What happens to my UK pension if I retire abroad?
5th June 2026
A frozen pension - quite literally
It is one of the most common questions British expatriates ask, and the answer is rarely simple. Your UK pension does not disappear when you move overseas, but what happens to it depends on the type of pension you have, where you retire, how you draw the income, and a set of rules that have been changing at pace. Getting this wrong is expensive. Getting it right takes some planning.
This piece covers the main pension types, the key risks British expats face overseas, and the decisions worth making before you start drawing income.
This piece covers the main pension types, the key risks British expats face overseas, and the decisions worth making before you start drawing income.
The state pension: frozen or not?
The UK state pension can still be claimed from abroad. You simply notify the International Pension Centre and arrange for payment into an overseas or UK bank account. The problem is not receiving it. The problem is what it is worth over time.
The UK state pension is frozen at the rate when you first claim it if you retire to a country without a reciprocal uprating agreement. That means it does not increase with inflation, wage growth, or the triple lock, regardless of how many qualifying years you have built up.
Around 450,000 retirees are currently affected. Popular retirement destinations including Canada, Australia, and New Zealand fall into the frozen category. So does Thailand. So does most of Southeast Asia and the Middle East.
The full new state pension for 2026/27 is £241.30 per week, roughly £12,548 per year for those with a complete National Insurance record. If you retire to a frozen country, that amount stays fixed while prices, rents, utilities, healthcare, and insurance costs continue to rise.
The problem is gradual rather than immediate. You can feel financially comfortable for the first few years, then look up a decade later and find your pension has been quietly losing ground the entire time.
There is an additional complication from April 2026. Class 2 National Insurance contributions, which previously allowed most expats working abroad to build qualifying years at relatively low cost, are no longer available. Class 3 contributions are now the primary option, at £923 per year. Topping up your record can still be worthwhile if you are in a frozen country, because it raises your starting pension amount. But it does not change whether that amount is then uprated. A higher frozen pension is still a frozen pension.
Private pensions: access and taxation abroad
Private pensions, including workplace defined contribution schemes and SIPPs, can generally be paid to you wherever you live. The more important questions are how they are taxed and whether your provider will actually deal with you as a non-resident.
Taxation
If you are non-resident under the UK Statutory Residence Test, there is a reasonable chance your UK pension income can be paid gross under double taxation treaty relief. Most countries have pension provisions within their tax treaties with the UK, and in many cases you can apply for a nil tax code using HMRC Form DT-Individual.
The result differs by country. Government pensions, for example from the NHS or Civil Service, remain taxable only in the UK regardless of where you live. For most private pensions, once you are non-resident and living in Thailand, your pension provider can pay income gross of UK tax after HMRC approves your DTA relief claim.
Thailand adds a layer of complexity. The UK-Thailand Double Taxation Agreement does not include a pensions article. Thailand treats all remitted UK pension income as assessable income, taxable under Thai income tax law. While Thailand grants credit for UK tax already deducted at source, this can still result in a higher effective rate overall.
From 1 January 2024, foreign income remitted to Thailand by tax residents is taxable in the same year it is brought into the country. Pre-2024 income held in overseas accounts is not caught by this rule, but anything earned from 2024 onwards and brought into Thailand is assessable.
The practical upshot for British expats in Thailand is that pension drawdown timing and remittance strategy matter considerably. Drawing pension income into a UK account, managing when it is transferred, and structuring withdrawals efficiently can make a meaningful difference to the tax paid. This is an area where a wrong assumption costs real money.
Provider restrictions
Not all UK pension providers will deal with non-residents. Some will allow you to remain in drawdown indefinitely. Others will restrict your options, refuse to take instructions from overseas, or insist on converting your fund to an annuity. This is worth checking directly with your scheme before you leave, not after.
The 25% lump sum: not always tax-free
Many British expats are aware of the pension commencement lump sum, commonly called the 25% tax-free lump sum. The "tax-free" description is accurate in the UK context. Outside the UK it is more complicated.
Taking your pension lump sum without advice can backfire if you are retiring abroad. While it is tax-free in the UK, many countries treat it as taxable income. The timing of when and where you take benefits can make a six-figure difference over the course of your retirement.
In Thailand, a lump sum received from a UK pension and remitted into Thailand in the same tax year it was taken could be treated as assessable income. The sequencing of when you take the lump sum, which account it lands in, and whether you are Thai tax resident at that point all affect the outcome.
The UK state pension can still be claimed from abroad. You simply notify the International Pension Centre and arrange for payment into an overseas or UK bank account. The problem is not receiving it. The problem is what it is worth over time.
The UK state pension is frozen at the rate when you first claim it if you retire to a country without a reciprocal uprating agreement. That means it does not increase with inflation, wage growth, or the triple lock, regardless of how many qualifying years you have built up.
Around 450,000 retirees are currently affected. Popular retirement destinations including Canada, Australia, and New Zealand fall into the frozen category. So does Thailand. So does most of Southeast Asia and the Middle East.
