Spain and Canary Islands. Brits favourite spots
If you are looking to up sticks and spend your golden years somewhere warmer, check out Standard Life’s new list of the world’s top five retirement hotspots – but before you jump on that plane, be warned that a life abroad may leave you less well off than staying in Blighty thanks to pension woes.
Spain is the country that most Brits would like to retire to, due to it’s warm climate, outdoors lifestyle and the proximity and ease of getting back to the UK. There is a crucial point to consider before heading off for sunnier climes – namely money and whether you will actually be able to afford the retirement you are dreaming of.
Andrew Tully, Senior Pensions Policy Manager, Standard Life said, “Retiring abroad is a dream for many people but without careful planning and advice, things can potentially go wrong very quickly.”
If you move abroad permanently, any increases in your UK state pension will only apply if you are living in an EU country (including Gibraltar and Switzerland), or a country with a reciprocal social security agreement with the UK. So, while your friends back home in ol’ Blighty may be enjoying double the level of state pension that you are getting after 20 years.
If you choose to move outside these countries, the amount of UK state pension you will receive each year is frozen at the amount initially paid when first claimed – or if you emigrated more than one year after payment began, at the rate in force when emigrating). Popular retirement countries outside these reciprocal agreements include Australia, Canada, New Zealand and South Africa.
Mr Tully added, “One significant consideration before you move is to think about your state pension and what, if any, reciprocal agreement is in place. 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. Over a 20 year retirement, your basic state UK pension could halve in real terms if a reciprocal arrangement is not in place.”
If you are considering retiring abroad in the future, but are wondering if your retirement savings will be sufficient, Standard Life has launched www.getarealitycheck.co.uk, where you can check if your plans are on track.
Top tips for retiring abroad
Seek independent financial advice before making plans about future pension provision or transferring your pension overseas.
Check what reciprocal basic state pension agreements are in place with the destination country, if any (check with the Department for Work and Pensions).
Inform your social security office, HM Revenue and Customs, and the Department for Work and Pensions when you move and provide your contact details abroad.
You can get a forecast of your state pension by completing a BR19 form or go to www.thepensionservice.gov.uk.
If already overseas, complete form CA3638 or call The International Pensions Centre on 0191 218 7777.
Check your state pension age (SPA). For women, the SPA is rising from 60-65 between 2010 and 2020, with further rises to 68 currently expected to take place by 2048, although the coalition government may accelerate these changes.
Find out about welfare rights abroad. Some UK benefits are not payable outside the UK, others apply only in the EU or in countries which have agreements with the UK.
Tell your bank, building society and any other financial institution that you have a policy or agreement with them and are moving abroad.
Contact your local council to let them know when you are leaving and leave a forwarding address.
Find out more about healthcare costs in the country you want to move to.
Inform your GP and dentist you are moving, and consider private healthcare.
Average Spanish property prices fell 4.6% over 12 months to the end of August, according to Tinsa, one of Spain’s leading property appraisal companies. After 9 months of trending towards smaller price declines, this is the second consecutive month in which the index shows price falls accelerating from -4pc in June to -4.6pc in August.
