State pensions, health care and private pensions can all be affected when you become an expat | Personal Finance | finance
According to the Organization for Economic Co-operation and Development (OECD), more than 300,000 people leave the UK each year to start a new life abroad. The reasons for this are varied and can include moving for a new job, being close to family or retiring in a new country.
Regardless of the motivating factors, these expats might see key claims affected as a result.
Express.co.uk spoke to two experts about some of the changes expats may be facing.
Finn Houlihan, chief executive of Arlo Group and ATC Tax, warned that valuable Social Security contributions could be missed – resulting in a state pension deficit.
He said: “A person must have paid NI contributions for 35 years to qualify for the new UK State Pension. As a result, expats often continue to pay voluntary Class 2 NI contributions to ensure they can continue to receive this benefit.
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Mr Houlihan added: “If a person of retirement age moves abroad their state pension will not be indexed and will remain frozen at the time they leave the UK.
“Of course, this will be of greater concern to individuals who have recently taken a step, at inflation above 10 percent.”
Another key entitlement that is an integral part of British life is access to the National Health Service (NHS).
Free health care is important to millions of people, but moving abroad could affect it.
Ema Boccagni, Commercial Director EMEA at ECA International, warned Express.co.uk readers that their eligibility could change.
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This also applies to retirees, so it’s important to be aware of it.
She said: “The decision to move abroad permanently can have a negative impact on your pension income and you will also lose your right to most NHS services in the UK even if you are a British citizen.
“That’s because the UK has a housing-based healthcare system.”
While it poses a problem for pensioners, some support could be given to those moving abroad to work in certain circumstances.
Ms Boccagni added: “You need to have an open conversation with your employer to understand whether they can sign up for the new country’s systems and if not, how they will support them with benefit packages.”
Expats also have to pay attention to important rules when it comes to private pension schemes.
Mr Houlihan stressed that moving abroad means people are not normally eligible to contribute to a UK-based pension pot.
Ms Boccagni also raised this issue, stating: “As pensions paid into a UK bank account are UK income, the pension income could be taxable in the UK and the country one has retired to will also try to to tax that income.
“However, if the two countries have a double taxation agreement in place, an expat can apply for tax relief in the UK to avoid double taxation.”
Of course, moving abroad can have numerous benefits, regardless of the motivation for doing so.
Therefore, the experts suggest doing some research and possibly enlisting the assistance of an independent financial advisor to help with specific circumstances.