Immigration Corner | Will I lose my pension?
Dear Mr Bassie,
I am planning on migrating and retiring outside of the United Kingdom. How will this affect my rights and status to my United Kingdom state pension if I retire abroad? Also, could you please explain in more detail how this works?
Persons can claim their state pension abroad if they have paid enough United Kingdom National Insurance contributions to qualify. They should get a state pension statement if they need to find out how much state pension they may receive.
Persons must be within four months of their state pension age to claim. To claim their pension, they can either contact the International Pension Centre and/or send the international claim form to the International Pension Centre. Please note that the address is on the form. Persons should be aware that if they live part of the year abroad, they must choose which country they want the pension to be paid in. Persons cannot be paid in one country for part of the year and another for the rest of the year.
With respect to the bank accounts that a pension can be paid into, a state pension can be paid into a bank in the country where that person resides or a bank or building society in the United Kingdom.
It should be noted that a person can use an account in his/her name; a joint account; someone else's account, having been given their permission and if kept to the terms and conditions of the account. Please note that a person will need the international bank account number (IBAN) and bank identification code (BIC) numbers if it is an account outside of the United Kingdom and that he/she will be paid in local currency. Persons should be aware that the amount received may change due to exchange rates.
Persons can choose to be paid every four or 13 weeks, but it should be noted that if the state pension is under PS5 per week, it will be paid once a year in December. For those who live abroad, and if the payment is due in the same week as a United States bank holiday, it could arrive one day late. This is because a US company processes these payments.
A person's state pension will only increase each year if he/she lives in the European Economic Area (EEA); Switzerland; countries that have a social security agreement with the United Kingdom. Persons will not get yearly increases if they live outside of these countries. It should be noted that persons cannot get increases if residing in Canada or New Zealand. Also, persons should be aware that their pension will go up to the current rate if they return to live in the United Kingdom.
It is advisable, just to be certain, that persons contact the International Pension Centre if they want advice on how their pension might be affected if they have already retired and are thinking of moving abroad.
With respect to how much tax that will need to be paid and where to pay it, this will depend on where those persons are considered to be a resident.
Persons may have to pay United Kingdom tax on their State Pension if they live abroad but are classed as a United Kingdom resident for tax purposes. The amount to be paid will depend on the amount of income.
It should be noted that overseas residents may be taxed on their state pension by the United Kingdom and the country where they live. If persons pay tax twice, they can usually claim tax relief to get all or some of it back.
Just for completeness, it should be noted that there will be no change to the rights and status of European Union (EU) nationals living in the United Kingdom, or to United Kingdom nationals living in the EU while the United Kingdom remains in the EU.
I hope this helps.
- John S. Bassie is a barrister/attorney-at-law who practises law in Jamaica. He is a justice of the peace, a Supreme Court-appointed mediator, a fellow of the Chartered Institute of Arbitrators, a chartered arbitrator, and a member of the Immigration Law Practitioners Association (UK). Email:firstname.lastname@example.org