The full new state pension for 2026/27 is £241.30 per week, roughly £12,548 per year for those with a complete National Insurance record. If you retire to a frozen country, that amount stays fixed while prices, rents, utilities, healthcare, and insurance costs continue to rise.
The problem is gradual rather than immediate. You can feel financially comfortable for the first few years, then look up a decade later and find your pension has been quietly losing ground the entire time.
There is an additional complication from April 2026. Class 2 National Insurance contributions, which previously allowed most expats working abroad to build qualifying years at relatively low cost, are no longer available. Class 3 contributions are now the primary option, at £923 per year. Topping up your record can still be worthwhile if you are in a frozen country, because it raises your starting pension amount. But it does not change whether that amount is then uprated. A higher frozen pension is still a frozen pension.
Private pensions: access and taxation abroad
Private pensions, including workplace defined contribution schemes and SIPPs, can generally be paid to you wherever you live. The more important questions are how they are taxed and whether your provider will actually deal with you as a non-resident.
Taxation
If you are non-resident under the UK Statutory Residence Test, there is a reasonable chance your UK pension income can be paid gross under double taxation treaty relief. Most countries have pension provisions within their tax treaties with the UK, and in many cases you can apply for a nil tax code using HMRC Form DT-Individual.
The result differs by country. Government pensions, for example from the NHS or Civil Service, remain taxable only in the UK regardless of where you live. For most private pensions, once you are non-resident and living in Thailand, your pension provider can pay income gross of UK tax after HMRC approves your DTA relief claim.
Thailand adds a layer of complexity. The UK-Thailand Double Taxation Agreement does not include a pensions article. Thailand treats all remitted UK pension income as assessable income, taxable under Thai income tax law. While Thailand grants credit for UK tax already deducted at source, this can still result in a higher effective rate overall.
From 1 January 2024, foreign income remitted to Thailand by tax residents is taxable in the same year it is brought into the country. Pre-2024 income held in overseas accounts is not caught by this rule, but anything earned from 2024 onwards and brought into Thailand is assessable.
The practical upshot for British expats in Thailand is that pension drawdown timing and remittance strategy matter considerably. Drawing pension income into a UK account, managing when it is transferred, and structuring withdrawals efficiently can make a meaningful difference to the tax paid. This is an area where a wrong assumption costs real money.
Provider restrictions
Not all UK pension providers will deal with non-residents. Some will allow you to remain in drawdown indefinitely. Others will restrict your options, refuse to take instructions from overseas, or insist on converting your fund to an annuity. This is worth checking directly with your scheme before you leave, not after.
The 25% lump sum: not always tax-free
Many British expats are aware of the pension commencement lump sum, commonly called the 25% tax-free lump sum. The "tax-free" description is accurate in the UK context. Outside the UK it is more complicated.
Taking your pension lump sum without advice can backfire if you are retiring abroad. While it is tax-free in the UK, many countries treat it as taxable income. The timing of when and where you take benefits can make a six-figure difference over the course of your retirement.
In Thailand, a lump sum received from a UK pension and remitted into Thailand in the same tax year it was taken could be treated as assessable income. The sequencing of when you take the lump sum, which account it lands in, and whether you are Thai tax resident at that point all affect the outcome.
QROPS: still relevant, but not for most people
A Qualifying Recognised Overseas Pension Scheme, or QROPS, is a pension scheme based outside the UK that HMRC has approved to receive transfers of UK pension funds. They were widely promoted in the expat financial advice industry for many years, sometimes appropriately, sometimes not.
British State Pensions cannot be transferred to a QROPS. Defined contribution pensions, defined benefit schemes, SIPPs, and SSASs can be. From 30 October 2024, transfers within the EEA are no longer automatically exempt from the Overseas Transfer Charge.
The Overseas Transfer Charge of 25% applies to the amount transferred above your Overseas Transfer Allowance. If your allowance is £1,073,100 and you transfer £1.2 million, the charge applies only to the £126,900 excess.
The practical reality for most expats in Thailand is that QROPS are not the default answer they once appeared to be. When QROPS funds are remitted to Thailand, they are considered taxable income regardless of the tax treatment in the QROPS jurisdiction. The lack of a Double Taxation Agreement between Thailand and most common QROPS jurisdictions, including the Isle of Man, Malta, and Gibraltar, means no tax credits are available, making the entire remitted amount fully assessable.
Most people are better keeping their UK pension where it is. A QROPS transfer has significant implications and tax charges that need to be weighed carefully before proceeding. There are situations where a transfer makes sense, but the case needs to be built from the numbers, not from a sales conversation.
The inheritance tax change coming in 2027
One significant development that has not yet received the attention it deserves among expats is the forthcoming change to how pensions are treated for inheritance tax.
From 6 April 2027, most unused pension funds and death benefits will be included in the value of a person's estate for inheritance tax purposes. Currently, most unused pension wealth sits outside the estate under discretionary trust arrangements and passes to beneficiaries without triggering inheritance tax.
