Government asked to inflation link overseas pensions

Source: Every Investor

MGM Advantage has called on the government to review the policy denying thousands of people inflation-linked rises in their state pension when they choose to retire abroad.

Where a country does not have a reciprocal agreement with the UK, including some of the most popular retirement hotspots, UK pensions are frozen at the point of retirement. 

Australia, Canada, New Zealand and South Africa all currently fall outside the reciprocal arrangements with the UK but are popular with expats.

“Retiring abroad is an aspiration for many people, with our research showing three of the most popular foreign retirement destinations do not currently have reciprocal agreements in place,” said Andrew Tully, pensions technical director at MGM Advantage.

“We need to ensure a level playing field for anyone retiring abroad, irrespective of their chosen destination. People who have been caught out by finding their UK state pension frozen at the point of retirement understandably feel hard done by.

“For example, if you retired to Canada ten years ago, your UK state pension would now be worth 42% less than if you had retired across the border in the US. Many retirees have found this has hit them hard.”

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Clients thinking of retiring abroad?

Retiring abroad is a dream for many people.  The thought of an easier pace of living, better weather and potentially cheaper property than the UK can prove a strong draw.  But without the right planning and advice you can quickly get caught out by the local tax laws.  And that is before you even look at your pension and other financial arrangements.”

 Here’s some Top tips to pass on to your clients who may consider retiring abroad:

1. Get an estimate of your state pension herehttp://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008
2. Seek independent financial advice (obviously)
3. Ask HM Revenue and Customs for information about any UK tax liability you may have even though you are living overseas
4. Check what reciprocal agreements are in place with the destination country regarding your UK state pension
5. Find out about your welfare rights while abroad
6. Check the cost of healthcare in the country you are thinking of moving to
7. If you decide to keep your property in the UK you will need to let your mortgage provider and insurance company know if it will be rented or remain empty
8. Do your homework on the cost of living in the country you want to move to
9. Notify utility companies, financial institutions and your local council when you are leaving
10. Contact the electoral register, and arrange for mail forwarding via the Post Office

 Check out the Retirement blog on: http://www.mgmadvantage.co.uk/blog/retiring-abroad-thinking-of-retiring-abroad/