Sunny climates attract Britons abroad in search of a happy retirement, but many could be paying a high price as a consequence. Their UK state pension could be frozen while those still resident in the UK enjoy double the level of state pension after 20 years.
Research from Standard Life has found that after two decades the UK state pension could be worth £205.73, while a pensioner who retired to a non EU country or a country where a reciprocal agreement is not in place would receive just £97.65. Andrew Tully, Senior Pensions Policy Manager at Standard Life said: “Retiring abroad is a dream for many people but without careful planning and advice, things can potentially go wrong very quickly.” If an individual moves abroad permanently, any increases in their UK state pension will only apply if they are living in an EU country (including Gibraltar and Switzerland), or a country with a reciprocal social security agreement with the UK.
Where the individual is living outside these countries, the amount of UK state pension they will receive each year is frozen at the amount initially paid when ﬁrst claimed. Popular retirement countries outside these reciprocal agreements include Australia, Canada, New Zealand and South Africa. What’s more, neither Canada nor the USA have healthcare agreements with the UK.
Standard Life’s research found that the top retirement hotspots are Spain, France, USA, Canada and Ireland. More information on reciprocal health and pension agreements is available at: www.dwp.gov.uk/