Photo by Matteo Pescarin from FreeImages

For British citizens, a national state pension has been considered a basic right for a number of decades and helps people who have retired to be able to make ends meet without working for a living.  Protecting your entitlement to the state pension is important, and people don’t always realise that their lifestyle choices may affect the amount of money they get once they retire.  Like all pensions, you are required to make regular contributions to build up a pension fund, and if you don’t, you could lose out when you retire.  The entitlement to a full state pension will depend on whether you have built up sufficient credits and you can read the basic details here.

This can become even more complicated for people living and working abroad because you may not be making regular payments.  We recommend that next time you’re in the UK you check exactly what your current entitlement is and what you need to do to preserve your pension rights.  To do this you contact the Charity, Assets and Residence (CAR) Centre run by Her Majesty’s Revenue and Customs (HMRC).  Click here for further details.

They can also give you a forecast of what your retirement pension is likely to be.  If there is a shortfall in the contributions you have made to date, you can top them up.  Find out about a pensions forecast here.

Normally, state pension contributions are deducted from your UK salary by your employer, but many people working overseas won’t have an employer, or even a salary.  This does not mean you are excluded from the state pensions system.  You can protect your pension rights by making voluntary contributions.  This is usually done by sending a cheque to CAR once a year.  Further details are available here.

If you are fortunate enough to be involved in humanitarian or development work, and your sending agency or church has registered with CAR, you may be entitled to make Voluntary Development Worker contributions, which are levied at a lower rate.  Check here for further details.

You can’t take your state pension until you reach retirement age.  This age is different for men and women, and also will be different depending on when you were born as the government incrementally raises the age at which you can claim it.  Check your retirement age here.  But you don’t have to claim it when you reach that age – you can defer it until you feel you really need it, and if you do, you can get a higher pension or a lump sum.  Read more about this here.

You should also be aware that though the UK pension is increased every year to help pensioners cope with the rising cost of living, but if you chose to live abroad once you’ve claimed it, you may forfeit the right to the annual increase as it only applies to residents of certain countries.  Read more about this here.

Sadly, many people ignore their state pension contribution while they’re working abroad in the mistaken belief that the government will take care of them in their old age.  The government will (under current arrangements) pay you something, but not necessarily your full entitlement.  We believe that in general, making a state pension contribution could be the investment of a small sum to get a big benefit.