30-06-2025
The countries where you can live abroad and still get the state pension
If you are thinking about relocating abroad on a permanent basis, you might assume you'll stop paying National Insurance contributions in the UK.
You might then imagine that you'll need to pay 'social security' – or the equivalent – in your new country of residence.
But what you might not realise is that there are a host of countries that have agreements with the UK in terms of National Insurance contributions.
Under those 'social security agreements', there is the option to pay voluntary National Insurance contributions while living overseas which will count towards your state pension record back here in the UK.
Adelle Greenwood, technical manager (tax) at the Institute of Chartered Accountants in England and Wales, said: 'Former UK residents who have moved abroad may wish to consider paying UK voluntary National Insurance contributions to secure future state pension and other benefits entitlement.'
Here Telegraph Money takes a closer look at what's involved.
National Insurance record and state pension
Before we delve deeper into the possibility of making National Insurance contributions while abroad, it's worth reminding yourself of the state pension rules.
Becky O'Connnor, director of public affairs at PensionBee, said: 'To get any state pension when you reach state pension age, you need 10 'qualifying years' on your National Insurance record.'
However, if you have less than this, you may be able to use your overseas social security contributions to make up the 10 qualifying years.
In other words, filling in the gaps in your National Insurance record could help you qualify for a UK state pension.
Ms Greenwood said: 'With this in mind, you may want to review your National Insurance record to evaluate your contribution history and see if there are any gaps you wish to cover.
'Armed with this information, you can then make an informed decision about contributing while living outside the UK.'
How does it work?
The way in which living or working – or having lived or worked – in another country could affect your claim for the state pension depends on two key things:
How many qualifying years you have in your National Insurance record;
Which countries you have lived or worked in.
In short, being able to use overseas National Insurance contributions is most likely if you have lived or worked in the European Economic Area (EEA), or Switzerland. But it's also possible in certain countries that have a 'social security agreement' with the UK – more on this below.
Ms O'Connor said: 'If you work and contribute to the social security system in any of these countries, reciprocal arrangements mean that these years can be added to the qualifying years in your National Insurance record.'
Understanding 'aggregation'
It's worth getting to grips with the idea that while, in some countries, you may be able to 'aggregate' UK and local contributions for 'qualifying' purposes – this is not for the pension amount.
In other words, where agreements are in place, years can be 'added', but the amount you get paid depends on the number of qualifying years in your UK record, not the years of work abroad.
Ms Greenwood said: 'This means any contributions made in the other country will be taken into account when determining eligibility for state benefits – but not usually for the calculation of the amounts due.'
Worked example
The government website provides some examples of how this can work in practice.
Say you have seven 'qualifying years' from the UK on your National Insurance record when you reach state pension age.
But during your life, let's say you worked in an EEA country for 16 years, and paid contributions to that country's state pension. This will come into play.
As a result of the time you worked abroad, you will meet the 'minimum qualifying years' to get the new state pension.
That said, the amount of new state pension you actually get will only be based on the seven years of National Insurance contributions you made in the UK.
Different rules apply to Canada, New Zealand and Australia
Having got your head around this, it's important to note that for some countries, the rules are slightly different.
Ms O'Connor said: 'The exception to this is, if you currently live in the UK, time spent living in Canada or New Zealand could be added to the qualifying years in your UK National Insurance record. Similarly, time spent living in Australia before April 5 2001 can also be added.'
Be wary of other criteria
Wherever you live, you will also have to meet other criteria. Whether or not you are eligible will be worked out by the Department for Work and Pensions (DWP) when you make a claim.
Making voluntary contributions
In order to pay voluntary Class 2 or Class 3 National Insurance contributions while abroad you must have either:
Previously lived in the UK for three years in a row;
Or paid contributions (or had Class 2 National Insurance treated as having been paid), for at least three years.
The government website provides more information here.
How to set yourself up
If you are planning to pay National Insurance contributions while you are overseas, you may need to apply for a certificate called a CF83 confirming that you pay social security in the UK.
Once you've sent the relevant paperwork to HMRC, you will be told whether you are eligible – and what class and rate you can pay.
How will years get added?
If you do meet the criteria – meaning years can be added to your record – you could be eligible for the state pension, provided you are over the 10-year threshold.
As mentioned above, the actual amount you get paid will be calculated on the 'qualifying years' in your UK National Insurance record along with the time added on from the country you were living or working in.
Note that you can only get paid up to the 'full rate' of the new state pension.
Act with caution
Before you proceed, you need to be aware that things can get a little complicated.
Ms Greenwood said: 'Some people – in particular workers who have moved abroad for work purposes or who regularly work between the UK and another country – may still be liable to employee UK NIC on a mandatory basis.'
Equally, there's also the possibility that a worker may now be liable to social security in the other country where they are living and working, instead of in the UK.
Ms Greenwood added: 'This will depend on the country, and whether the individual's circumstances mean they come into the scope of any social security agreement in place.'
Find out more here.
Seek advice
Matters to do with social security and National Insurance contributions can be complex – and especially for temporary non-residents.
If you're not quite sure about the right approach for you, or if you have any questions, it may make sense to seek professional advice. A good starting point is the International Pension Centre.
Remember, it won't increase the amount you get
If you live or work in a country that has an agreement with the UK, you may be able to aggregate UK contributions and contributions you make in your 'new' country for qualification purposes.
But this won't have an impact on the actual amount of pension you get.
Don't assume you will get the annual uplift to the UK state pension
Ms Greenwood said: 'Claimants should be aware that the annual uplift to the UK state pension does not apply if you are living in a country where there is no social security agreement with the UK – or where the provisions of the agreement do not protect the increase.'
Think about the impact of moving abroad
There's no escaping the fact that moving and working overseas can complicate your state pension entitlement.
Ms O'Connor said: 'As a result, the payments you receive when you reach state pension age may be lower.'
Moreover, if you then live overseas when you retire, this can also affect how much you receive.
Ms O'Connor added: 'For anyone who lives and works abroad, this can have a noticeable impact on retirement income later on.'
With this in mind, it's worth taking the time to make sure you understand the arrangements in the country you are moving to – and how these are likely to affect your retirement income.