Unless an exemption applies, unused pension funds will be aggregated with the rest of the estate and the excess over nil-rate-band taxed at 40%. Inherited pensions may also incur income tax of up to 45% upon drawdown by the beneficiary, leading to a combined effective tax rate of 64% to 67% in some cases, or higher for large estates.
The existing exemption for pension death benefits passing to a surviving spouse or civil partner who is a long-term UK resident, or to a registered charity, will be maintained.
For expats, this does not mean pensions should automatically be drained. It means the pension now sits within a broader estate planning conversation rather than being treated as a separate vehicle that bypasses the estate entirely. The strategy that made sense before 2027 may need revisiting.
What this means in practice
For a British expat planning retirement abroad, the pension picture involves at least five separate questions.
None of these questions has a universal answer. The right approach depends on the size of your pension, where you are living, your wider income, your beneficiary position, and your time horizon.
A Qualifying Recognised Overseas Pension Scheme, or QROPS, is a pension scheme based outside the UK that HMRC has approved to receive transfers of UK pension funds. They were widely promoted in the expat financial advice industry for many years, sometimes appropriately, sometimes not.
British State Pensions cannot be transferred to a QROPS. Defined contribution pensions, defined benefit schemes, SIPPs, and SSASs can be. From 30 October 2024, transfers within the EEA are no longer automatically exempt from the Overseas Transfer Charge.
The Overseas Transfer Charge of 25% applies to the amount transferred above your Overseas Transfer Allowance. If your allowance is £1,073,100 and you transfer £1.2 million, the charge applies only to the £126,900 excess.
The practical reality for most expats in Thailand is that QROPS are not the default answer they once appeared to be. When QROPS funds are remitted to Thailand, they are considered taxable income regardless of the tax treatment in the QROPS jurisdiction. The lack of a Double Taxation Agreement between Thailand and most common QROPS jurisdictions, including the Isle of Man, Malta, and Gibraltar, means no tax credits are available, making the entire remitted amount fully assessable.
Most people are better keeping their UK pension where it is. A QROPS transfer has significant implications and tax charges that need to be weighed carefully before proceeding. There are situations where a transfer makes sense, but the case needs to be built from the numbers, not from a sales conversation.
The inheritance tax change coming in 2027
One significant development that has not yet received the attention it deserves among expats is the forthcoming change to how pensions are treated for inheritance tax.
From 6 April 2027, most unused pension funds and death benefits will be included in the value of a person's estate for inheritance tax purposes. Currently, most unused pension wealth sits outside the estate under discretionary trust arrangements and passes to beneficiaries without triggering inheritance tax.
Unless an exemption applies, unused pension funds will be aggregated with the rest of the estate and the excess over nil-rate-band taxed at 40%. Inherited pensions may also incur income tax of up to 45% upon drawdown by the beneficiary, leading to a combined effective tax rate of 64% to 67% in some cases, or higher for large estates.
The existing exemption for pension death benefits passing to a surviving spouse or civil partner who is a long-term UK resident, or to a registered charity, will be maintained.
For expats, this does not mean pensions should automatically be drained. It means the pension now sits within a broader estate planning conversation rather than being treated as a separate vehicle that bypasses the estate entirely. The strategy that made sense before 2027 may need revisiting.
What this means in practice
For a British expat planning retirement abroad, the pension picture involves at least five separate questions.
- Will your state pension be frozen in the country you are moving to, and have you maximised your NI record before the Class 2 option closed?
- Can your private pension provider deal with you as a non-resident, and on what terms?
- How does the tax treaty between the UK and your country of residence treat your pension income, and what does that mean for how and when you draw it?
- Is a QROPS transfer worth considering given your pension size, country of residence, and the available jurisdictions?
- Has the 2027 IHT change affected your estate planning assumptions, and is your pension now sitting in a different position within your overall plan?
None of these questions has a universal answer. The right approach depends on the size of your pension, where you are living, your wider income, your beneficiary position, and your time horizon.
Where to start
If you have UK pension wealth and are living, or planning to live, overseas, the starting point is a clear picture of what you have, where it sits, and what the rules are in your country of residence. A lot of the mistakes made in this area happen not because people ignored their pension, but because they acted on assumptions that were not quite right for their specific situation.
We work with British expats across Asia and the Middle East on exactly this kind of retirement planning. If you would like to talk through your pension position, you can book an initial call at brigantiawealth.com/book or get in touch at team@brigantiawealth.com.
If you have UK pension wealth and are living, or planning to live, overseas, the starting point is a clear picture of what you have, where it sits, and what the rules are in your country of residence. A lot of the mistakes made in this area happen not because people ignored their pension, but because they acted on assumptions that were not quite right for their specific situation.
We work with British expats across Asia and the Middle East on exactly this kind of retirement planning. If you would like to talk through your pension position, you can book an initial call at brigantiawealth.com/book or get in touch at team@brigantiawealth.com.
