Economic Area
  • Gibraltar or Switzerland
  • a country that has a social security agreement with the UK

For a full list of countries where you’re entitled to an annual increase see GOV.UK.

Your workplace and personal pensions

Personal or workplace pensions can be paid to you wherever you live. And you’ll be entitled to any built-in annual increases in the same way as if you were living in the UK.

Talk to your pension scheme or provider before you move. Some only pay into a UK bank account but others may pay into an overseas one if you ask. There may be extra charges to pay.

Bear in mind that your pension income will be paid in pound sterling. That means it will be affected by fluctuations in exchange rates when you convert it to your local currency. You need to be prepared for your income to rise and fall because of this. If rates go against you, it can seriously affect how much you have to live on.

Moving before you take your pension income

If you move abroad before you start to take any pension income, you can:

  • stop paying into your pension and access your money at a later date (from age 55 at the earliest)
  • continue paying into your pension. But you may not qualify for tax relief on your contributions or the amount may be limited

Once you decide to start taking money from your pension pot, you have the same options as you would if you were living in the UK. However, the tax situation is more complicated if you are abroad and this can affect which options are best for you. For example, if you haven’t taken your tax-free cash lump sum from your pension before you move, you may be taxed on it as income in the country you live in.

We recommend you get financial advice from a tax and pensions specialist before making any decisions.

You also have the option, in some cases, of transferring your pension to an overseas scheme. Again, you should seek financial advice before doing this.

You can find FCA registered financial advisers who specialise in retirement planning in our Retirement adviser directory.

Read our guide on your options for using your pension pot.

Tax and your pension income

If you live abroad you’re likely to be classed as a non-UK resident. This means you don’t usually pay UK tax on your State Pension. But you may pay tax in the country you live.

You may have to pay UK tax on your other pension income because it’s classed as UK income. And you may also be taxed in the country you live in. However, if you live in a country which has a double-taxation agreement with the UK, you won’t have to pay tax twice.

For more information on tax if you move abroad, see GOV.UK.

Returning to the UK

If you come back to the UK, you should tell the Pension Service (International Pension Centre or the Northern Ireland Pension Centre). If your State Pension hasn’t been rising while you’ve been abroad and you remain in the UK for more than six months, it will be increased to the current rate and will start increasing again each year.

It’s also important to notify HMRC by calling the HMRC Residency helpline on 0300 200 3300 in the UK, or +44 151 210 2222 from outside the UK. You should also notify any pension schemes you belong to.

Useful contacts

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