Understanding your Pension Options when Retiring Overseas

The world is really your oyster when retiring abroad; it has become increasingly popular to retire overseas as an expat due to the freedom it offers. As so many countries begin to embrace a global lifestyle it could be the perfect time to consider retirement abroad. When you’re deciding whether to retire overseas and where to retire overseas you will have to consider a number of things such as quality of life and climate.

In addition to this it is essential that you do your research into understanding the impact retiring abroad may have on your finances. As with retirement in the UK, your pension is likely going to be crucial when it comes to enjoying your retirement; most commonly those retiring in the UK will have income streams from their UK state pension and workplace or personal pensions. For those who have a property portfolio, this will generate a suitable income in addition to their pension; but your pension is still a crucial consideration no matter what.

UK State Pension

Anybody who has worked and contributed to National Insurance is eligible for the state pension. The amount you’re eligible for will differ based on your contributions. With the UK state pension, you can choose whether you have it paid into a UK bank or building society; or, a bank within the country you’re living in. With the UK state pension, it is up to you how often you’re paid; either every 4 weeks or 13 weeks. If you’re payments are less than £5 per week you will receive payments annually in December.

Workplace and/or Personal Pensions

In most cases you’re personal or workplace pension will be a more lucrative source of income than your state pension. Therefore, it is essential that you know the best way to manage these in order to maximise your income from your pension. There are generally two options when it comes to personal and workplace pensions.

  1. Moving your Pension Abroad

In some cases, it will be possible to move your UK pension scheme to an alternative scheme abroad. Your plan must meet certain conditions which deem it as ‘Qualifying Recognised Overseas Pension Scheme’.

  • Keep your UK Pension

From the age of 55, you can request early payment from your pension scheme. You may be able to withdraw 25% of your pension value as a lump sum which you can then use to set up in your new home abroad. The remaining money can then provide you a lifetime pension; make sure, however, that you consider the impact of currency fluctuations.

As your pension is held in UK pension scheme it is paid in pounds sterling. This needs to be taken into consideration when you’re calculating the amount of income you need to support your desired quality of life as the exchange rate can fluctuate over time.

It is also important to keep in mind that banks tend to charge you a large percentage of the value of your payment whereas there are FCA-authorised specialist companies which can charge a fraction of the amount. They work to ensure you get more for your money. As a specialist online currency company, Eris FX can help you with retirement abroad; helping UK expats transfer large sums of money from their pension abroad every year. This can then be done when the rates are most favourable; to ensure you get more for your money.

Retirement abroad should be filled with excitement and fulfilment; to ensure your move goes as smoothly as possible make sure you do plenty of research. Consider where you would most like to enjoy your retirement and when you know make sure you seek financial advice on retirement abroad so that you can focus on enjoying your retirement.