At CurrencyFair we help many British expats receive their pension money outside the UK.
Today an external contributor, Julia Mann, shares some excellent advice on moving pensions out of the UK.
Over to Julia . . .
Points To Ponder Over Before Moving Your Pension Out Of The UK
The number of British expats that relocate to a foreign country surpasses 300,000 per year. Some leave for professional reasons, some for personal interests or simply for a change in routine. Whatever the reason might be, the prospect of exploring a new culture and building a new home for yourself is ultimately exciting. And why not retire abroad? Spending your well-deserved rest days enjoying the best life has to offer on tropical shores or in vibrant cities is certainly an enviable retirement plan! However, before you pack your bags, sell your old vinyl collection and start house-hunting in some far away land, have a quick read-through of some of the roadblocks and obstacles that might confront you.
Buying real estate
If you’re planning on owning a new property as opposed to renting, you’ll want to pay attention to this one, because the real estate market can sometimes be very different and difficult to navigate. Unless you know the location quite well already, it takes time to find out which areas are up and coming, which are best to invest, etc. Additionally, there are countries that regulate or restrict properties bought by foreigners.
However, if you reach a deal, make sure to explore your options regarding financing. Sometimes it makes sense to take out a loan in the home currency, rather than in the UK or waiting for the exchange rate to be at its best to transfer money. Also note that you probably will have to pay taxes in both countries, so to clarify the exact parameters of your contract back home, let any documents be translated by a professional.
Legal issues and right to vote
A traveller like yourself probably already knows that different cultures have different customs, but have similar understanding of basic laws. When it comes to more specific issues however, things can be a bit more complicated, especially if a matter like inheritance, custody or divorce settlements are to be settled according to regulations of both countries. Many countries have reciprocal agreements to avoid that exact conundrum, but it is no guarantee that it won’t end up proving a slow, drawn-out process.
A legal right that you will undoubtedly be entitled to is the right to vote. As of now, expats can vote for 15 years after leaving the UK. There are organisations currently fighting to dismiss the limitation.
State pensions are generally calculated by these three criteria:
1. Your contribution to the NIF (National Insurance Fund).
However, these factors don’t all hold weight outside of the UK.
For UK pensioners, non-Commonwealth countries and most destinations within the EEA (European Economic Area), rates are flexible. However, expats choosing to retire in one of 150 countries (mostly Commonwealth countries) have to expect their pensions to be “frozen”; a fixed rate determined at the time you leave the UK or receive your first payment. The result is that a lot of expats are forced to live with rates that are outdated and don’t match up to rising living costs. According to the Telegraph, frozen pensions save the UK Government £2.3 billion a year in social care costs. Meanwhile, some expats are expected to live on £6 per week.
Healthcare is a tricky thing, no matter where you are or where you go – costs seem to always be rising whilst the number of benefits drops. In many cases the UK has agreements that enable you to transfer your current plan, or apply for a similar level one. If that’s not the case, spend some time researching what exactly different schemes insure. Some might only cover partial costs or not include certain services at all. Be ready to potentially pay significantly more than what you are used to.
About the author
Julia is a digital marketer and passionate traveller, with a few relocations around the globe on her back, she now lives in London. Julia currently writes for QROPS Review.