If you're planning to live abroad when you retire, you'll still be able to claim your State Pension. If you work and settle in another country before reaching State Pension age, you'll also be able to get your State Pension when you retire and claim it.
Claiming your State Pension when you live abroad
You can claim your State Pension if you live outside the UK. However, you’ll only receive the yearly index-linked increases if you live in the European Economic Area (EEA) or Switzerland or in a country with which the UK has a social security agreement that includes state pensions.
If you live outside those areas, you won’t be entitled to the increases that normally happen yearly. However, if you return to live in the UK, your State Pension will be increased to current levels.
How the State Pension is paid if you live abroad
If you live abroad then your State Pension can be paid directly into one of the following:
- a bank in the country in which you live
- a bank or building society in the UK
Payment to a bank in the country where you live
Your State Pension can be paid electronically into any of the following countries:
Antigua, Australia, Austria, Bahamas, Barbados, Barbuda, Belgium, Canada, Channel Islands, Cyprus, Denmark, Dominica (Commonwealth), Dominican Republic, Finland, France, Germany, Grenada, Guyana, Hong Kong, Ireland, Israel, Italy, Jamaica, Luxembourg, Malta, Monaco, Netherlands, New Zealand, Norway, Portugal, San Marino, South Africa, Spain, St Kitts – Nevis, St Lucia, St Vincent and Grenadines, Sweden, Switzerland, Trinidad and Tobago, United States of America.
From October 2009 additional countries included are: Bangladesh, Bulgaria, Colombia, Egypt, Greece, India, Indonesia, Mexico, Morocco, Nigeria, Pakistan, Peru, Poland, Thailand, Tunisia, Turkey and Yemen.
Payment will be made in the local currency of the country in which the bank account is held. No charges are made for this service.
Payment to a UK bank or building society
If you reside in any country that is not listed above then your State Pension can be paid using one of the following:
- directly into any UK bank account
- with a sterling cheque to your home address
Cheques can be sent every four or 13 weeks either directly to the bank or to your home address. For small amounts of pension, under £5 per week, annual payments may be made, usually at Christmas.
If you only spend part of the year abroad
If you divide your time between the UK and abroad you'll have to choose which country you want your State Pension paid into. You can't choose to have it paid in one country for part of the year, and a different country for the rest of the year.
If you decide to come back to live in the UK
In this situation, you can ask for your State Pension to be paid into a UK bank account.
Paying tax on your State Pension
Your tax position will depend on:
- whether you're classed as 'non-UK resident' for tax purposes
- the country in which you're living
If you spend part of your time in the UK and part abroad you're likely to be classed as a UK resident. If you move abroad permanently, you're likely to be classed as a non-UK resident.
If you are a non-resident your tax position depends on whether you live in a country with a 'double taxation agreement' with the UK. This means you won't have to pay UK tax on your State Pension, but it will be taxable in the country where you live.
If you live in a country without a 'double taxation agreement', you'll have to pay UK tax and may be taxed again abroad.
It's a good idea to get advice about paying tax on your State Pension if you live abroad. You can contact HMRC Residency.
Making State Pension contributions if you work abroad
If you're working abroad, you may be able to pay into the State Pension scheme of the country where you're working. You can do this in EEA countries and some others, such as Canada and New Zealand, where there are special arrangements.
Depending on how long you work abroad, you can have your contributions credited to your UK State Pension or you could receive two pensions - one from the UK and one from the country where you lived and worked. This will be decided when you reach State Pension age, taking into account where you live.
Who to contact before you move abroad
If you're moving abroad to live, you'll need to tell:
- The Pension Service
- HM Revenue & Customs' National Insurance Contributions Office
- your Tax Office
You'll also need to give them your change of address.
The Pension Service will usually send you a form about four months before you reach State Pension age. This form asks about any insurance and residence you may have in other countries. If you're less than three months away from State Pension age and you've not received this form, it's advisable to get in touch with the International Pensions Centre (IPC).
If you are living in any EEA country you should claim as follows:
- if you have worked in the country you are now living in, your claim for your UK State Pension should be made through the pension institution in that country
- if you have not worked in the country you are now living in, you should claim your UK State Pension direct from the IPC, unless you have worked in another EEA country since leaving the UK, in which case you should make your claim through the last institution you were insured with.
Hannah Beecham talks to Gary Boal, Managing Director of Boal & Co, IOM and asks all your questions about Qualifying Recognised Pension Schemes (QROPS).