British Pensioners Abroad
Sunshine, a healthier lifestyle and a low cost of living are drawing more and more retirees abroad every year. With over one million Britons enjoying their retirement abroad it seems life really does begin at 60.
Britain’s less than sunny climate is one of the major reasons why retired people decided to move abroad. But the temptation of sunny climates isn’t the only reason. The low cost of living in countries abroad can see a state pension last longer, especially when it comes to food and accommodation. The UK state pension is easily transferable to bank accounts abroad, as well as many other government benefits. For many people, retirement is the chance to live out a life long dream of living abroad.
It is true that money does stretch further abroad. Many popular retirement countries such as Spain and Malta have a much lower cost of living than the UK. Many countries in the European Union, especially in Eastern Europe show a dramatic reduction in cost of living, as much as 50% less. State and occupational pensions will stretch a lot further abroad when it comes to purchases such as food and property. Retired Brits have 25 European Union destinations to choose from where they are legally entitled to live and work.
Mediterranean countries are among the most popular for retirees living abroad. Not only are these countries blessed with a fantastic climate but they have long been known to have healthier diets. Countries such as Italy and Spain are known to have lower rates of heart disease than in Britain. The healthy diet, laid back lifestyle and long hours of sunshine are definite bonuses to a healthier life.
Swimming and diving in warm sea waters, golf at any of time year, cycling and walking in the sunshine; just a few of the popular sports abroad. Many countries abroad are blessed with six long hot summer months. Winters abroad are usually short and mild and a far cry from the dark and damp UK winters. The number of sports activities available abroad and the sunny weather is conducive to a healthier lifestyle. These are definite bonuses for retirees looking to stay fit and healthy.
Brits who decide to retire abroad in European Union Countries are legally entitled to work in that country. This can top up any pension income, and working hours in Mediterranean countries are usually more flexible than Britain’s 9 to 5 culture. There is a huge British ex pat community abroad so it should be easy to make contacts and obtain employment advice. It is of course possible to work online for a few hours each day and top up an income.
Hospital facilities in countries abroad are usually of a better standard than found in the UK. Occurrences of infections such as MRSA in hospitals in countries such as France, Spain, Norway and Hungary are zero. As hospitals abroad are usually partly state funded and partly private the facilities are up to date. This is the reason many Britons go abroad for surgery rather than risk infection, or the long waiting lists in the UK.
It might not all be plain sailing when retiring abroad. Points to consider before retiring abroad should include:
Are UK pensions and benefits easily transferable?
Is there a mutual healthcare agreement with the UK?
Will there be any language or cultural difficulties?
Is the pound strong in the country abroad?
Are there dual tax implications in the intended retirement country?
Will there be free emergency care in the intended retirement country?
Will there be a lot of legal red tape when buying properties abroad?
Is the UK easily accessible for return trips and visits from friends and family?
It is always advisable to fully research the country that is being considered as a retirement option. The wise move would be to take an extended holiday in the country prior to retirement during both summer and winter seasons. Researching ex pat websites will also bring up a great deal of information and advice on the chosen retirement country.
Claiming a pension should not be too much of a problem for the millions of British people who retire abroad. State or occupational pensions can be claimed while living in a foreign country and there are some other UK benefits that can be claimed while enjoying the sunshine abroad.
It makes sense that if you have worked all your life in the UK then you should still be able to claim your pension abroad. State and occupational pensions can be claimed whilst living abroad and in fact very little changes with regards to these pensions. Moving to a country in the EU and claiming a pension should not be problem. Plus countries such as Australia and America do have an agreement with the UK, which means claiming pensions should also not be a problem.
An issue to consider is the increase in state pensions. Those who have retired abroad permanently will only be eligible to a yearly increase if they are residing in a European Economic Area country. This rule will also apply to countries that have a special agreement with the UK.
Those considering moving to an EEA country should remember that these countries do have their own guidelines and the pension age may vary between countries. These details should be checked through the Pensions Service agency.
As crazy as it seems although some countries do have an agreement with the UK regarding claiming pensions this does not apply to inflation. Certain countries such as Canada and Australia are not index linked, meaning the pension will not rise with inflation. This rule has long been a bone of contention with retirees living abroad and is constantly being challenged. But until the rule changes pensions will be not eligible to rise in accordance with inflation in these countries.
