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9 August 2010

State pension alert on overseas retirement plans

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by Gill Montia

State pension alert on overseas retirement plans

Standard Life has identified the top retirement hotspots outside the UK, as follows: Spain, France, USA, Canada, Ireland.

However, the insurer reminds would-be ex-pats that their UK state pension may not rise once living abroad, meaning that 20 years down the line they could be receiving only half the entitlement of Britons who remain in the UK at the end of their working lives.

When a retiree moves abroad permanently, increases in state pension only apply if they are living in an EU country (plus Switzerland), or a country with a reciprocal social security agreement with the UK.

For Britons retiring outside these countries, the UK state pension is frozen at the amount initially paid when first claimed, or if the pensioner emigrates more than one year after payment begins, at the rate in force when emigrating.

Popular retirement countries outside these reciprocal agreements include Australia, Canada, New Zealand and South Africa.

Standard Life’s senior pensions policy manager, Andrew Tully, comments: “Retiring abroad is a dream for many people but without careful planning and advice, things can potentially go wrong very quickly.”

He continues: “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.”

To help with financial planning the insurer has launched, where overseas retirement plans can be checked out.

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