Have you got a pensions and retirement question you'd like Jasmine to answer? Get in touch by emailing money@gbnews.uk.
Question: "l recently travelled to Brazil and may stay longer. My pension is paid into a UK bank. Can you tell me if it is a big problem to leave it that way as there is no agreement between the UK and Brazil to receive it in Brazil?"
Jasmine replies:This is a little tricky to answer without knowing more details about your situation, such as how you are receiving your pension. It’s worth checking out this section on the government’s website.
However, Lee Murphy, managing director of The Accountancy Partnership, says: “If you retire in Brazil, you can claim your UK state pension or new UK state pension, provided you’ve paid enough UK National Insurance contributions to qualify.
“To claim your pension in Brazil, contact the International Pension Centre and send the international claim form (IPC BR1), which is available from GOV.UK.
“However, if you have access to your pension through your UK bank account in Brazil and plan on returning to the UK, it may not be necessary to make a switch.
Jasmine Birtles shared some suggestions for someone hoping to retire overseas
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“I would recommend speaking with your bank and the International Pension Centre to discuss the right thing to do.
“The length of time you want to stay in Brazil may determine the best course of action.”
Also, I have had some pretty detailed suggestions from Zohaib Mir, a financial planner at EQ Investors. He says: “It's great that you're considering your financial situation while living abroad, here’s what you need to know about managing your UK pension while residing in Brazil:
- Pension Payments: You can receive your UK pension while living in Brazil. Payments are typically deposited into your UK bank account, which you can access internationally. Alternatively, some pension schemes might allow payments directly to an international bank account, so check with your pension provider for this option.
- Currency Exchange: Because there’s no specific agreement between the UK and Brazil regarding pension payments, you'll need to handle currency conversion yourself. This means you'll convert your pension payments from GBP (British Pounds) to BRL (Brazilian Real) through your bank or a currency exchange service. Be aware that exchange rates can fluctuate, and there may be fees involved, which could impact how much you ultimately receive in Brazilian Real.
- Bank Accounts: If you prefer to have your pension paid into a Brazilian bank account, you might need to set up an international account or use a service that facilitates international transfers. Some pension schemes offer international payment options, so it's important to check with your pension provider to see if they can arrange this or if there are specific requirements you need to follow.
- Tax Implications: Although Brazil may not directly tax your UK pension, you need to be aware of tax obligations in both countries. Since there is no double taxation agreement between the UK and Brazil, you may need to declare your pension income in Brazil and could be liable for local taxes. It's advisable to consult with a tax advisor who understands both UK and Brazilian tax laws to ensure you comply with regulations and optimise your tax situation.
- Pension Provider Communication: Contact your pension provider to inform them of your move to Brazil. They can offer guidance on how to manage your pension payments from abroad and let you know about any required documentation or procedures.
- Financial Planning: If you plan to stay in Brazil for the long term, it’s a good idea to review your overall financial plan. This includes investments, savings, and estate planning, considering your new residency. A financial planner experienced with expatriate financial issues can help you adjust your plan to your new circumstances.
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“In summary, while receiving your UK pension in Brazil is generally possible, managing currency conversion and understanding tax implications are important.
"Working with your pension provider and consulting a financial or tax advisor can help ensure everything is handled smoothly.”
Jasmine Birtles is founder of MoneyMagpie.com. Sign up to her free, fortnightly investing newsletter here.
