UK Expat State Pension guide (2022/2023 update)

Many British expats, caught up in learning a new financial ecosystem and allow the State Pension fall off their radars.

In fact, most simply write it off for the times that they have overseas 'gaps'.

Sound familiar?

In fact, State Pension can be a highly cost-effective way to create a secure contribution to your retirement savings.

The new State Pension

In April 2016 the State Pension scheme was reformed for those yet to reach pension age.

If you are planning to retire in 2022/2023, the current State Pension is set at £185.15 per week, representing an increase of £288.60 a year, or an annual income of £9,627.80.

Triple lock

Those receiving UK State Pension who are still residents in the UK are protected by the “triple lock”. This system annually increases the pension amount in line with whichever of the following is the highest:

• price inflation

• average wage growth (temporarily suspended in 2021)

• or a fixed rate of 2.5 percent

Frozen pensions

You may have heard of "frozen pensioners" - these are those for whom their pension rates are 'frozen' at the same amount as when they left the country.

However, some British expats living overseas also benefit from the “triple lock” pension increase system - Sweden is one of the countries in which British expats receive this benefit.

Who qualifies for State Pension?

UK residents with at least 10 years of relevant UK National Insurance Contributions qualify.

To receive the maximum State Pension amount you need to have 35 years of qualifying UK National Insurance Contributions.

Check your past contributions here.

Are expats entitled to State Pension?

Yes - even if you have moved abroad, you can still claim the state pension if you are qualified. This includes if you started to receive your State Pension while still living in the UK - however, you should advise the pension service of your plans to move.

Can I continue building my UK State Pension entitlement while an expat?

If you are unsure of your current entitlement level, you can check your State Pension forecast or call +44 345 300 01 68 and request a statement be sent to you.

The next step is to apply to make voluntary contributions using form NI38.

For those who are working, this falls under Class 2 voluntary contributions, and if you are not working (including trailing spouses who are stay-at-home parents), then you will have to pay Class 3 voluntary contributions.

Can I make up for prior gaps in my National Insurance record?

Yes. Even expats can normally pay up to 6 years of NI contributions in arrears.

When can I start receiving State Pension?

If you have not already retired, State Pension ages will face stepped increases to:

• 66 for men and women retiring in 2020

• 67 for men and women retiring in 2028

• 68 for men and women retiring in 2046

How do I pay tax on my pension if I live abroad?

You may be taxed on your State Pension by the UK and the country where you live. If you pay tax twice, you can usually claim tax relief to get all or some of it back.

If you live in a country that has a double tax treaty with the UK, you will only pay tax on your pension once. This may be to the UK or the country where you live, depending on that country’s tax agreement.

What if I previously contracted out?

In short, your pension might be lower.

Being contracted out means paying lower National Insurance Contributions as the money is paid into another form of pension instead, e.g. a final salary pension scheme at work or a workplace, personal or stakeholder pension (prior to 6th April 2012).

If you worked for a public sector organisation (e.g. NHS) this is likely to have been the case.