State pension, healthcare and pensions may be impacted by where you choose to live | Personal Finance | Finance
Each year, thousands of retirees decide to pack up and leave the UK for various reasons, including moving closer to family or in pursuit of sunnier climes. Regardless of the motivation behind the decision, it can impact pensions, the state pension and healthcare. William Cooper, marketing director at William Russell, shared important information about pensions and healthcare for UK expats with Express.co.uk.
State pension
Britons can receive a UK state pension from any country in the world.
However, Mr Cooper warned how much people receive depends on where they move to, namely whether that country has a social security agreement with the UK.
A state pension increase is gained in the following nations and areas:
- The UK
- European Economic Area (EEA)
- Gibraltar
- Switzerland
- Countries with a social security agreement with the UK (but not Canada or New Zealand).
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Those who move abroad, but not to these places, will see their sum frozen at the same rate as it was when they first became entitled to the pension or the date they left the UK if already a pensioner.
The End Frozen Pensions Campaign estimates 500,000 people are impacted in this way, with the majority living in countries popular with British expats, including Australia, Canada and New Zealand.
Mr Cooper added: “Your pension will be converted into the local currency, so your income will also be affected by the exchange rate.
“If you live part of the year abroad, you must choose which country you want your pension to be paid in. You cannot be paid in one country for part of the year and another for the rest of the year.”
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Pensions
Mr Cooper explained: “Since 2016, employees earning more than a certain amount are automatically enrolled into a workplace pension unless they choose to opt out. Many Brits also pay into private pension schemes of their choice.
“These pensions can be paid to you wherever you live in the world, but you’ll need to check whether they can be paid into an overseas bank account.
“If you move abroad before you retire and continue paying into a UK private pension, you might not get the same tax relief on contributions as you would in the UK.”
If a person moves anywhere other than the UK for retirement, they may have to take into account different restrictions and taxes.
Mr Cooper outlined two options when it comes to a combined pension pot.
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He said: “On the one hand, you can leave your pension pot in the UK and withdraw it from abroad.
“Alternatively, you can move your combined pensions abroad or a combination of both.
“It’s important to seek advice, however, as the tax implication could reduce your pension entitlement.”
Healthcare
Each country has a different approach to healthcare, with its own unique health system in place – and this may be vastly different to the NHS.
As a result, Mr Cooper recommends taking out international private medical insurance or expat health insurance.
He said: “It is the best, and sometimes only, way to guarantee you’ll have the coverage you need, when you need it.
“Healthcare varies enormously from country to country. As an expat, you may have limited access to public healthcare, and standards may not be what you’re used to.
“International health insurance plans range from basic cover, giving you access to essential emergency care, to fully comprehensive covering you for everything from maternity visits to dental care.”
Mr Cooper urged Britons to investigate the health system in the country they are moving to, before taking the leap to become an expat.
For example, in the United States, people may need highly specialised insurance to make sure they are covered.
Before moving abroad, people can talk to the International Pension Centre which offers advice and information about pensions and benefits for those who live abroad.
