Overseas retirement requires careful planning

Retiring abroad is a big life decision involving many significant changes, some of the most important and potentially daunting of which relate to financial affairs.

From fundamental requirements like bank accounts to more complicated concerns such as savings and pensions, there are a number of things for retirees to consider before relocating overseas.

Bank accounts

A bank account is a basic requirement in any country and if you are planning to start a new life abroad, it will be necessary to open an account with a bank based in your new home nation.

The good news is that, in our globalised economy and with the constant connectivity provided by the internet, this is a fairly easy thing to do.

Most major high street banks that British consumers will be familiar with are represented abroad, meaning account holders can walk into their local branch and discuss options for transferring their account to another country.

Another option is using an internet-only bank, which offers added convenience and removes the need to change provider when you emigrate.

Savings

Transferring savings abroad is likely to be a key part of the relocation process for many retirees.

If you are planning to spend your post-work years in a foreign country, the chances are you have been planning the move for some time and making the necessary preparations, including putting sufficient savings aside to ensure you are comfortable in your new home.

While it is possible to keep savings in a British account, there are some drawbacks to this approach, such as possible restrictions on contributions and the chance that income you receive from any savings or investments in the UK will be subject to taxation in the country you are moving to.

If you choose to make an international transfer to ensure your savings are directly accessible overseas, it could prove beneficial to use a currency specialist. This provides access to competitive exchange rates and allows you to make same-day global payments in any currency.

Using a dedicated money transfer service can prove much cheaper than going through a bank thanks to lower fees, particularly if your savings are substantial.

Pensions

UK pension plan members are generally able to transfer their funds to other approved schemes, even if they are retiring abroad.

If the foreign product is recognised by HM Revenue & Customs (HMRC) as a Qualifying Recognised Overseas Pension Scheme (QROPS), which basically means it is an approved arrangement, a transfer can be processed in the same way as in the UK.

A QROPS is defined as a pension plan that is regulated in the country where it was established and is subject to proper taxation. A list of approved products in nations including Australia, Canada, France and Ireland is available on the HMRC website.

You can take your state pension abroad and should receive a claim form four months before you reach state pension age. If you haven't received a letter three months in advance, or if you have any other queries, contact the International Pension Centre.

Tax

They say it's one of only two certainties in life, and tax is something you will still need to consider if you are planning to retire abroad.

When arranging your relocation, you will be expected to inform HMRC of your plans, so the government department can work out how much tax you have to pay in the UK, whether you need to fill out a self-assessment tax return and if you are entitled to a tax refund.

Even if you are classed as being 'non-resident' for UK tax after retiring overseas, the chances are you will still pay tax on your pension. Britain has a 'double taxation' agreement in place with some countries, meaning expats may be able to receive pension payments without income tax deductions.