Nearly half a million expat state pensioners are set to miss out on a £470 triple lock boost next month.
Under the triple lock system, the state pension will increase by 4.1 per cent in April. However, the Labour government’s ‘frozen pensions policy’ prevents annual increases for retirees in certain countries.
As the deadline looms, we have mapped the countries where expats are still eligible for an annual pension increase.
As William Cooper, Marketing Director at William Russell explains, expats living in countries that have a reciprocal social security agreement with the UK will still see their pension increase annually.
Most countries inside the EU have a reciprocal social security agreement with the UK
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The EU countries are:
- Austria
- Belgium
- Bulgaria
- Croatia
- Cyprus
- Czech Republic
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Malta
- Netherlands
- Poland
- Portugal
- Romania
- Slovakia
- Slovenia
- Spain
- Sweden
The UK also has a social security agreement with Ireland, which can be considered in certain circumstances.
The countries which the UK has social security agreements outside of the EU are:
- Barbados
- Bermuda
- Canada
- Chile
- Gibraltar
- Iceland
- Ireland
- Isle of Man
- Israel
- Jamaica
- Japan
- Jersey and Guernsey
- Liechtenstein
- Mauritius
- New Zealand
- Norway
- Philippines
- Republic of Korea
- Republics of former Yugoslavia
- Switzerland
- Turkey
- USA
For those considering transferring their pension abroad, Cooper says it’s essential to explore options like a Qualifying Recognised Overseas Pension Scheme (QROPS).
A QROPS is a type of pension scheme based outside the UK that meets specific requirements set by HM Revenue & Customs (HMRC).
It allows individuals with UK pension savings to transfer their pensions abroad without incurring an unauthorised tax charge, provided the scheme remains compliant with UK pension rules.
How to Apply for a QROPS:
- Research QROPS Providers: Look for reputable financial institutions that offer QROPS in your country of residence. Make sure the scheme is recognised by HM Revenue and Customs (HMRC).
- Consult a Financial Advisor: It’s advisable to speak with a financial advisor experienced in expat pensions and international retirement planning. They can guide you on the tax implications, costs, and benefits associated with transferring your pension.
- Request a Transfer Value from Your Existing Pension Scheme: Contact your current pension provider to get a transfer value quote. This will be the amount you can transfer to the QROPS.
- Submit the Application to the QROPS Provider: Complete the necessary paperwork to apply for the transfer, including forms from your existing pension scheme and the QROPS provider.
- Transfer the Funds: Once approved, the funds will be transferred from your current pension scheme to the QROPS. Keep in mind that transfer fees and tax charges may apply, especially if the transfer exceeds the lifetime allowance.
“Always seek guidance from a financial advisor with international expertise to navigate currency fluctuations, tax implications, and local pension regulations,” Cooper told GB News.
Before doing anything else, expats must check their state pension eligibility, he says, adding: “Start by logging in to the UK government’s online service to view your National Insurance record. This will show how many qualifying years you have accumulated. Generally, you need at least 10 qualifying years for a minimum state pension, and 35 years for the full amount.”
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It’s advisable to speak with a financial advisor experienced in expat pensions and international retirement planning
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You should also:
- Use the State Pension Forecast Service: You can use the state pension Forecast service to see how much you might get, and when you can start claiming. This service provides an estimate of your State Pension based on your current National Insurance contributions.
- Make Up Any Gaps in Your National Insurance Record: If there are gaps in your contributions, you may be able to make voluntary National Insurance contributions to increase your pension entitlement. This can be particularly useful for expats who may have missed years while living abroad.
- Check if Your Country of Residence Impacts Your Pension: Verify whether the country you live in has a reciprocal social security agreement with the UK, as this can affect whether your pension will increase annually.”Proper planning ensures your pension works for you, wherever you choose to retire. With these steps, you can optimise your pension’s value and ensure a smooth transition to living abroad,” Cooper added.
Expats are not the only group set to miss out on the triple lock hike.
Those who have taken career breaks longer than six years could face significant gaps in their National Insurance record.
“Those who have a gap of more than six years in NI contributions… may want to consider filling these gaps in their record now to ensure they are on track to receive the full state pension entitlement at retirement,” said Jonathan Watts-Lay, Director at WEALTH at work.
