Many people in the UK choose to move abroad in retirement, but when doing so, it’s important to consider how this will affect your State Pension…
Pension Increases
The Triple Lock means the State Pension increases each April by whichever of the following is highest:
- A 2.5% increase
- Inflation, as measured by CPI in the previous September
- Growth in average earnings in the UK
In the Autumn budget, it was announced that the increase we will see in April 2025 will be linked to earnings, meaning both the basic State Pension and new State Pension will rise by 4.1%.
However, your State Pension will only increase each year if you live in the European Economic Area (EEA), Gibraltar, Switzerland, or countries that have a social security agreement with the UK (excluding Canada and New Zealand).
If you do not live in any of these countries, you will not get yearly increases to your pension. However, if you do return to live in your UK, your pension will go up to the current rate.
The EEA includes:
- Austria
- Belgium
- Bulgaria
- Croatia
- Republic of Cyprus
- Czech Republic
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Malta
- Netherlands
- Poland
- Portugal
- Romania
- Slovakia
- Slovenia
- Spain
- Sweden
- Iceland
- Liechtenstein
- Norway
Nigel Green, CEO and founder of deVere Group, told the Echo that whilst the rise announced recently is good news for many retirees, not all will benefit:
“An estimated 500,000 retired Brits who live abroad will not receive any boost at all. Outrageously, they will continue to have their pensions frozen in value at the point of retirement date, or date of emigration.
Having a frozen pension means that your retirement income falls in real terms year on year due to inflation, and never has this been more true than as the cost of living has soared.” – Nigel Green
Claiming Your State Pension in Different Countries
The UK State Pension is based on National Insurance contributions, but if you have paid contributions in multiple countries, you might get separate pensions from each.
Depending on where you’ve lived or worked, you may need to make more than one pension claim.
For EEA counties, Gibraltar and Switzerland, you only need to claim your State Pension once, in the last country where you lived or worked. This claim will then cover all countries within the EEA, as well as Gibraltar and Switzerland.
For any other countries, you will have to claim your pension separately.
If you split your time between the UK and another country, you must choose which country you wish your pension to be paid in. You can’t be paid in one country for the some of the year, and another for the rest.
If you want advice on how your pension may be affected by moving abroad, you should contact the International Pension Centre by email or by submitting an online enquiry form.