EU Brexit for Expats - Potential Impact on State Pension Indexing
Expats Living and Retired Abroad can receive indexed UK state pensions if they live in a country with a reciprocal agreement for pension indexation. That includes all the EU Countries, so with EU Brexit - what happens to Expats Receiving UK State Pensions?
Whatever the manner of UK Brexit from the EU, Overseas Tax on Pensions paid offshore will continue to be determined by the relevant double taxation treaty - for better or worse.
Those Expats that receive British State Pensions can receive an index linked pension abroad if they live in a country that has a reciprocal social insurance agreement. All EU countries are signed up to a common Social Insurance agreement in addition to other selected countries.
If an Expat lives in a country with a reciprocal agreement, their UK State pension is indexed each year by a figure that is linked to UK inflation of prices or wages. If there is no agreement then the Expat UK State Pension stays frozen at the rate payable on the date first received or the date they become non resident taxpayers.
Brexit Loses Indexation
Many British Expats are Living and Retired Abroad in EU countries such as Spain, Portugal, France, Cyprus and Germany and receive indexed annual UK state pensions. This applies to all EU countries, plus EEA countries, Switzerland and Gibraltar.
With EU Brexit this automatic right will be lost. It may be during Brexit that Britain negotiates replacement arrangements, to allow pension indexing to continue. This is a complex situation and cannot be answered categorically at this point in time. Countries such as France have an independant social insurance reciprocal agreement, so indexing will continue after Brexit.
There are another 16 countries around the world where Expats can receive Indexed UK State Pensions - many will surprise you, some offer Income Tax Savings.
The USA & Israel are included in indexation but not former commonwealth countries such as Canada, Australia or New Zealand. Will the UK repair and renew these old commonwealth ties?
The British Isles are included, Jersey, Guernsey or Isle of Man plus the more exotic Bahamas, Mauritius and Bermuda. Expensive though they may be.
Surprisingly maybe are two countries without traditional ties to the UK. Turkey and Philippines. These could become hotspots for Retired Expats going forward with lower costs of living.
Most of the former Republic of Yugoslavia countries are included and allow indexation - Serbia, Macedonia, Montenegro, Bosnia and Kosovo! These new countries show modern thinking may allow new agreements with individual countries to replace the EU wide agreement.
Pension Freedom Review For Expats
If you have a Pension Fund, and are over 55, consider how you could move forward to free your funds. ProACT offer a Free review of your options and can help you reclaim the tax at source on the pension fund.
ProACT Tax Saving Expat Experts offer tax saving for people living and working and retiring and investing abroad.
Free Review and more information on the impact to your Pensions & EU Brexit for Expats
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