What happens to your pension if you retire abroad?

With summer in full swing, some travellers use this time to test the waters – using a short term holiday to decide if they want to embrace a life of quiet walks across sandy beaches (or a screaming tour of handgliding hotspots) for the longer haul.

But while retiring abroad sounds great, what would happen to your pension savings? And do you still get the UK state pension if you retire abroad?

Whether it’s France, Spain or Greece, or a more far-flung destination like Canada or Australia, becoming a UK expat can mark the start of an exciting chapter.

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Every year around half a million people leave Britain and relocate to another country.

According to the Office for National Statistics, about 479,000 people left the UK in 2024.

Around 44% (211,000) were EU+ nationals, 39% (189,000) were non-EU+ nationals and 16% (79,000) were British nationals.

Dean Butler, managing director for retail direct at Standard Life, part of Phoenix Group, said: “After a summer holiday, it’s not uncommon to return home wondering what life would be like if you’d stayed forever. For some, this turns into a real plan of moving abroad permanently and thanks to the rise of remote work and the emergence of the ‘digital nomad’, it’s becoming a more realistic option at every stage of adult life.

“Whether you’re planning on moving abroad to retire, or WFB (working from beach) is on your horizon, it’s important not to lose sight of your hard-earned pension.”

Moving abroad can bring exciting opportunities, but it also comes with financial considerations – especially when it comes to your retirement savings. Understanding how your pension works across borders can help you make informed decisions and avoid unexpected tax charges or losing valuable benefits.

If you’re thinking of relocating to another country, we run through what happens to your pension – as well as whether you’ll receive a state pension when you retire.

What happens to my UK pension pots when I move abroad?

When you move to a different country, any pension plans you have in the UK won’t follow you unless you arrange for them to be transferred overseas.

“Instead, they’ll stay where they are, meaning once you reach 55 (57 from 6 April 2028) you can start taking money from them, even while you’re overseas,” explained Butler.

Can I transfer my pensions to the country I’ve moved to?

According to Butler, you can usually transfer your UK pension plan(s) to a different pension scheme abroad, but you’ll need to make sure you’re transferring into a “Qualifying Recognised Overseas Pension Scheme”, or QROPS for short.

This is essentially a pension scheme that follows similar rules to UK schemes – there’s a list on gov.uk.

“You may be able to make this transfer tax-free, or otherwise you might need to pay 25% tax on the amount you’re transferring out of the UK – it depends on your individual circumstances, including where you live when you make that transfer,” said Butler.

There is also an “overseas transfer allowance”, which is a cap on the amount of pension savings you can transfer out of the UK.

Unless you have protection in place, the overseas transfer allowance is usually £1,073,100. If you move any more than this you’ll normally need to pay a 25% tax charge on the excess.

“If you try to transfer your UK plans to a scheme that isn’t a QROPS, you could face a 55% tax charge and even extra penalties on top of that. This is because it could be seen as making an unauthorised payment from your plan. Transferring to a scheme that isn’t a QROPS also probably won’t be regulated, and you might not be able to get any compensation if there’s any issue with the scheme in the future,” said Butler.

Moving a pension plan overseas is a big decision, and it won’t be right for everyone. It’s wise to get financial advice to consider the pros and cons properly.

When you do not have to pay tax on a transfer to a QROPS

You usually do not pay tax if you transfer to a QROPS provided by your employer. Check with the scheme to find out.

You do not have to pay tax if you both live in the country your QROPS is based in and the transfer does not exceed your available overseas transfer allowance.

You also do not have to pay tax when you transfer to a QROPS based in the EU, Norway, Iceland, Liechtenstein or Gibraltar if all the following are true:

• you live in the UK, the EU, Norway, Iceland, Liechtenstein or Gibraltar
• you requested the transfer before 30 October 2024 and it’s completed before 30 April 2025
• the transfer does not exceed your overseas transfer allowance

If you move countries within five years of the transfer you should fill in form APSS 241 and give it to your scheme administrator.

You’ll get a refund if you’ve moved to the country your QROPS is based in or have to pay 25% tax on your transfer if you’ve moved away from the country your QROPS is based in.

