Britons retiring to seven of the 12 most popular foreign destinations for UK expats will have their state pensions frozen at the rate when they first started drawing them, a new study by Alliance & Leicester International (ALIL) finds.
These seven popular destinations are New Zealand, South Africa, Dubai, Canada, Australia, Singapore and Hong Kong, the Isle of Man-based offshore savings bank said.
In the UK, men begin drawing their pensions at age 65, women at 60.
The decision of the UK Government not to increase the state pension of Britons resident in these seven countries has significant implications for such individuals, given that the average man is expected to live to 82 years of age and the average woman to 85, ALIL noted.
Few UK pensioners realise “that by choosing to move to Cape Town rather than Capri, they will have their state pension frozen at the level at which they first started to draw it”, said Simon Ripton, joint managing director of ALIL, a wholly-owned subsidiary of Alliance & Leicester, now part of the Santander Group.
Lower cost of living
It is true, ALIL noted, that the cost of living tends to be lower in many of the destinations where UK pensioners currently face having their state pension payments frozen.
Nevertheless, the bank went on, it is “difficult to imagine that the basic weekly pension of twenty years ago” – £43.60 for an individual, £69.80 for a couple – “is sufficient to live a comfortable retirement now”.
ALIL said the research highlighted the need for individuals to ensure they have additional retirement income, by saving ahead of their retirement.
Added Ripton: “This is something that ALIL actively promotes.”
He said customers who open an ALIL eSaver or Select account receives a free guide to expat financial planning entitled Expat Money.
Information on ALIL is at www.alil.co.im, or by calling +44 (0) 1624 641888.
