22 August 2011
Spain again tops overseas retirement hotspots

Standard Life has revealed the top retirement hotspots outside the UK. These are: 1st Spain; 2nd Australia; 3rd USA; 4th France; 5th Ireland2.

John Lawson, Head of Pensions Policy, Standard Life commented: "Retiring abroad is a dream for many people, but does require careful planning and advice. Many people think living abroad is cheaper than living in the UK, but this isn't always the case. Doing your homework in advance of moving, matching your retirement income and expenditure, and making the appropriate decisions around purchasing an annuity or using income drawdown are key considerations.  Your retirement income could also be subject to exchange rates and currency fluctuations, as well as local tax laws.

"You also need to think about your state pension and what, if any, reciprocal agreement is in place. A reciprocal agreement entitles you to any increases in the UK state pension, paid for by the country you retire to. However, 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 halve3 in real terms if a reciprocal arrangement is not in place."

If an individual moves abroad permanently, any increases in their UK state pension will only apply if they are living in an EU country (including Gibraltar and Switzerland), or a country with a reciprocal social security agreement with the UK4. Where the individual is living outside these countries, the amount of UK state pension they will receive each year is frozen at the amount initially paid when first claimed (or if the pensioner 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.

If you are considering retiring abroad in the future, but are wondering if your retirement savings will be sufficient, please go to www.yourfuturemoney.co.uk, where you can check if your plans are on track.

Top tips for retiring abroad

  1. Seek independent financial advice before making plans about future pension provision or transferring your pension overseas.
  2. Check what reciprocal basic state pension agreements are in place with the destination country, if any (check with the Department for Work and Pensions).
  3. Make sure that you can afford to withstand adverse currency movements. Your pensions will be paid in GB pounds but your spending may largely be in Euros or Australian, U.S. or Canadian Dollars. For example, the £/Euro exchange rate for the week of 20th August 2007 was 1.4745 Euros5 to the £. On 17th August 2011 the exchange rate was 1.1447 Euros5 to the £. This means someone retiring to Europe four years ago has lost nearly a quarter of the spending power of their UK pensions, and that is before taking account of inflation.
  4. 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.
  5. You can get a forecast of your state pension by going to the Directgov website. If already overseas, complete form CA3638 or call The International Pensions Centre on 0191 218 7777.
  6. 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.  You can check by using the State Pension Age Calculator on the Directgov website.
  7. 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.
  8. Tell your bank, building society and any other financial institution that you have a policy or agreement with them and are moving abroad.
  9. Contact your local council to let them know when you are leaving and leave a forwarding address.
  10. Find out more about healthcare costs in the country you want to move to.
  11. Inform your GP and dentist you are moving, and consider private healthcare.

For further tips, please go to the Directgov website.


For further information, please contact:

Paul Keeble - Standard Life
Direct: 020 7872 4481
Mobile: 0771 248 6387
Email: paul_a_keeble@standardlife.com

Notes to Editors

  1. In August 2010, the top retirement hotspots were: 1st Spain;  2nd France;  3rd USA;  4th Canada;  5th Ireland.
  2. Standard Life currently pays pensions to over 3,000 people using an overseas bank account.  The top five countries are listed.
  3. For example, someone who retires abroad for 20 years to a country which doesn’t up rate the basic state pension in line with the UK, could receive less than 50% of the equivalent of their UK pensioner counterpart.  This assumes the current UK £102.15 basic state pension is uprated by 4% each year for the next 20 years.
  4. After 20 years the UK state pension could be worth £215.21, while the pensioner who retired to a non EU country or a country where a reciprocal agreement is not in place would continue to receive £102.15.
  5. A list of European Union countries and countries that have reciprocal arrangements with the UK is available from the DWP website. A reciprocal social security agreement is where the country of residence agrees to increase the state pension in line with any increases in the UK.
  6. Source: Yahoo Finance.

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