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United Kingdom (UK) - Retirement
State Pension Scheme
The state pension scheme does state that a person aged 55 can gain their benefits, however the amount given through the state pension will be based on the number of years one has paid into the National Insurance and the amount of National Insurance Credits one has accrued. To receive full state pension, at least 30 years of paying into the system is needed.
If a person has a significant illness that lowers their life expectancy and makes it impossible to work then it is usually possible to obtain state pension payments. For this to be the case, an individual usually has to have maximum of one year’s life expectancy. It is possible to take a tax-free lump sum from a state pension if a person is under 75 or if they have not used the lifetime tax allowance. Those who are over 75 have to take a lump sum and pay out 55% tax. Some of the state pension schemes allow a person to keep 50% for their husband, civil partner, or wife.
The pension scheme works by paying money into a pot that is then used to gain shares and investments in a variety of different industries. The lump sum is the only portion that is tax free. The rest that is used for income over time will require a certain tax payment each year. Pension schemes are considered a final salary and thus based on a person’s lifetime career average earnings.
Company Based Pensions
In recent years fewer companies have offered pension schemes, until 2010 when the government that announced all medium and large companies must offer some kind of pension scheme. Nowadays such companies have to have some type of pension option, regardless of whether there is matching contribution. An employee can set up a private pension scheme if a company does not offer a matching contribution scheme. With a company pension scheme, the employer generally contributes a matching amount to the retirement account. The employee decides how much of their income they want to pay into a pension and the company has to match a certain percentage of that payment.
Since employer-based pension schemes are slightly harder to find, especially for expats working in the UK temporarily, a private pension might present a better option. Expats can also take out a pension in their home country. HMRC states there is tax relief for pensions gained in one’s home country. A pension scheme has to meet certain conditions to avoid double taxation. Usually, if savings are transferred to the UK there is at least one tax paid, and it can be two if both the home country and the UK tax the funds. Taxes usually occur when the funds are moved into a UK account rather than drafted in the home country and put into a current account for use. It is best to check the full details with HM Revenue and Customs since there are multiple schemes that can have different charges.
Quality of Life for Expat Retirees
Expats can expect to have a decent quality of life when retiring in the UK. The ability to pay into state and company pension schemes helps provide income in later years. The ability to have a foreign pension transferred, as well as foreign social security benefits from certain countries, can enhance one’s ability to afford retirement in the UK.
Expat Health Insurance Partners
Our award-winning expatriate business provides health benefits to more than 650,000 members worldwide. In addition, we have helped develop world-class health systems for governments, corporations and providers around the world. We want to be the global leader in delivering world-class health solutions, making quality health care more accessible and empowering people to live healthier lives.
At Bupa we have been helping individuals and families live longer, healthier, happier lives for over 60 years. We are trusted by expats in 190 different countries and have links with healthcare organisations throughout the world. So whether you're moving abroad for a change of career or a change of scene, with our international private health insurance you will always be in safe hands.
Cigna has worked in international health insurance for more than 30 years. Today, Cigna has over 71 million customer relationships around the world. Looking after them is an international workforce of 31,000 people, plus a network of over 1 million hospitals, physicians, clinics and health and wellness specialists worldwide, meaning you have easy access to treatment.