Expat Brits who are retiring abroad have been warned to make sure their pensions will be valid in their new destinations, or risk losing out on thousands of pounds.
The warnings come from pension specialist Standard Life as they revealed the top retirement hotspots for British expatriates. Based on the places where Standard Life pay into the most pensions, they ascertained that Spain is currently the most popular destination for British expatriate retirees.
However, in light of more people retiring abroad than ever before, the importance of being aware of your pension scenario has also been underlined.
John Lawson, head of Pensions Policy at Standard Life, said: “Doing your homework in advance of moving, matching your retirement income and expenditure, and making the appropriate decisions around purchasing an annuity or using income drawdown are key considerations. Your retirement income could also be subject to exchange rates and currency fluctuations, as well as local tax laws.”
He added that: “You also need to think about your state pension and what, if any, reciprocal agreement is in place. A reciprocal agreement entitles you to any increases in the UK state pension, paid for by the country you retire to. However, if there isn’t a reciprocal agreement in place, then you need to be very careful your retirement income is sufficient to cover your living costs over a long period of time. Over a 20 year retirement, your basic state UK pension could halve in real terms if a reciprocal arrangement is not in place.”
The topic of pensions is often a contentious one for British expats, at the moment there are thousands of expats lumbered with frozen pensions that have left them in a state of financial hardship.
One of the best ways of avoiding pension problems is by utilising a special offshore pension transfer, such as the QROPS. A QROPS offers many benefits and advantages over a standard pension, find out more by speaking to a recommended financial planner.