Article Pension planning for expats – what you need to know

Many of us dream of living and working abroad, whether that's to develop our professional skills, improve our career prospects or simply experience life in another country.

But what happens to your pension if you move overseas?

The good news is that moving abroad doesn't necessarily mean leaving your UK pension behind. Depending on your circumstances, you may still be able to contribute to your pension, benefit from tax relief and access your savings from overseas when you retire. However, the rules depend on factors like where you live, who employs you and your long-term plans.

Whether you're already living abroad or planning a move, here's what you need to know about managing your pension. Your options may differ depending on whether you're working abroad temporarily, employed by an overseas company, planning to retire abroad, or intending to return to the UK in the future.

For a broader look at retiring overseas, including healthcare, housing and social connections, you might want to take a look at our article 'How to retire abroad: what to consider before you make the move'.

Can I contribute to a UK pension while living abroad?

Yes, in many cases you can continue contributing to a UK pension after moving overseas. However, the amount of tax relief available depends on your individual circumstances.

Before moving abroad, it's important to tell your pension provider. They can then let you know if they can keep accepting contributions from overseas and explain any restrictions that may apply.

Moving abroad but working for a UK company

Most often, UK companies only send employees abroad for a short period. If your earnings remain subject to UK income tax, you can usually continue contributing to your pension and may still be entitled to UK pension tax relief, subject to the relevant limits.

The limit on your personal contributions for tax relief purposes would still be the greater of £3,600 gross per annum and 100% of your relevant UK earnings in that tax year. In addition, your UK employer can continue contributing to your pension.¹

If you're going to be abroad long-term, you might be employed under a foreign subsidiary or third-party employer, which might mean different tax implications.

Moving abroad to join a foreign company

If you're employed and taxed overseas, you can still contribute to a UK pension scheme, but the amount of UK tax relief available may be limited. The rules can differ depending on whether you're working abroad temporarily or have become tax resident in another country.

Because pension and tax rules vary depending on where you move, it's worth checking how local regulations could affect your retirement planning and seeking professional advice where appropriate.

Moving abroad to retire

Private pensions can usually be paid wherever you live in the world. However, some providers may only make payments into a UK bank account, while others may charge fees for paying into an overseas account.

Before moving abroad, it’s worth checking how your pension provider handles overseas payments and whether any additional charges could apply.

You can also usually receive your UK State Pension overseas if you’re eligible, although there are some important considerations to keep in mind.

Should I keep my pension in the UK or transfer it overseas?

Returning to the UK in the future

If you expect to return to the UK, it might make sense to keep your existing UK pensions where they are while building up retirement savings in your new country of residence.

When you return, you may be able to transfer an overseas pension into a UK pension scheme, depending on the tax rules of the country involved and whether the overseas arrangement meets HMRC requirements for transfers.

Living overseas for good

If you plan to settle overseas permanently, you may want to consider whether your existing UK pension arrangements still meet your needs.

Some people explore transferring their pension to a Qualifying Recognised Overseas Pension Scheme (QROPS). A QROPS is an overseas pension arrangement that meets requirements set out by HMRC and can accept transfers from UK pension schemes.

However, transferring a pension overseas may not be the right option for everyone. Depending on your circumstances, an overseas transfer charge may apply, so it's important to understand any tax implications before going ahead.²

It's worth remembering that transferring overseas isn't your only option. Many people choose to leave their pension in the UK and access it from abroad when they retire. The best approach will depend on your circumstances, future plans and the country you're living in.

Can you receive a UK State Pension if you live abroad?

Yes, you can usually receive your UK State Pension while living overseas, provided you’ve paid enough National Insurance contributions to qualify. You must be within four months of your State Pension age to make a claim.³

One important point to be aware of is that annual State Pension increases don’t apply everywhere.  

Whether your pension increases each year depends on where you live. Annual increases generally apply in the EEA (European Economic Area), Switzerland, Gibraltar, and certain countries with social security agreements with the UK.⁴

Want to learn more about retiring abroad?

Retiring overseas is about more than just managing your pension. In the Money:Mindshift podcast episode ‘How to retire abroad’, Dr Tom Mathar speaks to relocation specialist Federica Grazi and expat retiree David Richardson about the practical realities of building a life overseas, including healthcare, housing, taxation and adapting to a new country.

One of the key messages from the episode is that retiring abroad doesn’t have to be an all-or-nothing decision:

‘You don’t need to decide yes or no. You can start experimenting, go on a trip, see how it feels before committing.’

You can tune in to the full conversation now on Spotify or Apple Podcasts.

Planning a move abroad can be exciting, but it’s important to consider how your retirement savings may be affected.

Whether you’re moving temporarily, settling overseas permanently or planning to return to the UK in the future, taking time to understand your pension options could help you make a more informed decision about your financial future.