Insights into pensions for expats

Pensions remain an interesting, if not perplexing, subject matter for expats, government figures and professionals at large. It is a multifaceted area of government policy that is constantly under scrutiny and therefore subject to amendments.
Take for example the government’s current policy towards British individuals who have decided to retire abroad. At present, state pension payments to such people are, to all intents and purposes, frozen.
Retirees who have paid national insurance contribution but are now living in one of 120 countries – the freeze isn’t universal per se – are not privy to regular increases to their basic state pension, which is necessary if it is to maintain real spending power.
Therefore, it bodes well for international movers to think about pensions, even if they have no intention of retiring soon. It’s good to plan ahead and, moreover, it is important to think about pensions now so that they are not left lacking in the future.
Robin Ellison, a partner at the international law firm Pinsent Masons, suggests that one of the key things to think about when moving abroad with regards to claiming a pension is whether a state pension is index-linked or not.
“There are certain countries where the UK has an agreement and their state pension is protected but in other countries it is not like that,” he went on to say.
“There are things they can do to protect the interest on their pensions. They also need to work out their exchange controls. They also need to worry about double taxation. In some cases their pension will be taxed in this country and when they receive it they will be taxed in their resident country as well.”
It is important to note, Mr Ellison added, that it is extremely tricky, if not rare, for people to be able to get two state pensions. This is because most pensions of this type require residency and an earning record.
In fact, getting a pension from a foreign country is near enough impossible, as many nations have in place rules that effectively prevent this from happening. It’s not entirely impossible, he noted, but very difficult.
Mr Ellison advised: “If you are going abroad or you’ve got general income, then go and have a chat with an IFA [independent finance advisor] who understands all of this.
“It is absolutely critical because it can make a huge difference. In fact there is a lot of case law by people for example who have gone to Australia who are now earning equivalent to British state pension which hasn’t changed for 20 or 30 years. So you do need to think about what you do before you go.”