For people planning to retire abroad, one of the largest financial questions is what happens to the State Pension when they leave the UK. The pension can usually be claimed from overseas, but whether it rises each year depends on where the person lives. This article summarises the GOV.UK guide “Get your State Pension if you retire abroad”, in particular the pages on claiming and on how the pension is affected. The State Pension is a UK-wide benefit, and the rules described are those the guide sets out for people who live abroad. It is general information, not financial or pension advice, and it does not cover pension forecasts or private pensions.
Claiming from overseas
GOV.UK says a person can claim the State Pension abroad if they have paid enough UK National Insurance contributions to qualify, or have relevant overseas work or residence history. The guide says a person must be within four months of their State Pension age to claim. To claim, the guide says to contact the International Pension Centre or use the international claim form. This is a step to schedule well before the removal date, so the paperwork does not fall in the middle of a house sale or shipment.
How the money is paid
The pension can be paid into a bank account in the country of residence or into a UK bank or building society account. GOV.UK says that for overseas accounts, the claimant will need to provide the IBAN, BIC or the bank and branch codes. When paid into a foreign account, the amount is usually converted into local currency at the exchange rate at the time of conversion, and there is a conversion charge of 0.39% before payment. Recipients can choose payment every 4 or 13 weeks, and pensions under £5 a week are paid annually in December. Because exchange rates vary, a pension paid in euros or another currency will not be the same amount each period.
The guide also mentions delays around US federal holidays for payments to the United States. Anyone moving there should read that section of the guide to see what timing it describes.
The annual increase depends on where you live
The key point in the GOV.UK guide is that the State Pension only increases each year if the person lives in certain places. It lists:
- the European Economic Area (EEA);
- Gibraltar;
- Switzerland; and
- countries that have a social security agreement with the UK, with the exception of Canada and New Zealand, which the guide says do not receive increases.
Anywhere else, the pension is frozen. GOV.UK explains that a frozen pension stays fixed at its current value and does not rise annually, unlike the pension paid to those living in the countries above. The guide adds that the pension will go up to the current rate if the person returns to live in the UK.
The guide page read for this article does not include a list of the individual social security agreement countries, or current pension rates, so both should be checked on GOV.UK before a decision is made. The result is that two people with identical UK records can receive very different amounts after several years, depending only on where each moved.
What this means when choosing a destination
Moving home internationally usually involves a shortlist of countries, weighed against cost of living, healthcare and climate. The uprating rule adds another factor that only shows its effect over time. A person who retires to a frozen-rate country receives the same nominal amount year after year, so its value against prices may fall. That is an observation about how a fixed amount behaves, and GOV.UK does not quantify it. The site’s guide to tax residence and UK income after moving abroad covers the tax side of leaving, and its article on shipping and customs for a move abroad deals with the physical move.
A checklist before leaving
- Check whether the destination is in the EEA, Gibraltar, Switzerland or a country with an agreement, and whether it is one of the exceptions the guide names.
- Decide whether the pension will be paid into a UK account or a local account, bearing in mind the 0.39% conversion charge on foreign payments.
- Have IBAN and BIC or local bank and branch codes ready if paying into an overseas account.
- Contact the International Pension Centre when the claim window approaches, using the international claim form.
- Read the full GOV.UK guide for the specific country, as the guide is a summary and the destination country’s rules on residence also matter. For example, see the site’s article on moving to Spain.
Common questions
Does the pension stop if I move abroad?
No. GOV.UK says the pension can be claimed abroad and paid into a bank in the country of residence or in the UK.
Will it be frozen in Canada?
The guide says Canada and New Zealand are exceptions among the agreement countries and do not receive increases.
Does moving back restore the increases?
GOV.UK says the pension will go up to the current rate on returning to live in the UK.
Are the rates and country list fixed?
No. Government rules and payment rates can change, so the GOV.UK pages should be re-checked when the decision is being made.
The bottom line
The State Pension can be paid abroad, but it only receives yearly increases in the EEA, Gibraltar, Switzerland and most social security agreement countries, with Canada and New Zealand named as exceptions. Elsewhere it stays frozen. Because the difference builds up over years, the destination country deserves a place in the moving plan alongside visas, shipping and tax.