UK pensions when you live abroad – Things to consider

UK pensions when you live abroad – Things to consider

by Aurora Financial — Posted on June 9, 2020

If you are a UK citizen working abroad but planning to retire in the UK you may want to make pension contributions into a UK pension.

You’re now allowed to be a member of a UK registered pension scheme regardless of where you live or where your employer is based.¬†

However, there are some thing you will need to keep in mind.

Firstly, you may not be eligible to receive the full amount (if any) tax relief on your contributions.

To get tax relief on your contributions, you must have been a relevant UK individual for the tax year in question.

Also, the years you have spent working abroad may not count towards the minimum 10 years required to receive the New State Pension once you return to the UK.

However, you may be able to build up a UK State Pension if you pay into the social security system of a country in the European Economic Area, Switzerland or a country that has a social security agreement with the UK.

You may also be able to claim a State Pension from the country you are living in, if you are paying into its state pension scheme.

It’s important to check your entitlement to a pension wherever you choose to retire.

If you choose to retire abroad instead, your UK pension is not lost. You can still claim it and collect payments. Currently the earliest you can do this is from age 55.

However you may need to have this paid into a UK bank account which means you may be affected by exchange rates when taking the money abroad.

It may be possible to transfer your UK pensions to a pension arrangement overseas if the pension plan is a Qualifying Recognised Overseas Pension Scheme (QROPS).

However, in order to do so certain conditions must be met and these policies can sometimes have high charges.

As with anything, there are pros and cons in regards to your pension when you work or retire abroad. Speaking with a Financial Adviser can make it easier to understand your options based on your particular set of circumstances.