UK State Pension
The UK State Pension is a regular payment from the government that provides financial support once you reach retirement age. Read our guide on the UK State Pension for expats to learn more.
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The UK State Pension for Expats
The UK State Pension is part of the UK government pensions agreement and is a core component of your overall retirement income.
It can be used to supplement your other sources of income in retirement, such as personal pensions or any other savings or investments.
In this guide, we explore the UK State Pension for expats and answer some of the most frequently asked questions.
Understanding the UK State Pension
The UK State Pension is a regular payment from the government and is a vital component of your retirement income.
You become eligible once you reach the State Pension legal retirement age. It's important to know that the State Pension age differs from your retirement age.
The current UK State Pension age is 66. However, there will be a phased increase in the State Pension age to 67 and eventually rising to 68 for those born after 5 April 1960.
You need at least 10 years of National Insurance contributions (NICs) to qualify for the pension payment. To receive the maximum amount, it's 35 years.
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Use the links below to quickly find information about expat financial advice
- The UK State Pension for Expats
- Understanding the UK State Pension
- State Pension Amounts: How Much Will You Receive?
- The UK State Pension for Expats - Understand the Triple Lock
- Boosting Your State Pension
- Claiming Your Pension Overseas
- Tax Implications on Your State Pension
- Checking Your State Pension Entitlement
- What is the UK State Pension Age?
- Planning Ahead with Holborn Assets
- FAQs
State Pension Amounts: How Much Will You Receive?
Your State Pension is determined by your 'qualifying years' on your National Insurance (NI) record. You add qualifying years to your record through National Insurance contributions (NICs).
Post-April 6, 2016, changes in rules mean you no longer accrue additional State Pension as you could with the basic State Pension.
As part of the new State Pension rules, you need:
- At least 10 qualifying years to get any UK State Pension
- 35 qualifying years to receive the maximum amount
The UK State Pension typically increases every April. However, the current maximum amount for 2023/24 is £203.85 a week.
Each additional qualifying year you add to your record beyond the 10-year requirement adds 1/35th of the full amount to your pension income.
To illustrate, here are some examples:
- 25 qualifying years: 25/35 x £203.85 = £145.60 a week
- 20 qualifying years: 20/35 x £203.85 = £116.48 a week
- 15 qualifying years: 15/35 x £203.85 = £87.36 a week
The UK State Pension for Expats - Understand the Triple Lock
The UK's triple lock policy safeguards the State Pension against inflation.
It increases yearly by the highest of the three measures. They are:
- Average earnings
- A measure of inflation using the Consumer Price Index (CPI)
- 2.5%
This system ensures that your pension keeps pace with the economy, providing a more secure financial future.
Boosting Your State Pension
The UK State Pension is based on the number of qualifying years you have on your national insurance record by the time you reach the State Pension Age.
Gaps on your NI record could reduce the value of your State Pension pot or mean you are not eligible. It is possible to make voluntary State Pension contributions to fill gaps and increase your pension pot.
This is especially helpful when discussing the UK State Pension for expats. This is because expats often have gaps in their NI record due to not paying National Insurance while working overseas.
Another strategy is deferring your State Pension, which can increase its value significantly over time.
Claiming Your Pension Overseas
You can typically transfer a UK pension overseas. Pensions that can be transferred include:
- Workplace pension schemes
- Private pensions
And while the UK State Pension cannot be transferred, it is claimable in most countries, provided you have sufficient NI years.
However, the triple lock's benefits may not apply everywhere.
Annual increases are restricted to certain areas, including the EEA and countries with specific social security agreements with the UK.
Tax Implications on Your State Pension
The UK State Pension is treated as taxable income. This means it is liable for Income Tax but is paid before any tax is deducted.
You will pay tax only if your total annual income exceeds the Personal Allowance, which is currently £12,570. The current maximum new State Pension for 2023/24 is £10,600 a year – £1,970 less than the annual Personal Allowance.
Therefore, you likely won't pay Income Tax if the State Pension is your sole income.
Checking Your State Pension Entitlement
You can visit the government website to get a State Pension forecast. This will provide an estimate of your pension amount, claim age and ways to boost the amount.
You can also check your National Insurance record online. This is where you can check for gaps, make voluntary contributions, and determine how much they will cost.
What is the UK State Pension Age?
The current State Pension age is 66. However, this is set to rise to 67 between 2026 and 2028 and 68 between 2044 and 2046.
Planning Ahead with Holborn Assets
Pensions are the cornerstone of retirement planning, providing financial security when we leave employment.
If you want to better understand your retirement options and how to plan effectively, we can help.
Holborn Asia offers independent, professional advice and wealth management solutions.
Our financial advisers offer a range of retirement planning services to help you build a more financially secure future. Our financial advice is tailored to your needs and goals, so you can be sure you are in safe hands.
We are part of the wider Holborn Assets Group, a leading, award-winning financial advisory company with over $2 billion in assets under management (AUM).
Ensure your retirement plans are on track. Book a free, no-obligation meeting today to learn how we can help you.
Frequently Asked Questions
The primary benefits of transferring your pension include potential tax efficiencies, better alignment with your lifestyle as an expat, reduced currency exchange risks, and access to a broader range of investment options. Transferring to schemes like QROPS or SIPPs can also offer more flexibility in terms of how and when you can access your pension.