Can I keep paying into a UK pension if I live overseas?

You should check this with your provider as it depends on the rules of your pension scheme. Butler warns that you may not be eligible to get any tax relief on the payments you make into the UK pension, or the amount you do get might be limited.

Whether you get pension tax relief and how much you get depends on your circumstances. For example, you can still get tax relief if, in that particular tax year, you have “relevant UK earnings” that could be taxable in the UK.

This includes things like income from employment, including salary and overtime. The government website MoneyHelper gives some more examples.

What happens to my state pension if I move overseas?

You can still claim your UK state pension abroad as long as you’ve paid enough National Insurance (NI) contributions to qualify.

This means 35 years of National Insurance contributions to get the full new state pension, and at least 10 years to be entitled to a reduced payment. However, you must notify the Department of Work and Pensions of your move.

It's worth being aware that the state pension triple lock only applies in certain countries. These are currently any country in the European Economic Area (EEA) and Switzerland, as well as any country that has a social security agreement with the UK allowing it to pay state pension increases.

This includes Jamaica and the USA. Here’s a full list of the countries where you get an annual increase to your state pension.

If you’re emigrating to Canada or Australia, or a host of other countries like Thailand, India and South Africa, your state pension will not increase.

This is something to bear in mind, as over a 20 or even 30-year retirement, this could mean you lose out on thousands of pounds due to your state pension being frozen.

According to the All-Party Parliamentary Group on Frozen British Pensions, 450,000 British pensioners – half the pensioners living overseas – do not benefit from state pension up-rating.

How can I take money out of my UK pension pot if I retire overseas?

If you’re abroad, you’ll generally be able to take your money in the same ways as you would in the UK. However, some providers may limit payment options.

Butler advised: “For added clarity, contact your existing provider regarding the payment options available, and then if your existing plan doesn’t offer what you want, shop around.

“However, your options may be still limited as some providers won’t let you open a new plan if you live abroad.”

Can the money I withdraw from my pension be paid into a foreign bank account? 

Some pension providers may be willing to pay into an overseas bank account, although they may charge extra for this. Others might only pay into a UK account.

Be aware that the exchange rate will affect how much you get when your pension money is changed into your local currency.

How will I be taxed on my UK pensions when I live abroad?

This is where it can get complicated. If you take money from a UK pension scheme, you might need to pay UK income tax on it, as it counts as UK income, but the country you’re living in might also tax you.

“The UK has a ‘double-taxation agreement’ with numerous countries, which means you may either be able to get tax relief or a refund, so you won’t end up paying tax on your pension savings twice. You can find out more about tax on your UK income when you live abroad on gov.uk,” said Butler.

“In the UK, you can normally take up to 25% of your pension tax-free (with the total amount you can normally take tax-free across all your pension plans being £268,275). However, you might not be able to take money tax-free in the country you’ve moved to, and it may be taxed as income, so it’s important to investigate how this works in the overseas country.”

Will my loved ones have to pay inheritance tax if I die abroad?

Something to consider is how your overseas pension (and any other assets) may be potentially liable to UK inheritance tax (IHT).

Until the 2024 Autumn Budget, IHT was based on a person’s domicile status. From 6 April 2025, however, the domicile rules were replaced by new long-term UK resident rules.

Alex Gaita, financial planning director at Schroders Personal Wealth, said: “To be deemed a UK resident, you must have either lived in the UK for 10 consecutive years, or, a total of 10 years or more within the previous 20 years.

“For people who are considered a UK resident when they die, IHT will apply to their worldwide assets which includes their pension from April 2027 – even if it is transferred out of the UK,” he added.

So, in the case of those leaving the UK, their IHT position will depend on how much time is spent outside of the UK when they die.

“If you have successfully become a non-UK resident, your overseas pension (plus any other overseas assets) will no longer be liable to UK IHT. It is worth noting that UK IHT still applies to any UK based assets held by non-UK residents,” said Gaita.

You should also understand the tax rules in your new country, as they may have their own version of IHT which must also be considered.