Many retirees choose their country abroad based on factors such as family already living in the foreign country or simply because they love a certain country. But there are one or two financial points to consider before heading off and relaxing in the sun. Points to consider and research should include:
Does the country have a reciprocal agreement with the UK regarding pensions?
Will my income be taxed twice, once in the UK and abroad?
Is there a good currency exchange rate in the country I am considering?
How far will my pension stretch abroad; is the cost of living abroad high?
How strong is the pound in my intended country?
Am I entitled to certain benefits abroad such as free medical care?
Pensions are not the only UK benefits that apply for retired people living abroad. For instance the winter fuel and heating allowance may still be claimable for those who have retired abroad. This may not apply in all countries abroad such as Canada, Australia, New Zealand and South Africa. Those considering claiming this benefit should bear in mind that to be eligible they will have to already be claiming in the UK before moving abroad. Claimants must be 60 and over and those who have forgotten to claim this benefit may be able to apply for back-dated payments.
There are various ways that a state pension can be paid to UK individuals abroad. These can include credit transfer to a foreign bank or to the individuals own UK bank. A cheque can also be sent to the individual’s bank abroad. Occupational pensions may have slightly different payment processes and individuals should check for any restrictions such as payment only to UK banks. Those claiming occupational pensions should also check on charges that may be applicable when transferring the pension to a bank abroad.
Finances are of course one of the main considerations for those who are retiring abroad. Claiming a pension abroad may not be a problem depending on the country but there may be other considerations such as currency exchange and transfer fees to think about. Taking advice from a financial advisor would be advisable for those who are considering retiring abroad.
Whether you are retiring abroad permanently or are simply looking to buy a holiday home overseas which you may look to live in on a seasonal basis, there are many travel destinations both near and far that are proving popular locations for British retirees looking to retire abroad.
European destinations, especially those with warmer climates than the UK are still the most sought after with the likes of France and Spain still topping the list of international destinations for retirees.
Greece and Portugal are also becoming more established locations, due to their increase in popularity amongst holidaymakers and with the growth of cut price budget airlines flying regularly to even more locations, the ease at which you can get to the UK from your retirement property abroad to see family and friends, has resulted in a boom in the international retirement property market.
It’s not just the traditional European destinations that hold so much appeal these days. Many people choose to sell up and move abroad to the other side of the world and there are also a number of ‘up and coming’ destinations in Europe which, whilst still being established, can often represent a significant saving on a similar property elsewhere. Here is an overview of some of the most popular locations for Britons when retiring abroad along with some reasons why they are so popular.
Budget airlines have made France even more appealing as a place to retire to given that many of them now fly to destinations that many of us would have previously been unaware of. France’s appeal as a retirement location is due to its close proximity to the UK. And, if you prefer to drive and take the ferry, those alternative travel options are plentiful. There are also a number of British rural enclaves out in various parts of France which is also appealing to those who would like to maintain a sense of community spirit whilst the locals will also make you feel at home. They call the French lifestyle ‘joie de vivre’ meaning ‘joy of life’ and many Britons who retire there are attracted to the laid back lifestyle with an emphasis on fine wine, great cuisine and good company.
Spain continues to attract large numbers of people looking to relocate abroad in retirement. The weather is generally even more settled than in France and a large proportion of the British community are settled along the various southern sunshine coasts such as the Costa Blanca and Costa del Sol, although you will also find small pockets of Britons almost anywhere – from living within any of the great traditional Spanish cities to enjoying a more rural, peaceful setting. Additionally, the Spanish-owned Balearic and Canary Islands are also extremely popular locations for people to retire to. Once again it’s often the sense of community that holds much appeal but the weather is obviously a great influencing factor.
Retiring to Greece (or, more likely, one of the Greek islands) and Portugal is becoming more popular as more Britons go on holiday to these destinations. In Portugal, it’s the Algarve peninsula with its fantastic beaches and magnificent golf courses which they have in abundance which are the most influential factors but it has much the same appeal as Spain. Retiring in Greece is very popular for those who like the changes in seasons and, although it rarely gets as cold as the UK in winter, some parts of Greece and neighbouring islands do experience winter as we might know it along with receiving snowfall. The Greek food is also very popular amongst Britons retiring there as well as there being a real sense of hospitality and welcoming from the Greek people.
