09 Jan 2019
Retiring abroad is a dream for many people, with thoughts of relaxing sun-filled days and warm nights to wet the appetite.
However, there are a number of factors to consider well in advance, particularly when it comes to pensions.
Firstly, you’re allowed to be a member of a UK pension scheme, wherever you choose to live, and you have choices as to what to do with your pension.
You can simply leave your pension in the UK plan until you claim it, which you can do from 55 years of age, or you can leave it until your normal pension date. Bear in mind that pension scheme and annuity providers don’t normally pay your pension income into an overseas account.
You can also pay into a UK pension if you’re living or working abroad and there are no limits to how much you can pay in, although you should consider the possible tax relief implications.
Alternatively you could transfer the pension to an approved arrangement in the country you’ve chosen to live in, if it meets certain conditions. This is called a Qualifying Recognised Pension Scheme.
Finally, we shouldn’t forget the State Pension. You’re allowed to reside in another country and receive your State Pension but you’ll only receive increases in your in the UK for 6 months or more, in the European Economic Area, Switzerland or in a country that has a specific social security agreement with the UK.
Of course there are far more things to consider including the possible wider tax implications, but taking advice would be a sensible first step and could help you avoid any potential pitfalls.