Retiring abroad? ‘Crucial’ points to understand so you can afford to retire ‘comfortably’
State Pension: Expert outlines criteria to qualify
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Many people dream of retiring abroad, and will wonder what happens to their private, workplace and state pension when these dreams come true. Romi Savova, CEO of PensionBee, shared exclusively with Express.co.uk when and where Britons with international intentions should put their pension pots.
Retiring abroad can be a complicated endeavour. The most common guidance for those saving for their retirement is usually aimed at people who want to retire in the country they are currently working and living in.
It’s not so straightforward for people with more ambitious retirement plans.
With the growing rates of poverty in older age groups having a good grip on one’s future finances has never been so important.
Generally, the advice to build a pension pot starts simply with saving as much as possible as early as possible and being consistent.
Ms Savova shared: “This is of the utmost importance, regardless of their eventual retirement plans.
“A little can go a long way in pension saving, so it’s crucial for savers to start building their pot as early as possible and regularly increase their level of contributions when they receive a pay rise or bonus.
“Over time, the compound returns on these contributions could have a significant impact on a savers’ pension balance by the time they come to retire.”
Usually this guidance is used for private pension pots, but workplace pensions offer employees what is essentially ‘free money’ due to the benefits of auto-enrollment.
Auto-enrollment allows UK taxpaying employees to contribute to a workplace pension tax-free and their employer will contribute as well.
As Ms Savova noted, every bit counts: “Ultimately, saving for retirement is a marathon, not a sprint, and it’s crucial for savers to maximise their contributions to ensure they can afford to retire comfortably when and wherever they wish.”
She suggested, specifically for those looking to retire abroad, that they “take the time to understand how this decision will affect their retirement savings.”
People who move abroad before their actual retirement, and therefore stop paying into their UK workplace or private pension, should be wary of forgetting these savings pots.
The pension pots will remain active in the UK and potentially continue to grow as time goes on, subject to the performance of the investment.
Those who want to move their funds to their retirement country of choice may need to do a lot more research on both sides of the border.
Ms Savova explained: “This is not always a straightforward process, particularly in the case of defined benefit pensions, and therefore requires thorough research.
“As there are variations per country, it’s a good idea for savers to contact their pension providers in advance to gather the specific information for the country they wish to retire to.”
Additionally, Britons can receive their UK state pension anywhere in the world, but certain countries may see this amount being frozen at the rate it was when they left the UK.
They must also inform the DWP of their move and should be wary of exchange rates at the time they are paid.
Ms Savova explained: “The state pension can be paid into a UK or international bank account, however savers who receive payments via an international bank account, will receive their state pension in the local currency.
“So the amount they actually receive will depend on the exchange rates at the time.”
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