For pensioners, moving abroad can be a very tempting option. Not only can you find somewhere to live with a bit more sunshine, there’s also the fact that your money can often stretch a lot further in other countries. Cheaper property prices, lower costs of living and favourable exchange rates can make your UK pension worth far more abroad than at home, but is it really worth it?
Cost of living
The UK is one of the most expensive places to live in the world. From the price of property to the cost of food, power and other essentials, many other countries are far more affordable. If your pension income isn’t stretching as far as you might have once hoped, moving abroad could offer a solution.
It’s important, however, to be aware that a lot of ex-pat pensioners were hit quite badly by the recent global financial downturn. Many ex-pats in countries such as Spain and Portugal found that changes in the exchange rate and prices, affected by the recession, suddenly made their pension worth a lot less abroad than it had been previously.
Although you can still claim your state pension when you move abroad, you will need to fill out an international claim form, which can be found on the International Pension Centre website alongside lots of other useful information.
One of the most important things to understand is that your state pension will only continue to increase in line with inflation in certain countries. In many other places, including popular ex-pat destinations such as Australia and Canada, your state pension will be frozen at the level it was at when you left the UK.
The countries where your pension will continue to rise with inflation are:
- All EEA member states
- Republic of Macedonia
As we grow older the amount of medical care we need almost always increases. Planning how you will pay for this when living abroad is therefore of vital importance.
If you are planning on living within the EEA or Switzerland, then as a pensioner you could be entitled to state health care paid for by the UK government. To claim these benefits, you will need to fill out a certificate of entitlement (known as an S1 or E121 form depending on the country).
Elsewhere in the world your health care costs will not be covered, so you will need to arrange private health insurance which can be costly for pensioners as insurance premiums for older people tend to be higher to those below pensionable age.
One issue that is worth considering is how living abroad will affect inheritance tax on your estate. Different countries have very different rules about inheritance tax compared to the UK, some of which may be beneficial to you and your heir, others less so.
It is important to research the inheritance tax rules of the specific country you are considering moving to as these rules can often be quite complicated. You should also familiarise yourself with the current UK conventions around inheritance tax for ex-pats. Understanding how this works could help avoid tax being paid twice on your estate, both in the UK and your new country of residence.
Intransit have been helping people move both within the UK and internationally for over 17 years. This gives us the knowledge and experience to advise you about all aspects of your move, as well as a range of contacts who can help us arrange a smooth transition for you into your new life. We can assist you with everything from export wrapping and getting the all the right forms of insurance to correct customs clearance and other relevant paperwork.