Living abroad and the State Pension

Contents

• Claim State Pension abroad

• How your pension is affected

• Paying Tax

• Report a change in your circumstances

Claim State Pension abroad

There will be no change to the rights and status of EU citizens currently living in the UK until 30 June 2021. You and your family can apply to the EU Settlement Scheme to continue living in the UK.

You can claim State Pension abroad if you’ve paid enough UK National Insurance contributions to qualify.

Get a State Pension Statement if you need to find out how much State Pension you may get.

Make a claim

You must be within 4 months of your State Pension age to claim.

To claim your pension, you can either:

• Contact the International Pension Centre

• Send the international claim form to the International Pension Centre

If you live part of the year abroad

You must choose which country you want your pension to be paid in. You cannot be paid in one country for part of the year and another for the rest of the year.

Bank accounts your pension can be paid into

Your State Pension can be paid into:

• a bank in the country you’re living in

• a bank or building society in the UK

You can use:

• an account in your name

• a joint account

• someone else’s account - if you have their permission and keep to the terms and conditions of the account

You’ll need the international bank account number (IBAN) and bank identification code (BIC) numbers if you have an overseas account.

You’ll be paid in local currency - the amount you get may change due to exchange rates.

When you’ll get paid

You can choose to be paid every 4 or 13 weeks.

If your State Pension is under £5 per week, you’ll be paid once a year in December.

Defined contribution schemes

Defined contribution (DC) schemes are occupational pension schemes where your own contributions and your employer’s contributions are both invested and the proceeds used to buy a pension and/or other benefits at retirement. The value of the ultimate benefits payable from the DC scheme depends on the amount of contributions paid, the investment return achieved less any fees and charges, and the cost of buying the benefits.

A DC scheme has a set contribution for the employee and a set contribution for the employer. For example, in some DC schemes, the employer and the employee each contribute 5% of the member's earnings, or 10% in total.

Some DC schemes allow members to choose the level of contribution they wish to pay, with a related employer contribution.  Contributions are invested on behalf of each scheme member.

The retirement benefits for each member depends on how much money has been built up by the member's retirement date and so it is not possible to know in advance what pension benefits a member will receive.

How much state pension will I receive

How much state pension will I get?

For details on how much state pension you will receive please see here.

Pensionwise

Understanding what Pensionwise is and how to use it

If you are aged 50 or over and have pension based on how much has been paid into your pot (a defined contribution pension), you can get free guidance from Pension Wise - a new service backed by the government. This guide explains how Pension Wise works and how to prepare for your appointment.

• Free, impartial guidance – backed by government

• How to get your free Pension Wise guidance

Free, impartial guidance

Pension Wise is a free government service that helps you understand what you can do with your pension pot money.

It offers guidance on the Pension Wise website about the options for taking your pension pot, and can help you understand the tax implications.

It also offers free guidance appointments over the telephone or face-to-face where you can talk through these options, ensuring you have the information you need to make the right decision.

Pension Wise can help you:

• Understand the tax implications of each available choice

• Understand the different options for accessing your pension pot(s), and the potential advantages and disadvantages of each

• Understand the right things to think about when considering your choices, such as your plans to continue working, your personal and financial circumstances, and leaving money after you die

The service is impartial and free for you to use.

However, it won’t recommend companies or tell you how to use your pension pot or invest your money.

How to get your free Pension Wise guidance

You can get Pension Wise guidance online, over the phone or face-to-face.

You can visit the Pension Wise website by clicking here to see what the service offers and to begin to understand your available options.

If you want to book a telephone or face to face appointment call 0300 330 1001 .

Preparing for your appointment

To make the most of a Pension Wise appointment it would be helpful to have:

• The value of your pension pot(s) and whether there are any guarantees or special features that apply to your pot. Check your pension statement or ask your scheme or provider for an up-to-date valuation. If you have more than one pension pot remember to gather information on all of your pots together

• If you have lost track of any pensions, contact The Pension Tracking Service which is a free government-backed service

• An estimate of how much State Pension you might get – get a State Pension statement from GOV.UK or call Tel: 0845 3000 168

Before your appointment, you should think about your financial circumstances as a whole.

Such as your current salary or income, your likely living costs in retirement, and any relevant savings or debts.

You should also start thinking about how you want to use your money in retirement; whether you just need small sums or would prefer a regular income.

The Pension Wise appointment will also discuss relevant points such as any medical or health conditions that might affect your life expectancy.

Which might result in you getting a better income in retirement if you buy an annuity, how any benefits you’re currently receiving could be affected by how you take your pension.

Next steps

Pension Wise will provide you with next steps for each of the options available.

Once you understand your options we recommend that you shop around to get the best deal before making a decision.

You can also speak to a financial adviser who will help you finalise your choices and find the right retirement income products for you.

You can find FCA registered financial advisers who specialise in retirement planning using this website.

Advice sources

An editorial by Which? magazine in June 2018 

Can I get free advice at retirement? 

If you’re unwilling or unable to pay for financial advice, you can get free guidance, in some cases ‘personalised guidance’, from a number of government-provided services – Pension Wise, The Pensions Advisory Service (TPAS) and the Money Advice Service. Which? used undercover fieldworkers to make a number of calls to the services in June 2018 asking for assistance with plans to cash in a £100,000 pension to pay off an outstanding mortgage and to consolidate three pensions into a single plan. 

Pensionwise 

Pension Wise was set up in 2015 to coincide with the introduction of the so-called pension freedoms. You can have a conversation over the phone (which we opted to do) or face-to-face, but you must be over the age of 50 and have a defined contribution pension. Despite the current eight-week wait for an appointment, our mystery shoppers eventually dealt with well-informed call handlers who asked personal questions and then covered the chosen retirement option in detail. The calls follow the same broad format, lasting about 45 minutes – questions about the consumer’s finances, health, family situation and pension provision , followed by points to consider with the preferred option, and finally an overview of the alternatives . In our scenario, the call handlers had some insightful observations about the tax liability if you take a pot in one go, even working out how much exactly you would pay in tax, and also gave clear warnings about potential scams. 

The Pensions Advisory Service 

Callers to The Pension Advisory Service (TPAS) can get straight through to someone to discuss their question. Our first call about cashing in the pension was fairly succinct, with the caller told to contact her pension provider, phone Pension Wise or seek financial advice. The other telephone call was more productive, with tax implications discussed and the dangers of having no alternative retirement income highlighted. Conversations about pension consolidation were again quite brief. However, some key considerations around the flexibility gained by keeping the pots separate, the potential loss of benefits and possible transfer penalties were outlined by TPAS . A point about managing separate pots effectively in the post-2015 world was particularly insightful. 

The Money Advice Service 

The Money Advice Service covers all financial issues, with phone menu options for debt, pensions, benefits, home/mortgages and ‘other’. If you choose pensions, you’re connected to someone at TPAS. We chose the mortgages option and explained we wanted to pay off our home loan by cashing in a pension. Speaking to a financial adviser was immediately suggested and some help given to find one. By their nature, the guidance services featured above will have their limitations. Call handlers can outline options and provide impartial guidance (sometimes ‘personalised’ to reflect your individual circumstances), but they can’t provide financial advice or recommend specific products.

Should I pay for financial advice? 

While the costs may seem high, paying for professional advice could be an invaluable investment – especially if you have little experience investing. A financial adviser has the tools and experience to help you plan for a future without work and make sure your savings last throughout your retirement. 

When should I see an adviser? 

An adviser can add value when you’re considering complex products, such as pension drawdown or investments, or significant decisions in life, such as retirement or arranging care, and don’t have the time, knowledge or confidence to make decisions yourself.