State pension freeze: Lord Jones raises issue of ‘unfairness’
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However, over-50s considering such a move have been warned that they may see their state pension frozen if they do.
This will be the case if they move to a country which doesn’t have a reciprocal payment agreement (RPA) with the UK.
Such an agreement will mean that someone’s state pension will still rise when they live abroad.
Countries in the EU, as well as many others, have these RPAs, but people need to inform themselves whether this is the case further afield as 43 percent of state pensions paid to people overseas are frozen.
Only one in five people planning to head abroad know which countries had reciprocal payment agreements in place, and a quarter don’t even know these agreements existed.
When there is no RPA, people’s state pension will be frozen when they leave the country, meaning they miss out on triple lock growth while they live there.
It is estimated that as many as 500,000 overseas pensioners may have a frozen pension (Image: Getty)
The triple lock ties the state pension to the highest of inflation, wage growth or 2.5 percent, so missing out on this will make a big difference.
Sean Christian, executive director at the Wealth Management Division for Canada Life, urged people to consider this when making their retirement plans.
He said: “There are a number of key considerations when planning a move abroad, such as which countries offer RPAs.”
This includes “whether state pensions will keep pace with the cost of living,” he said.
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There are other factors which are currently prompting more and more people to reconsider their retirement plans.
Canada Life found that half of over-50s planning a retirement abroad are now reconsidering because of Brexit.
This is up from 46 percent a last year.
Mr Christian said: “Despite Brexit and the ongoing global pandemic, many over 50s continue to harbour the dream of a retirement which includes better weather, a more desirable lifestyle, or cheaper standards of living than the UK.”
Pandemic fears have also spurred people to think again but Brexit worries are the biggest reason for hesitancy about an overseas retirement.
42 percent of over-50s considering retiring abroad say Brexit is causing a rethink.
Brits longing for a retirement overseas may do so for a number of reasons. Weather is unsurprisingly the biggest factor pulling people towards this decision.
This is the case for seven out of 10 Britons, with 62 percent also being drawn by a more preferable lifestyle and 45 percent by cheaper living costs.
The list of places people dream of retiring is made up of familiar names and Spain tops the chart as the most popular destination for the ninth year running.
Just shy of half of all Brits retiring abroad chose Spain.
Brexit is the main factor causing people to rethink retirement plans abroad (Image: Getty)
No other country comes close to that, as France, in second place, is the destination of choice for 21 percent of people retiring abroad.
Portugal, Italy and South Eastern Europe round off the top five of the list.
Mr Christian urged that to help navigate the complexities of an overseas retirement, people should seek professional advice.
“An expert in expatriate finance will be able to help and ensure you make the most of the retirement people have worked long and hard for,” he said.