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Expats to consider pension requirements

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People from the UK who are keen to move abroad have been told to think about their pension requirements.

According to Robin Ellison, partner at Pinsent Masons, expats need to consider whether or not their state pension will be index-linked in their new home.

This, he said, is because the agreement the UK currently has regarding the protection of state pensions with some countries does not apply across the board.

As a result, Britons who are relocating overseas might need to adopt different methods to safeguard the interest on their pensions.

Mr Ellison said expats from the UK will also need to consider how their move abroad will impact on their tax bill, as they could end up being taxed twice.

"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," he commented.

Mr Ellison noted that some people might consider the option of claiming one pension from their country of birth and another from their new home.

However, he said it is unlikely that a person will be able to adopt this approach, as state pension systems usually "require residence and an earnings record".

Furthermore, he pointed out that many countries have rules in place to stop so-called pensions shopping.

"Normally the claim has to be made in a local language, so if you're not familiar with a local language, that is a real problem," Mr Ellison stated.

"Claiming a pension from a foreign country is not impossible but difficult."

Mr Ellison encouraged those who are unsure about their pension situation to speak with an independent financial adviser before relocating overseas, as they will understand all the relevant issues.

He said this can be "absolutely critical" to the success of any move to another country and could make a "huge difference" to an expat's finances.

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