What happens to my pensions when I leave the UK?

Retiring abroad requires considerable advance preparation. You must address a range of issues, including obtaining the correct visas and establishing a local bank account. Ensuring access to your pension from abroad is a crucial aspect of this process.

Here’s a guide on how to claim your UK pension from overseas and manage your pension while living abroad.

Can I claim my pension if I leave the UK?

This question encompasses several types of pensions and financial considerations, such as:

• State Pension
• Defined contribution pensions
• Final salary pensions
• Other payments you’re receiving
• Tax implications of relocating abroad

What happens to my State Pension if I move abroad?

You can continue receiving your UK State Pension overseas, but annual increases might not apply. You’ll receive annual increases only if you reside in:

• A European Economic Area country or Switzerland
• Any country that has an agreement with the UK to pass on cost-of-living increases

For a comprehensive list of such countries, visit the GOV.UK website.

Claiming your State Pension from abroad

The government can transfer your State Pension to:

• A bank account in your new country
• A bank or building society account in the UK

To transfer your State Pension, contact the International Pension Centre. Note that Pension Credit will cease if you move abroad permanently. If you move abroad for medical treatment, you may still receive this benefit for up to 26 weeks, and it can be reinstated upon your return to the UK. More information is available on the GOV.UK website.

If you retire abroad before reaching State Pension age, you might need to make voluntary National Insurance contributions to qualify for the full pension amount. If you work abroad, you may also need to pay National Insurance contributions, depending on where and how long you work. For more details, refer to the government’s National Insurance if you work abroad page.

If you spend only part of the year abroad, you must choose the country where you want your pension paid. Pensions cannot be split between countries. Additionally, monitor currency exchange rates, as they can significantly impact the value of your UK State Pension when living abroad.

Accessing your pension funds from abroad

You can either transfer your UK pension abroad or leave it in the UK. If you keep your pension in the UK, providers can:

• Pay pension income into your UK bank account
• Transfer it to a bank account in your new country

Both options have potential complications. Maintaining a UK bank account may be difficult after moving abroad, and not all pension providers will transfer funds to a foreign account. Some may charge for this service. Discuss your plans with your bank and pension provider to avoid surprises.

If you wish to transfer your pension to a non-UK scheme, it must be a qualifying recognised overseas pension scheme (QROPS). This process is complex and typically requires financial advice.

Claiming other payments from abroad

You might receive income from annuities, property, or investments. Once these funds are in your UK bank account, you can transfer them abroad. Some providers might pay directly into a foreign account; check with each provider.

Tax implications of claiming from abroad

Moving abroad usually changes your tax residency status to non-UK. However, if your pension remains in the UK, it will be taxed as UK income. If your new country does not have a double-taxation agreement with the UK, you may also owe tax there. If a double-taxation agreement exists, you must still declare the income, even if no additional tax is due. The GOV.UK Tax on your UK income if you live abroad page provides valuable information, including a list of countries with double-taxation agreements and instructions for claiming tax relief.

For more on pension tax, read our article on how pensions are taxed in the UK refunds of pension contributions upon leaving the UK

Refunds are typically unavailable unless:

• You recently opened the pension and contributed within the last 30 days
• You have a Defined Benefit (DB) pension scheme and have been a member for less than two years
• Your contributions exceed your UK earnings

If you want some help or have other questions then why not reach out to us using our contact form below.