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Living Overseas Could See Pension Cut in Half
By Myra Butterworth, The Telegraph
August 3, 2010
United
Kingdom
The latest retirement hot spots index by financial services group Standard Life revealed France in second place, America in third and Canada in fourth, followed by Ireland in fifth place.
Andrew Tully, senior pensions policy manager at Standard Life, said: “Retiring abroad is a dream for many people but without careful planning and advice, things can potentially go wrong very quickly.”
If an individual moves abroad permanently, any increases in their UK state pension will only apply if they are living in an European economic area – including Gibraltar and Switzerland – or a country with a reciprocal social security agreement with Britain.
People living outside these areas will see their state pension frozen at the amount initially paid when they first claimed.
Popular retirement countries outside these reciprocal agreements include Australia, Canada, New Zealand and South Africa.
It means the basic state pension could halve in real terms during a 20-year retirement, according to Standard Life.
Mr Tully added: “One significant consideration before you move is to think about your state pension and what, if any, reciprocal agreement is in place. If there isn’t a reciprocal agreement in place, then you need to be very careful your retirement income is sufficient to cover your living costs over a long period of time.”
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