UK State Pension Facts for British Expats
British Expats often forget about their UK State Pension. Most expats assume that time spent abroad will leave gaps in their contribution records and permanently affect the value of their state pension. But this is not true.
While the State Pension will not fulfil the retirement income needs, for most expats, it is one of the most cost-effective ways to create a basis for their retirement income.
If you have queries about your UK State pension contributions and how to top-up and fill in missing gaps as an expat, read more here and download our guide for further information.
Contents
The New (Current) UK State Pension
The UK government reformed the basic State Pension in 2016. If you reach the State Pension age on or after that date, you now get the new State Pension under the new rules.
Those who receive the new State Pension will get 203.85 GBP per week (23/24) at the time of writing. This is an increase of 10% per week from last year. Over a year that will be a total annual income of 10,600 GBP.
The Triple Lock
Those receiving State Pensions and residents in the UK currently have protection in the form of something called the Triple Lock. This guarantees that payments increase annually in line with whichever of the following is the highest:
- price inflation
- average wage growth (suspended in 2021)
- 5 %
Frozen Pensions
More than 500,000 Britons retired overseas are losing out because of the Frozen Pension policy.
As mentioned previously, pensioners will receive help from the Triple Lock rule in the UK. As a result, State Pension payments increase by 2.5%, causing price inflation or average wage growth. This means that State Pension payments keep their worth as time goes on.
However, for British nationals who retire outside to certain destinations, State Pension payments are permanently frozen at either the date the individual retired or the date that they arrived in their country of residence. But this is not consistently the case – in specific countries, UK State Pension payments are frozen, and in others, they are not, and the basis on where pensions are frozen seems quite random. Canada, New Zealand, and Australia – all locations where high volumes of British Nationals live – are headline examples of this.
Below, we supply a list of the countries where UK State Pension payments are, at the time of writing, currently frozen:
| Afghanistan |
| Albania |
| Algeria |
| Andorra |
| Angola |
| Anguilla |
| Antigua |
| Argentina |
| Armenia |
| Ascension Island |
| Australia |
| Azerbaijan |
| Bahamas |
| Bahrain |
| Bangladesh |
| Barbuda |
| Belarus |
| Belize |
| Benin |
| Bhutan |
| Bolivia |
| Botswana |
| Brazil |
| British Antarctic Territories |
| British Virgin Islands |
| Brunei |
| Burkina Faso |
| Burundi |
| Cameroon |
| Canada |
| Cabo Verde |
| Cayman Islands |
| Central African Republic |
| Chad |
| Chile |
| China |
| Colombia |
| Comoros |
| Congo |
| Cook Islands |
| Costa Rica |
| Cote D’Ivoire |
| Cuba |
| Democratic Republic of the Congo |
| Djibouti |
| Dominica |
| Dominican Republic |
| Ecuador |
| Egypt |
| El Salvador |
| Equatorial Guinea |
| Eswatini |
| Ethiopia |
| Falkland Islands |
| Faroe Islands |
| Fiji |
| Gabon |
| Gambia |
| Georgia |
| Ghana |
| Greenland |
| Grenada |
| Guatemala |
| Guinea |
| Guinea Bissau |
| Guyana |
| Haiti |
| Honduras |
| Hong Kong |
| India |
| Indonesia |
| Iran |
| Iraq |
| Japan |
| Jordan |
| Kazakhstan |
| Kenya |
| Kiribati |
| Kuwait |
| Kyrgyzstan |
| Laos |
| Lebanon |
| Lesotho |
| Liberia |
| Libya |
| Macau |
| Malawi |
| Malaysia |
| Maldives |
| Mali |
| Mauritania |
| Mexico |
| Moldova |
| Monaco |
| Mongolia |
| Montserrat |
| Morocco |
| Mozambique |
| Myanmar |
| Namibia |
| Nauru |
| Nepal |
| Netherlands Antilles |
| New Caledonia |
| New Zealand |
| Nicaragua |
| Niger |
| Nigeria |
| Norfolk Island |
| North Korea |
| Oman |
| Pakistan |
| Panama |
| Papua New Guinea |
| Paraguay |
| Peru |
| Qatar |
| Russian Federation |
| Rwanda |
| San Marino |
| Sao Tome & Principe |
| Saudi Arabia Senegal |
| Seychelles |
| Sierra Leone |
| Singapore |
| Solomon Islands |
| Somalia |
| South Africa |
| South Korea |
| Sri Lanka |
| St Helena |
| St Kitts & Nevis |
| St Lucia |
| St Vincent & Grenadines |
| Sudan |
| Surinam |
| Syria |
| Tahiti |
| Taiwan |
| Tajikistan |
| Tanzania |
| Thailand |
| Togo |
| Tonga |
| Trinidad & Tobago |
| Tunisia |
| Turkmenistan |
| Turks & Caicos Islands |
| Tuvalu |
| Uganda |
| Ukraine |
| United Arab Emirates |
| Uruguay |
| Uzbekistan |
| Vanuatu |
| Vatican City |
| Venezuela |
| Vietnam |
| Samoa |
| Yemen |
| Zambia |
| Zimbabwe |
Brexit and the State Pension
While Britain was a member of the European Union, UK nationals who retired in another EU country had their State Pension payments increased in the same way as they would be if they were residents in the UK. Brexit changed this.
