Recent estimates have put the annual number of UK citizens leaving their homeland to retire abroad at around 300,000. James Cartwright, Senior Product Analyst at financial information services QROPS Review has advised hundreds of budding expats on investment opportunities, pension schemes and buying property overseas. With more and more Brits setting their sights on sunnier climes, we asked him for his tips for dealing with the difficulties and trials of shifting your life to another country.
“The process of buying property overseas can be beset with pitfalls, and the foreign real estate market can often be very difficult to navigate. Many countries impose regulations and restrictions on properties purchased by foreigners, so make sure you’re au fait with the rules before you consider making a purchase.
“If you do get far enough to arrive at a deal, be sure to investigate your financing options. Oftentimes it’s smarter to take out a loan in the local currency, rather than doing so in the UK and awaiting a beneficial exchange rate.
“Also be aware of your tax commitments to the UK and your chosen destination. Be sure to have your contract translated by a professional so as to avoid any misunderstandings.”
Voting Rights and Potential Legal Issues
“Issues such as inheritance taxes, divorce and custody settlements are often handled incredibly differently in different nations. Many nations have reciprocal agreements with the UK to allow these expat disputes to be settled according to UK law, but this doesn’t ensure that there won’t be an overly drawn-out process. Be sure to investigate whether your destination country has a reciprocal agreement with the UK. It might not be a joy to think about, but if you’re spending your twilight years abroad, you may well be ending your life there. Be sure to have your affairs in order before you make the move.
“As far as voting rights are concerned, UK expats have the right to vote in UK elections for 15 years after departing the UK. This may be set to change as there are currently groups rallying to nullify this restriction.”
Frozen State Pensions
“As you’ll be aware, UK state pensions are calculated by these three criteria: your contribution to National Insurance, inflation rates and your tax rate, and for UK pensioners most non-Commonwealth destinations within the European Economic Area offer flexible rates.
“However, it should be made clear that expats choosing to retire in a Commonwealth country or outside of the EEA, your pension is subject to becoming frozen. This is a fixed rate determined by the date that you leave the UK or the date of your first payment. This means that if you’re planning on spending the next 20 years in your new country then you’ll likely find that your state pension won’t be enough to support you. Make sure your employment pension plan (or plans) will be sufficient to keep you going.
UK expat groups are currently battling to change these restrictions, but have made little headway and seem ultimately unlikely to affect a change.”
“If you’re of retirement age then it’s clear that healthcare will be an important facet of your life. Thankfully, the UK does have agreements with many nations that enable you to transfer your current healthcare plan.
“However, it’s important to make sure you investigate this beforehand, as foreign healthcare plans may not cover all services and may prove more costly than you anticipated. Ultimately, proper health cover is an essential part of your retirement plan and should not be done on the cheap”.