Moving abroad and claiming pensions overseas
You can continue to receive UK state pensions overseas provided you inform the Department of Work and Pensions of your new address. However, planning pensions overseas does not stop there and there are courses of action you must take if you are moving abroad to retire. Even if you are not near retirement age, you should be planning your pension and must take several factors into consideration when setting up a new home abroad.
Pensions overseas – where to make your home abroad
If you are relocating to a country within the EEA or one of another 20 nations with social security arrangements with Britain you will still receive annual increments on your state pension. If you are moving abroad to anywhere else, including Canada and Australia, your UK state pension will be frozen.
After establishing your new home abroad you will still be able to make voluntary contributions to the UK NI system. This would entitle you to receive the full UK state pension overseas when you retire.
Personal and company pensions can generally be paid anywhere but some firms will only pay into UK banks. This would mean paying to transfer the pension overseas into local money and exposing yourself to major currency risk. For this reason you should check the details of the scheme before moving.
What to do before moving to your new home abroad
There are a few things you need to do regarding pensions overseas before moving abroad. Firstly, you should contact the Pensions Service to advise them you will be moving abroad. You can write to them at:
DWP
International Pension CentreLongbenton
Newcastle upon Tyne
NE98 1BA
Tel: 0191 218 7777
You should also check out the situation with regards to any personal or occupational pensions you might have. After doing so, you should speak to a professional financial advisor before moving to your new home abroad.
Other points regarding pensions overseas
If you make your home abroad and become resident in another country then your worldwide income is subject to taxation, including pensions. Even tax-free lump sums in the UK become taxable after moving abroad. This situation is not as grave as it may appear and can often be avoided. UK state pensions are liable to tax overseas but not in the UK.
If you are still working after moving abroad you will be making contributions to the social security system in that country and may be entitled to a pension once retired. There are ways to minimise the portion of pensions overseas liable to tax. This requires careful planning before relocating to your home abroad.
