Pension Freeze – Pension For People Living Abroad – Guide

You are entitled to get your state pension when you start living abroad but if you move to certain countries, your pension funds may be frozen – meaning your pension will be frozen at a rate when it was first paid. In other words, your pension will not reflect any rise if you move to certain countries.

There are about 150 countries that are not under social security agreement with UK and thus the principle of “Frozen Pension” applies to these countries. Strangely, as a UK citizen working in a country that is not under social security agreement with UK, and if you visit Jamaica (or any other country that is in agreement) for 2 weeks, you get raised pension for the period you spend in Jamaica.

Understanding all the laws and rules related to UK pension and pension freeze can be difficult for a common citizen; so, here is a simple and concise guide on frozen pension for people living abroad.

State Pensions

The state pensions are based on your National Insurance contributions. As you plan to move abroad temporarily or permanently, here are things to consider about your state pension are:

1. What will happen to your future contributions to the state pension?

2. Will you be able to continue building your UK state pension while working abroad?

If you are moving to EEA State member country, the answers to these questions are simple – you can usually carry on contributing to your NI contributions if you are visiting abroad for a period that is not more than twelve months provided your employer applies with your name. The application informs the social security authorities of the EEA country that your insurance will be carried under the UK plan.  The involved countries include:

  • Austria
  • Belgium
  • Bulgaria
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • France
  • Finland
  • Greece
  • Germany
  • Hungary
  • Italy
  • Ireland
  • Lithuania
  • Latvia
  • Luxemburg
  • Malta
  • Netherlands
  • Portugal
  • Poland
  • Romania
  • Spain
  • Slovakia
  • Sweden
  • Turkey

The countries under EEA with UK allow reciprocal payments of benefits and taxes to citizens of each state and thus you can continue to make contributions and get associated raises and benefits. However, if you are moving to a non EEA country, a set of different arrangement applies.

Your state pension could be frozen at the initial rate when you first became entitled to the state pension if you move to non EEA country but living abroad in such country does not affect your eligibility to claim back your UK state pension. While moving abroad can boost your income, at the same time, it can reduce your pensions too. The impact of moving to a non EEA country can be too complicated depending on a number of factors.

So, if you are planning to live abroad, it is recommended to get your pension plans reviewed to perform as expected and to know how moving abroad will affect your pension scheme. Professional advisers can also suggest you the ways to recover your frozen pensions, if any.

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