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Retiring abroad: will your state pension be frozen?

Find out the best countries for state pension pay-outs

Dreaming of a sunny retirement by the sea? You can still receive your UK state pension if you decide to move abroad – but the amount you’ll receive will depend on where you go. 

Which? research shows the countries where your pension will rise with inflation, and those where it will stay at the level you first claim it, potentially costing you thousands over the course of your retirement.

We explain how the state pension works for overseas retirees and how much they receive in popular locations.


Where is the state pension frozen?

For the 1.2 million retirees living overseas and collecting the UK state pension, there is a huge variation in how much they’re paid each month – and it’s partly dictated by the country they’ve moved to.

In countries that are part of the European Economic Community, or where there is a social security agreement with the UK, the state pension of ex-pats rises each year, as it does in the UK.

The annual increase is determined by the so-called ‘triple lock’ – this ensures that the state pension rises each year by the higher of inflation (as measured by the CPI), the increase in average earnings, or 2.5%.

In all other countries, recipients’ state pension is frozen at the rate it was first paid abroad. The amount you’re paid when you first move overseas will be the amount you’ll continue to receive into the future – meaning you’ll miss out on increases you would have benefited from in the UK.

Countries that apply the state pension triple lock

People living abroad may have paid for their state pension all or most of their working lives, but it may be frozen if they live in one of 150 countries around the world where there is no annual index-linked rise.

Our graphic highlights which countries up-rate the state pension. In all others, your payments will be frozen.

State pension frozen down under

To understand how much pensioners are earning in sought-after retirement destinations, Which? Money accessed the DWP database of UK benefits information and extracted data from it.

Our analysis covers the latest DWP statistics available (the quarter to November 2017) comparing different demographic and national elements of the government data.

Expatriates living in some of the most popular destinations – Australia (237,815 UK pensioners), Canada (133,198) and New Zealand (65,769) – collect a ‘frozen’ weekly pension averaging £45.23, £41.86 and £42.76 respectively.

Nine out of ten ex-pats receiving frozen pensions live in those countries and South Africa.

Retiring in the sun

Moving to a country in the European Economic Area, or one with a social security agreement with the UK, will mean your state pension goes up each year.

After the Second World War, the UK entered into agreements with a number of countries where it had interests or a special relationship. Retirees in Jamaica (£105.01) and Barbados (£104.89) are covered by such arrangements.

The 107,148 ex-pats who have decamped to Spain receive an average of £108.13, while 66,797 retirees in France get £104.34 each week.

UK pensioners living in the USA get the index-linked increase each year, but payments to their counterparts across the border in Canada are frozen.

Curiously, the nine UK nationals who’ve settled in the Republic of Armenia receive a particularly generous average weekly payment of £124.39.

If you’d like to know more about your state pension entitlement, you can view our guide to the state pension.

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