The UK government initially said that, after Brexit, UK state pensions for expats in the EU would increase annually only until 2023. After that time, any increases would have depended on whether reciprocal arrangements with remaining EU member countries were in place. However, in early 2020, the UK government assured British expats who were already residents of the EU that they would continue to receive annual increases to their state pension.
This new guarantee was welcome for British expats currently retired in the EU, Switzerland, and the EEA.
Currency
Those receiving UK State Pension abroad will always have currency fluctuation to consider. For example, Sterling has dropped versus the Euro and US Dollar in recent years.
Currency movements can have a tremendous impact on the purchasing power of those retired overseas, and potential currency fluctuations are something that you should take into consideration when doing proper international retirement planning.
UK State Pension Qualification
If you have 10 years of relevant UK National Insurance Contributions, then you qualify. You can find out the level of contributions that you have made on this website.
British Expats CAN still receive the UK State Pension
You can still claim any State Pension you are eligible for if you have moved abroad. Furthermore, if you move overseas after you have started to receive your State Pension, and payments go directly into your bank or building society, the payments can continue. But you should let the pension service know when you are going to leave the UK.
Getting the Maximum State Pension
To get the maximum State Pension, you must have 35 years of qualifying UK National Insurance Contributions. Every year less than this will reduce your weekly pension.
Topping Up Your UK State Pension Whilst Overseas
Your first step should be to determine your current State Pension entitlement. You can do this by obtaining a pension statement, and you can do that here. You can also request a statement by post.
Once you know where you stand, you can apply to make voluntary contributions using a NI38 form. If you are employed or self-employed, you should be able to make Class 2 contributions and those weekly Class 2 contributions for the tax year are currently 3.15 GBP.
If you are not working, you will have to pay Class 3 voluntary contributions, which are more expensive, currently 15.85 GBP per week. This is still worthwhile, though; all expats who are not working should consider this.
Most British expats should be looking at making voluntary National Insurance payments if they do not already have 35 years’ worth of qualifying contributions.
To read more about how to boost your state pension, read here.
Filling In Gaps in Contributions
You can normally pay up to 6 years of arrears.
When can I start receiving State Pension?
State Pension age was 65 for men born before 6 December 1953 and between 60 and 65 for women born between 5 April 1950 and 6 December 1953. This is changing, though. Going forward, the State Pension age will increase to:
- 66 for people retiring in 2020 or later
- 67 for people retiring in 2028 or later
- 68 for people retiring in 2046 or later
Paying tax on my pension from abroad
You may be liable to pay tax on your State Pension by the UK and the country where you live. You can usually claim tax relief to get a refund if you pay tax twice. If you live in a country with a double-tax treaty with the UK, you will only pay tax on your pension once. This may be to the UK or the country where you live, depending on that country’s tax agreement.
Contracted Out
Your pension might be lower if you contracted out. Contracting out means that you pay lower National Insurance Contributions and have the money paid into another form of pension instead, e.g., a final salary pension scheme at work or a workplace, personal or stakeholder pension (before 6th April 2012). This was common for those working in the public sector.
Deferring the State Pension
Each year you defer taking your State Pension, you will get just under a 5.8% increase in your pension when you start taking it. However, you cannot take the deferred amount as a lump sum, and there is no inheritance by a surviving spouse or civil partner of the extra state pension built up from deferral of State Pension. Retirees would need to live beyond 80 to realise the tax benefits from deferring their state pension, so your life expectancy dictates whether deferring is correct.
Other things to consider
Future Changes – State Pension is a huge liability for the UK government. As a result, it is possible that the model could change in future. This could be in the form of further increasing the age at which you begin receiving it, adjusting to the Triple Lock rule, or other unforeseen changes.
No Refunds – The DPW will not refund Voluntary contributions to you, so do not pay more years than you need to. This can be difficult if your plans are not certain. If you are living abroad and are currently missing NIC years but might go back to the UK and would then reach the necessary 35 years, anyway, then do not plug any gap just yet. You can normally pay up to 6 years in arrears, so if you later decide to stay overseas, you can still build up your contribution record retrospectively.
Finally, you may not get the full new state pension even with 35 years of contributions. This is because the rules are complicated. For example, if you were a member of an occupational pension scheme contracted out, you would have paid fewer NICs and a lower state pension entitlement. More contributions can still improve this, though.
What we can help with
We can assist with UK state pension queries if you are living overseas and any questions you may have about how to top up or fill in the gaps. We have created this UK State Pension guide to help with any further questions you may have.
Disclaimer
The information on this page is directed only at persons outside the United Kingdom and must not be acted upon by persons in the United Kingdom.
