If you dream of living out your golden years on balmy Portuguese beaches or French vineyards, you may be planning to retire abroad. And you wouldn’t be alone in the Anglophone bingo: as of 2017, there were 247,000 British citizens aged over 65 living in EU countries (excluding Ireland), including 121,000 in Spain alone. In fact, British pensioners have travelled and set up retirement communities all over the world, from Thailand to Jamaica, in pursuit of a cheaper cost of living and clement weather.
But there are financial, legal, and practical implications to retiring overseas, whether to Europe and further afield. Here are a few of the things you’ll have to consider before you pack your sandals and socks and adjourn to the Costa del Sol.
In This Guide:
When you move abroad, you’ll have to consider the costs of living in your new abode, from property and groceries to energy, fuel and public transport. These things can vary widely, even within the EU.
Most pensioners rely on two forms of income: State Pension and a workplace or personal pension scheme. There are implications for both if you pack your bags and relocate abroad.
You’ll be able to claim your State Pension in any country in the world and have it paid into either a bank or building society account on our shores or an account in your new location (in the local currency). You just have to notify the Department for Work and Pensions (DWP) of your move and new address.
But while State Pension payments typically increase each year in line with the cost of living if you’re in the UK, in some countries you’ll forfeit these increases. Typically, your payments will be frozen, unless you’re residing in the European Economic Area (EAA), Gibraltar, Switzerland, or a country that has a social security agreement with the UK.
Additionally, Pension Credit, a benefit that tops up your weekly income (if it’s below £163 for single people or £248.80 for couples) ceases when you move abroad permanently.
Workplace and Personal Pensions
Workplace and personal pensions can be paid to you no matter where you live, with the same annual built-in cost of living increases you’re entitled to in the UK.
You’ll have to notify your pension provider when you move. Some will pay into overseas bank accounts while some will only deposit money into UK accounts.
Remember that, whether you’re having your pension paid into a UK or overseas bank account, the exchange rate between the pound and the local currency, which will fluctuate, will affect how much money you receive. You should budget carefully, aware that your income may go up or down. If your pension is paid into a UK bank account, you’ll also face charges for currency conversion and transferring the funds into a foreign bank account so you can spend it.
Most life insurance policies from major providers will still be valid if you move overseas and your beneficiaries will be able to claim on them if you die abroad. You’ll just need to notify your provider of your new address.
However, some policies won’t be valid abroad so you should read the terms and conditions of your policy carefully before picking up the sticks and heading to the Algarve - and then leaving your family in for a nasty surprise when they try to file a claim.
Compare life insurance quotes and see if they’re valid abroad, and how you can still benefit from retiring in the sun.
A will drawn up in the UK may not appropriately handle assets, including property, based in a different country due to different legal systems. You should seek out independent legal advice when drawing up wills and have separate wills written for each country in which you have assets.
If you retire abroad long-term, you’ll be classified as a non-UK resident. You won’t have to pay UK tax on your State Pension, but you might have to pay tax on it in the country in which you reside. Other pension income, from employer and personal pension schemes, will be classed as UK income and taxed accordingly, however. You can also be taxed on that income in the country in which you reside, but some nations have double-taxation agreements with Britain, so you can avoid being double-taxed.
For information, consult .
Rights and benefits
You can keep your right to vote in general and EU elections for 15 years after moving abroad. For more information, consult .
While healthcare in the UK is free at the point of access via the NHS, the situation is different abroad. In many countries, you will need to pay partly or fully for medical appointments, treatment, and medicine. These costs may be high so you may need to take out health insurance.
The UK has agreements with some countries that will entitle you to state healthcare, paid for by the UK. This is true (currently) if you live in a country in the European Economic Area (EEA) or Switzerland. To receive these benefits, you’ll need to obtain an S1 form in the UK and have it registered in the country in which you’re living.
It’s important to note that while the terms of the UK’s exit from the European Union remain uncertain, it’s unknown what rights and benefits, including access to healthcare, British citizens living in the EU will have in the future.