Many Britons have started to cash in and buy retirement property in the Balkan states and even further afield in Eastern Europe. The prospect of buying a retirement home for far less than a similar home might cost in France or Spain is obviously its biggest attraction. Countries like Croatia, Bulgaria, Romania and Turkey are becoming ever more popular with Britons looking to, perhaps, snap up a bargain retirement home.
The USA, Australia and New Zealand have always been seen as prime locations for those who wish to ‘up sticks and retire’ even further afield. As well as the natives speaking English predominantly in all three countries, each of them has its own unique appeal with more predictable seasons than in the UK and with the full range of outdoor and leisure activities to pursue. Additionally, many people who retire to these countries do so to become closer to other family members.
As these are some of the most popular locations for people from the UK to retire to, you will probably know someone personally already who has gone out and done it for themselves and they will obviously be a very useful resource to gather information from and there are, of course, plenty of resources online.
Most of us have become familiar with winter fuel payments being made by the UK government to people over the age of 60 who qualify for them to help them towards the additional cost of heating their homes over the colder British winter months. What many of us have only recently realised, however, is that people who qualify but who now live abroad are also entitled to receive these same payments too. It was recently revealed that over £10 million has so far been paid out to people for winter fuel payments but who no longer live in the UK. But it is an issue that has become very controversial since the figures were released.
Firstly, you do not need to apply for a winter fuel payment. If you qualify, they are automatically sent out to you, although if you think you qualify but have not received a payment, you may need to fill out a claim form. To qualify, a person needs to be over 60 and in receipt of a state pension or some other form of social security entitlement (excluding Housing Benefit, Child Benefit or Council Tax Benefit). You need to qualify by a set date earlier in the year to receive payment for that coming winter and payments are usually made from November onwards.
Firstly, the winter fuel payments were initially introduced to help alleviate financial hardship for the elderly whose health could be put at risk by them deciding not to keep their heating on for long periods over the colder British winter months because, in doing so, they might not be able to afford it given that their heating bills would become inevitably higher and yet their incomes might not be able to cover the additional costs. It is not a ‘means tested’ payment. Therefore, no matter how rich or poor you are has no bearing on you receiving it, as long as you meet the criteria. Therefore, some people have been ‘up in arms’ over the likes of those who meet the criteria but who have left the UK to escape from the British winter to go and live in sunnier and warmer climates such as Spain, whereby opponents argue that the weather is warm there anyway and so those receiving the payments abroad do not, in fact, need it.
And yes, it is true that many older people have decided to ‘up sticks’ and move from the UK to the likes of Spain for this very reason. In fact, when the figures were announced, it was residents in Spain and France who formed the most significant proportion of those who receive the payments. That said, there are many ex UK residents who now live in other countries within the EU where winters are either equally or even colder than those which we experience in the UK. It’s also important to remember that even in certain areas of France and Spain, winters (though maybe not as harsh as our own) can and do increase the cost of heating bills over the winter months. The argument, however, is often cited at those people who live in areas such as the Costa del Sol or the likes of Mallorca - both popular places to retire to and where severely harsh winters are very few and far between. Secondly, with the UK experiencing a spell of some of the steepest increases in the cost of electricity and gas over recent years, this has outraged opponents even further who’d argue that surely the payments being made to those residing in the likes of southern Spain do not really need the extra money for fuel and it could be put to far better use in helping to assist those back here in the UK who are suffering from financial hardship. And, with the scale of recent gas and electricity price hikes, this has only made the situation here an even more difficult burden to cope with.
Basically, the freedom of movement of people to live, work and receive benefits throughout the EEA (European Economic Area), of which it has to be mentioned that, as UK residents, we have also benefited from in terms of being permitted to work and live in countries which we weren’t previously automatically entitled to do so, has meant that, under EU law, benefits which have been acquired in one member state are equally entitled to receive them if they move to another member state within the EEA, bar a few exceptions to the rule.
Whatever side of the ‘fence’ you stand on with regard to this issue, the fact is that if you do meet the criteria and live in an EEA country, you are probably entitled to receive winter fuel payments. It’s also important to take a wider view that not all pensioners living abroad reside in countries where it’s continually warm and not all of them are well off financially.
To find out more about entitlements to the Winter Fuel Payment scheme, you should visit the Pension Service website.
See also Ex Pat’s WFA for new EU ruling
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