Whether you’re keen to live in sunnier climes, looking to invest in overseas property or wish to move closer to loved ones, retiring abroad is often an exciting, rejuvenating experience. However, funding a new life abroad is not without its challenges.

We can provide you with the support that you need when moving your savings across borders and transferring pension payments from abroad. As specialists in foreign currency exchange, we provide our customers with a quick, easy and cost-effective way to transfer funds from their UK bank accounts to overseas accounts, enabling them to get more out of their money.

What happens to my state pension if I move abroad?

There are two options when it comes to moving your state pension abroad: you can either i) transfer your pension pot to an overseas pension scheme or ii) leave your pot in the UK and simply send yourself the funds whenever you wish to do so.

The second option is the most popular with British retirees living abroad, as it allows you to enjoy the protection of the UK pension scheme and transfer your money across to your new country of residence. If you do decide to keep your pension in the UK, however, you’ll need to bear in mind that you’ll stop receiving Pension Credit, and your income will vary due to exchange rate fluctuations. You’ll also need to make international payments on a regular basis.

How can I make pension payments to a foreign bank account?

Transferring your money from a UK bank account to an overseas account can prove rather costly. Many high street banks provide poor exchange rates and charge high transfer fees. The good news is that we can offer low-fee transfers and competitive exchange rates, allowing you to save money when you transfer your savings or state pension abroad.

You can transfer your entire pension pot to your foreign bank account with one large overseas payment. Alternatively, you can set up regular international transfers between the two accounts.

How to protect your pension payments from exchange rate movement

You can protect your money from unfavourable exchange rate movements with our foreign exchange tools; our forward contracts, for example, allow you to secure a prevailing rate for up to two years. While this may require a deposit, you’ll benefit from knowing exactly how much you will pay when transferring your money abroad.

It’s up to you to decide how to manage your funds. You can either manage and send money online, or you can talk to one of our currency experts. Our experienced team can provide support and guidance, and they’ll also keep you informed of movements in the currency markets.

Can you transfer pensions internationally?

You can indeed transfer your pension internationally to an overseas pension scheme. The scheme must, however, be a qualifying recognised overseas pension scheme (QROPS) that has been verified by HMRC; otherwise, your UK pension scheme may refuse to transfer your pension, or you’ll have to pay a heavy tax penalty of at least 40% on the amount being transferred. Check the full HMRC overseas pension list today.

You can normally transfer your pension without paying any tax if you’re resident in the country where your QROPS is located. However, you’ll have to pay a 25% tax charge if:

• You transfer to a QROPS in the EEA or Gibraltar, and you live outside the UK, EEA or Gibraltar when you make that transfer
• You transfer to a QROPS outside the EEA or Gibraltar, and you are not a resident of the country in which the QROPS is based

What happens to my pension if I move abroad?

If you decide to move abroad before you have retired, you can either:

• Stop paying into your pension and receive your money at a later date (from age 55 at the earliest). Your pension will remain active and continue to grow, depending on how your investments perform.
• Keep paying into your pension (the tax relief on your contributions may be limited, however)

You’ll still receive a state pension if you move abroad; however, you’ll only be eligible for State Pension increases if you live in the EU/EEA, Switzerland, or a country that has a social security agreement with the UK that allows the State Pension to rise in line with cost-of-living increases.

Can I have my UK pension paid into a foreign bank account?

Yes – your pension can still be paid on a monthly basis into a foreign bank account. You will first need to open an overseas saving account, if you have not already done so, and supply your employer with all the necessary details, e.g. your new bank account’s International Bank Account Number (IBAN), Bank Identification Code (BIC) (also known as a SWIFT code), the currency used in that account, etc. You can relay this information by completing an international payment mandate form, or an overseas payment mandate.

State Pensions can also be claimed from abroad if you have paid enough National Insurance contributions to qualify.

Is my pension frozen if I live abroad?

British pensioners who retire abroad have their state pension frozen at the level that it was at when they left the UK or first claimed their pension overseas. There are exceptions to this rule, however; if your new country of residence has an agreement with the UK that says otherwise, your state pension will increase each year.

State pensions are uprated in the following jurisdictions:

• The European Economic Area (EEA)
• Gibraltar
• Switzerland
• Countries that have a social security agreement with the UK (Canada and New Zealand are excluded)