by Helen Llewellyn 
Thinking of moving overseas, or perhaps you already have, what happens to your state pension exactly?
Moving overseas before you reach state pension age often makes you think about your finances. Now may be fine but what about when you plan to stop work and enjoy your retirement? That’s when you want your pension to kick in and support you.
So, what does happen to your pension if you move to Spain?
Your state pension will still be paid even if you move overseas. If you moved and gained residence prior to 31st December 2020 you will retain the right to any triple lock and inflation linking. If you arrived after that date you may not receive all of the increases that the UK government offer those residing in Spain prior to 31st December 2020 or those residing within the UK.
How do I collect it
You apply via International Pension Office within 4 months of your State pension date. So if you reach pension age on 1st August you can apply for it on or after 1st April of the same year.
There is a form to fill in. You can find it here
What if I am retiring early
You can retire whenever you like. The state pension will be paid to you when you reach state pension age, which is around 67 but depends on your date of birth. You can check your precise state pension age here
You may be entitled to a full or part pension depending on how many years National Insurance you have paid (or how many years you have credit for – this can happen for parents taking time off to look after their children). A full pension is currently £221.20 per week. The amount you get may also be affected by whether you contracted out in the past. You can get a pension forecast here
If you are not entitled to a full pension you can pay more money in to increase the amount of pension you get.
So, should I top up then?
Not necessarily, no. You will need to weigh up the benefits based on your personal information and health situation. The UK state pension pays out until you die but does not, ordinarily pay any death benefit or widow benefit – which personal pensions sometimes do.
So if you are 50 and in good health and pay in £5,000 to get an extra £50 a week that is great value for money. You only have to live 2 years past pension age and you are quids in.
However if you are 63 and have to pay in £9,000 to get £20 a week extra you would have to survive for 8.65 years to recoup your money. I really hope that you live to a ripe old age but hopefully you get my drift.
Can it be paid into a Spanish account
Yes. UK Department of Pay and Pensions can pay your pension into a UK account in £ and you can transfer money as you need it or it can be arranged for your pension to be paid in € to a Spanish account. People regularly report that they get a great exchange rate by having it paid into a Spanish account.
What about other pensions, can I still access those?
In brief yes. Moving overseas doesn’t affect you received retirement benefit. With Private pensions you can access the money from the age of 55. Beware that the 25% tax free sum that you see advertised relates to UK tax. It will be taxed in Spain although you do have a personal tax free allowance here too.
You can transfer your pension pots to an EU held fund if you wish too – these are called QROPS schemes. It is usually unviable due to charges for pension pots of less than £150,000 though. Please do seek financial advice if you are considering changing funds or making big changes.
