Written by Richard Way,
Last Modified: 11th August 2017

Brexit is raising all sorts of questions for the ten per cent of British people considering retiring abroad. One expert says that successful retirement will be possible whatever happens in the Brexit negotiations, you just need to prepare properly. Read his ten step plan.

 

A healthy retirement abroad just needs careful planning

 

Preparation is especially important for overseas retirees with the prospect of Brexit approaching, according to a recent survey by a provider of retirement financial products, who added that currently one in ten British people aged over 50 are considering retiring abroad.

Retirement Advantage, which offers annuities and equity drawdown to retirees, also showed that Spain is the most popular retirement destination for the over-50s, followed by France and Portugal, then Italy and south-east Europe joint fourth.

“Without the right planning and financial advice, your retirement could very quickly become a nightmare,” said Andrew Tully, pensions technical director at Retirement Advantage. “Local tax laws, currency exchange rates and other financial issues can easily catch out the unwary. For example, if you retire to some countries, you will not be eligible for increases in the State Pension, which currently rises by the higher of inflation, earnings or 2.5 per cent, under the ‘triple lock’ mechanism.

Without the right planning and financial advice, your retirement could very quickly become a nightmare.

Countries in the EU, as well as many others, have ‘reciprocal arrangements’ with the UK, meaning your State Pension will increase each year. However, other countries including Australia, Canada and New Zealand do not, which means the state pension will not increase once you move overseas. When we leave the EU, reciprocal arrangements will form part of any deal reached, so it is unclear what the position will be in future.

So it’s worth keeping in mind how your financial position would be affected by changes to these agreements, as well as how incomes paid in sterling are affected by currency exchange rates. Retirement Advantage suggests the following to begin your overseas retirement journey:

1. Get an estimate of your state pension, which you can do on-line at the gov.uk pensions page, here.

2. Seek independent financial advice before you move.

3. Tell HM Revenue and Customs that you are moving overseas. This allows them to let you know of any UK tax liability you may have even though you are living overseas. More importantly it can allow any UK pension you have to be paid gross (no tax deducted) and taxed in your country of residence (this only applies if the country you live in has a double taxation agreement with the UK).

4. Check what reciprocal agreements are in place with the destination country regarding your UK state pension and other social security benefits. Also find out about your welfare rights while abroad.

5. Keep an eye on exchange rates and open a bank account local to where you are moving. Another thing to do sooner rather than later is open an account and speak with currency transfer specialist Smart Currency Exchange who will help you buy and transfer foreign currency to your overseas account, usually offering better exchange rates than your high street bank would.

6. Check your healthcare options in the country you are moving to, and research your medical insurance options.

7. If you decide to keep your property in the UK you will need to let your mortgage provider and insurance company know if it will be rented or remain empty.

8. Do your homework on the cost of living in the country you want to move to.

9. Notify utility companies, financial institutions and your local council when you are leaving.

10. Contact the electoral register, and arrange for mail forwarding via the Post Office.

For further details of how to live abroad after Brexit, read our guides to living in France, Spain, Italy and Portugal after Brexit.

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