This piece first appeared in Saga Magazine in July 2004
The text here may not be identical to the published text

 

Retiring abroad

European moves

Europe just got a lot bigger. With ten more countries in the European Union the options for retiring to another country and getting your pension paid there in full have expanded too.

One of the basic rights the EU gives to its citizens is the freedom to travel within its borders without a visa and to settle and remain in any part of it. With the bigger EU, all its 455 million citizens can now travel to any of the 25 member countries and live anywhere within its four million square kilometres without a visa or other restrictions.

As well as the right to visit, we now all have the right to live in any of the 25 EU countries and that includes retiring there. So if you fancy selling up and moving to Estonia or Malta or Poland, you can. UK citizens are also free to go and work or set up a business anywhere in the EU, including all ten of the new member states. So if you want to retire abroad but earn a bit of money there is nothing to stop you – except perhaps the language.

All the new members will eventually adopt the euro as their currency. But that will normally take up to four years, more in some cases. So you will still have to cope with the kroon, zloty, tolar and forint for a few years yet.

State pension
The UK state retirement pension can be paid in full anywhere in the European Economic Area – that is the EU and three other countries. It will go up each year with inflation as it does in the UK. Remember though that the pension credit is not paid to people living outside the UK. If you live outside the new EEA you may still get your pension uprated each year. There is no rhyme or reason to the list but there are 20 other countries where the retirement pension – and widow’s or bereavement benefits – are paid in full. Everywhere else in the world the pension can be paid but it is frozen. In other words it does not rise each year with inflation.

War pensions can be paid anywhere in the world in full. But almost all other social security benefits – including disability benefits – cannot be paid to people living permanently outside the UK. You will be able to claim local benefits and social assistance on the same terms as other citizens. But these may not be as comprehensive as those in the UK.

Winter Fuel Payment
The winter fuel payment – currently £200 tax-free for individuals or couples over 60 – can be paid to people living outside the UK in certain circumstances. The rules are complex. But broadly speaking if you qualify in the UK, then move to one of 30 other European countries, you can get the payment there in subsequent years. You do not have to have claimed it in the UK. Being the right age and living permanently in the UK during the qualifying week is enough. The thirty qualifying countries are the 25 countries of the enlarged EU, the three other countries of the European Economic Area, plus Switzerland and Gibraltar.

Of course, people go to many of these countries to avoid the winter – but the money can still be paid. Malta, Gibraltar, Greece, and parts of Italy, Portugal, Spain and France all enjoy winter temperatures far higher than those in the UK. And the winter fuel payment can be made further afield than that. Spain includes the Canary Islands, off the African coast, as well as the Balearic Islands in the Mediterranean. Portugal includes the Azores and the Madeira islands off Africa. France includes three overseas Departments where winter hardly exists. Martinique and Guadeloupe are in the Caribbean where temperatures seldom fall below 25C. Réunion in the Indian Ocean enjoys January temperatures above 30C. And in the equatorial country of French Guiana on the coast of South America the thermometer stays around 27C all year round. But all these places count as part of the EU and the winter fuel payment can still be paid every year to people who have retired there after first qualifying for it in the UK.

If that does not seem daft enough, some people enduring winter in the British Isles are excluded from the payment. It is not paid to people living in the Isle of Man – winter temperature around 5C – or the Channel Islands. Technically they are outside the UK and the EU.

People living abroad can also get the payment backdated. As long as you first qualified in the UK, you can claim your winter fuel payment for any subsequent year that you lived in some of the qualifying countries – right back to 1998/99. However, people living in Switzerland can only get back payments for 2002/03 and 2003/04. And if you live in one of the new EU countries you cannot claim for years before 1 May 2004.

If you live in the UK the rules are different. If you were over 60 on the qualifying dates you can still claim the payment for 1997/98, 1998/99 or 1999/2000. But it is now too late to claim for later years. for 2004/05 must be made by 30 March 2005.

Other financial factors
Health
- As EU citizens we have the right to use the health service in any member state on the same terms as citizens of that country. In the UK we are very fortunate to have a free National Health Service and that advantage is shared with any other EU citizen who lives here. When we live in another country, we are subject to their rules. So if local people have to pay for medical care or drugs then UK citizens living there have to pay too.

Tax - If you live in another country you will be subject to their tax laws. Income paid in the UK will normally be either paid free of UK tax and taxed where you live or will be taxed in the UK and be tax-free in the other EU country. UK citizens who die in another EU country will normally be subject to inheritance tax there, and the rules are very different from those in the UK. Some EU countries such as France and Spain even have an annual tax on wealth. Remember to make a new valid will in the country where you live.

Customs - If you return to the UK from the new EU countries – except Malta and Cyprus – you are limited to bringing back 200 cigarettes duty free. If you arrive from Estonia or Czech Republic there are also restrictions on other tobacco products.

Qualifying for winter fuel payment
Once you have first qualified, you do not have to live in the UK to qualify for subsequent years.

Winter Born on or before Living in the UK in this week Full amount Half amount
1997/98 11 January 1938 5-11 January 1998 £20 £10
1998/99 15 November 1938 9-15 November 1998 £20 £10
1999/2000 26 September 1939 20-26 September 1999 £100 £50
2000/01 24 September 1940 18-24 September 2000 £200 £100
2001/02 23 September 1941 17-23 September 2001 £200 £100
2002/03 22 September 1942 16-22 September 2002 £200 £100
2003/04 21 September 1943 15-21 September 2003 £200 £100
2004/05 26 September 1944 20-26 September 2004 £200 £100
  • Full amount is paid to people who live alone or with people under 60, or to people receiving a means-tested benefit and claiming for a partner. Half amount is paid to individuals who do not get an income related benefit and who share a home with someone else aged 60 or more.

  • People living outside the UK will not get the extra £100 for the over 70s this winter. The extra payment for the over 80s is only made if you qualified for it in the UK

  • The enlarged European Union
    Austria, Belgium, Cyprus*1, Czech Republic*, Denmark, Estonia*, Finland, France, Germany, Greece, Hungary*, Ireland, Italy, Latvia*, Lithuania*, Luxembourg, Malta*, Netherlands, Poland*, Portugal, Slovakia*, Slovenia*, Spain, Sweden, United Kingdom.

    *Joined 1 May 2004

    1Although Cyprus is a full member of the EU, the northern part is still under Turkish control and EU law does not generally apply there. But pensions are uprated and winter fuel payment can be paid.

    The European Economic Area
    Iceland, Norway, and Liechtenstein.

    Extra countries for winter fuel payment
    Gibraltar, Switzerland.

    Extra countries for uprating state retirement and widow’s pension
    Alderney, Barbados, Bermuda, Bosnia and Herzegovina, Croatia, Federal Republic of Yugoslavia (Serbia), Gibraltar, Guernsey, Isle of Man, Israel, Jamaica, Jersey, Kosovo, Macedonia, Mauritius, Philippines, Sark, Switzerland, Turkey, United States of America.

    July 2004


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