It is entirely possible to still build up state pension while living abroad but the amounts received may be affected. As the pension advisory service detail, it will be relatively easy to build up a state pension if living in a country within the European Economic Area (EEA), Switzerland or a country that has a social security agreement with the UK.
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It may even be possible to receive two state pensions in retirement. State pension from the new country may be able to be claimed. Individuals are encouraged to investigate the state pension system in the country they’re living in to see if it’s possible to pay into it.
If the UK state pension is already being paid to a claimant, it can carry on being received if they move overseas.
To ensure there’s no issues with this the pension service or state should be made aware of any plans to leave the UK.
The only foreseeable issue with receiving state pension abroad concerns the amounts received, or the country the claimant has relocated to.
State pension will increase each year but only for people who live in the EEA, Switzerland, Gibraltar or a country that has agreements set up with the UK.
Countries outside these parameters, for example Australia, will not receive yearly increases. However if the person returns to live permanently in the UK, their state pension will go up to whatever the current rate is.
There is a specific department set up by the government to help people in this area. The International Pension Centre can provide advice or information on pensions and benefits for anyone who lives abroad or has lived abroad.
They can be contacted online, through email or event through Twitter. It’s important to note that, generally, the best thing someone can do to protect their state pension while living abroad is pay UK national insurance.
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The details and logistics of how this would work will depend on the individuals specific circumstances.
The requirements will depend on if a person works in the EU, EEA or elsewhere.
For people working for an employer in the EEA social security contributions will normally be paid within the country, replacing UK national insurance.
This could mean that the person will likely be covered by the country’s social security laws and may be entitled to benefits there.
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However, this may in turn reduce entitlement to benefits from the UK, including state pension, as there could be a gap in national insurance contributions.
If this is the case, and the person involved wants to make sure they receive UK state pension, efforts should be made to ensure that UK national insurance is voluntarily paid.
If a UK employer sends an individual to work in the EEA the rules will be slightly different. It may be possible to carry on paying national insurance abroad for up to two years, meaning social security contributions to the host country will not be needed.
If this is the case, a “Portable Document A1” will be needed as proof. The employer themselves can check if the person can get this by completing a CA3822 form.
There are also procedures in place for countries who have bilateral social security agreements with the UK. These are typically countries outside of the EU and EEA and they can include the USA, Canada and Japan.
In these circumstances, it may be possible to continue paying contributions to the UK instead of the host country if the person is only there temporarily. The details for this will need to be checked by the employer themselves by completed a CA9107 form.
It should be noted that the rules for national insurance contributions and receiving state pension abroad will be different for the self-employed, those working for the UK government or armed forces.
Those who live and/or work outside of these types of countries still have options too. National insurance for the UK can still be contributed to if the following conditions are met:
- The employer has a place of business in the UK
- The person is ordinarily resident in the UK
- The person was living in the UK immediately before starting work abroad
To check on all of these details and ensure that national insurance and state pension commitments are met the HMRC should be contacted for guidance. They will be able to confirm eligibility as well as provide various documentation and information.
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