Claiming your pension in Italy
When you consider the lifestyle, the climate, the history, and the cuisine, it is little wonder that so many opt to retire to Italy.
If you plan to retire in Italy, you will need to contact the following organisations prior to departure, to supply them with your new information:
- The International Pension Centre (if you are already receiving a State Pension)
- HM Revenue & Customs’ National Insurance Contributions Office
- Your local Tax Office
No matter which method of pension payment you choose, it’s important to be familiar with all the details of your pension scheme before you move.
Drawing a pension in Italy is a relatively simple process, and there are two main options for doing so:
1. Direct payment into Italian bank account
Once you have checked whether it’s possible with your choice of Italian bank, you can opt to have your pension paid directly into your Italian account. If you plan on splitting your time between the UK and Italy, you will need to decide which account you want the payment to be paid into – your Italian account, or your UK account. Should you change your mind about retiring to Italy, you can request your state pension revert back to being paid into your UK account.
2. Paid into UK account and transferred to Italy
You can also opt to keep your pension payments coming in to your UK account, and then transfer them to Italy yourself. In this instance you must remember that the amount of money you receive each month will depend on currency exchange rates. To avoid receiving varying amounts each month, speak to Smart Currency Exchange about setting up a Forward Contract. This helps you to lock in an exchange rate for up to a year, so you always know what rate you’ll be trading at, and how much will be coming into your account. Smart Currency Exchange can also help you to set up automated regular payments.
UK state pension
If you’ve been paying into a state pension in the UK, you will receive a claim form from the UK Pension Service four months before you retire. It is your job to inform them that you are planning a move to Italy, and to provide them with your new address.
If you have a private pension, you will need to consult your pension provider about your best options. They should be able to move the payment to an Italian account very easily, but as mentioned above, you will have to remember to consider how currency exchange rates will affect this payment. Contact Smart Currency Exchange today to discuss how best to manage these payments.
Tax on your pension
Whether or not you are taxed on your UK state pension will depend on the following factors:
- Whether you are declared as “non-resident” in regards to tax purposes
- Which country you are deemed tax resident in. If you reside in Italy permanently, you will be classed as a non-UK resident
- If you alternate between the UK and Italy, you’re likely to remain UK resident for tax purposes
- If you are deemed non-UK resident, you will pay tax on your pension in Italy.
In order to determine how best to proceed in your exact circumstances, we recommend you speak to an independent financial advisor. They will be able to help you determine the best method of receiving your payments to ensure you get the most from your money.