If you’ve spent part of your working life in the UK and have paid UK National Insurance contributions (NICs), you may be entitled to claim a UK state pension, even if you’re no longer living in the UK.
Eligibility for state pension abroad
The UK state pension is a regular payment made by the UK government to individuals who have reached the state pension age and have made sufficient NICs during their working life. This applies whether you are a UK resident or have moved to another country. However, the amount you receive may depend on the contributions you made while working in the UK.
Note that your state pension age may differ from the age at which you can access workplace or personal pensions, so it’s important to confirm your specific state pension age before starting the process. In the UK, the state pension age is the age at which you can start receiving your pension as defined by UK legislation.
Currently state pension age is 66 for men and women, but is subject to periodic review. The State Pension Age Review, published in March 2023, confirms that the state pension age will rise to 67 between 2026 and 2028.
This will affect those born after April 1960. The government plans to have a further review to reconsider a future rise to age 68.
Claiming your UK pension abroad
The claim process can be started when you are within four months of reaching your state pension age.
The process for claiming your UK state pension while living abroad is straightforward. The first step in claiming your UK pension abroad is to contact the International Pension Centre (IPC). They are responsible for processing pension claims for individuals living outside the UK. You can do this either by contact the IPC or sending an international claim form.
The form can typically be downloaded from there the UK government’s website. However, it is essential to select the correct form based on your age and pension status.
Coordinated claims across multiple countries
When claiming your UK state pension, you might be able to make a single claim to the IPC or directly to the pension authority in the country where you currently reside. If you’ve lived or worked in other countries, this single claim can trigger communication between different state pension schemes, so there’s no need to file separate claims in each country.
Once your claim is submitted, the pension schemes of other countries where you’ve contributed will be notified, and they will inform you if you are eligible for any state pension benefits from them.
This streamlined process applies to the pension schemes of:
- The European Economic Area (EEA), which includes all EU countries, as well as Norway, Iceland, and Liechtenstein
- Switzerland
- Countries that have a social security agreement with the UK, excluding Canada and New Zealand
If you reside in one of these countries and are eligible for a state pension there, it’s recommended to submit your claim directly to their pension scheme. They will then pass on your details to the UK or other state pension schemes in the EEA or Switzerland, if applicable.
Alternatively, if you submit your claim to the IPC, they will forward your details to all relevant state pension schemes based on where you’ve lived or worked.
Receiving your pension abroad
If you live abroad for part of the year, you must choose one country in which to receive your pension. The UK government will only pay your pension into one country’s bank account and does not allow you to split payments between multiple countries. Therefore, it is essential to decide which location is most convenient for receiving your payments.
Once your claim has been approved, your UK state pension can be paid directly into a bank account either in the UK or in the country where you are living.
You have several options for the type of account you use:
- An account in your own name.
- A joint account shared with another person.
- Someone else’s account, provided you have their permission and agree to the terms and conditions of that account.
If you opt for payments to an overseas account, you will need to provide your International Bank Account Number (IBAN) and Bank Identification Code (BIC).
Payment frequency and foreign exchange
You can choose how frequently you receive your pension payments. The options are every four or 13 weeks. If your pension amount is less than £5 per week, you will be paid once a year, in December.
If you choose to have your pension paid into a bank account outside the UK, the payments will be made in local currency, based on the exchange rate at the time of transfer. Be aware that the amount you receive may fluctuate due to exchange rate changes.
Avoiding double taxation
You should be aware of the potential for double taxation, where you may be taxed both in the UK and in the country where you now live. It’s crucial to understand the tax rules in your country of residence and any applicable international tax treaties. These agreements can help ensure that you are not taxed twice on your pension.
For example, according to the articles 17 and 18 of the Multilateral Instrument and the 2006 Poland-UK Double Taxation Agreement, generally, taxes from pensions and other similar remuneration received by Polish residents from the UK have to be paid only in Poland. However, taxes from lump sum payments derived from a UK pension scheme are taxable only in the UK.
Final considerations
If you’ve worked in multiple countries, the claim process may take longer due to coordination between various pension schemes.
It’s crucial to begin planning your pension claim well in advance of your state pension age. Start by verifying your eligibility, ensuring you meet the UK NICs requirements, and gathering all necessary documents. It’s also important to be aware of the local tax implications and banking options in your country of residence.
To make the process more efficient and avoid any unnecessary tax complications, it is highly recommended to seek professional advice. Engaging with experts can help you navigate the complexities of international pension claims and ensure that you receive your full entitlements without unnecessary delays or extra tax liabilities.
Don’t let the complexities of UK pension claims overwhelm you. Contact LEXeFISCAL LLP today for a free initial consultation on how we can help you navigate your UK pension entitlements. Our experts can guide you through the verification process, assist with document gathering, and advise on tax implications in your country of residence. Visit www.lexefiscal.com or email info@lexefiscal.com to ensure you receive your full pension entitlements efficiently and without unnecessary complications.
