Spain tops the charts for the favourite place to retire outside the UK, though retirees must seriously consider pension implications, warns Standard Life.
Brits favour Spain as the best place to retire outside the UK with France, USA, Canada and Ireland are also amongst the top places for retirees, research by Standard Life has found.
Although the quality of life and better weather abroad may be a lure for many people, their UK state pensions may not rise in the future if they life in a country that is not part of the EU, or has a reciprocal social security agreement with the UK.
Financial hardship may result as cost of living rises are not met by increases in pension payments.
This is because if an individual moves abroad permanently to a country outside the EU, the amount of UK state pension they will receive each year is frozen at the amount initially paid when first claimed (or if the pensioner emigrated more than one year after payment began, at the rate in force when emigrating). Popular retirement countries outside these reciprocal agreements include Australia, Canada, New Zealand and South Africa.
According to Andrew Tully, Senior Pensions Policy Manager, Standard Life: “Retiring abroad is a dream for many people but without careful planning and advice, things can potentially go wrong very quickly.”
“One significant consideration before you move is to think about your state pension and what, if any, reciprocal agreement is in place. If there isn’t a reciprocal agreement in place, then you need to be very careful your retirement income is sufficient to cover your living costs over a long period of time.””
“Over a 20 year retirement, your basic state UK pension could halve in real terms”, he added.