If you are a British expat trying to work out your retirement options, just how do you calculate when you can stop working and receive a pension?
The problem is you have different retirement dates –
- When you reach your 55thbirthday
- When you stop working
- When you start getting paid by work or personal pensions
- When you receive the state pension – the state retirement age
The first milestone is the easiest – your 55th birthday is the earliest date a British expat can start drawing money from a workplace pension, a personal pension or a Qualifying Recognised Overseas Pension Scheme (QROPS).
When you stop working is now not that relevant. The date was generally set as your 65thbirthday and the time you started to receive the state pension. Now these are uncoupled and when you give up work now depends on you.
Retirement goal posts keep moving
The payment date of many workplace pensions is anytime between your 55th and 65thbirthdays.
For instance, local government pensions mostly pay from the age of 60.
Sorting out the state pension age can involve some head scratching, as the date is now a variable:
- The current state pension age is 65 for men born before December 6, 1953. For women, the date is between 60 and 65 years old, depending on when their birth date falls between April 5, 1950 and December 6, 1953.
- The payment date rises to 66 years old phased between November 2018 and October 2020, then 67 between 2026 and 2028, and 68 between 2044 and 2046.
To check the date when you are likely to receive the state pension, the government has a handy online calculator
Frozen state pensions
To make matters even more complicated, the state pension age is likely to face a revision after 2028.
The government is considering making the qualifying age increase in line with longevity figures.
Working out when you retire is one thing, but calculating how much pension you might receive is even harder.
Direct benefit pensions are based on length of service and final salary, while defined contribution schemes are based on fund size and financial market performance.
Even the state pension depends on how many qualifying years an expat has chalked up working in the European Union or Britain.
Expats are further impacted by index-linking the state pension – or the lack of cost of living increases which depend on the country where they choose to live in retirement.