Older Britons may have missed out on around £26,000 in state pension payments if they are spending retirement abroad, shocking analysis has found.
Those who retire outside the European Union and United States face a stark financial penalty as their state pensions remain frozen at the rate they received when leaving the UK.
Analysts warn that these retirees see their income steadily eroded by inflation year after year, with no increases to match the rising cost of living.
The freeze applies from the day pensioners depart Britain, leaving them increasingly worse off compared to those who remain in the country.
Thousands of older Britons have missed out on £25k worth in state pension payments since 2010
GETTYWhile UK-based pensioners benefit from the triple lock guarantee, which ensures annual increases based on inflation, wage growth or 2.5 per cent, expats in affected countries receive no such protection.
Research from stockbroker interactive Investor reveals the substantial financial impact on those who have already moved abroad. Pensioners who relocated in 2010 have missed out on £25,832 in payments over the past 15 years.
Those who left Britain in 2015 have sacrificed £13,162 compared to what they would have received had they remained in the UK.
Interactive investor's analysis shows that British pensioners moving overseas now could forfeit approximately £70,000 from their state pension over the next two decades if their payments remain frozen.
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The projections assume the full state pension will increase by 3.7 per cent in 2025, followed by annual rises of 2.5 per cent annually thereafter.
Currently, the new full state pension currently offers claimants at £11,973 annually, having risen by 4.1 per cent in April.
Britain has established agreements with the United States, most of continental Europe and various other nations to protect expat pensioners from inflationary pressures.
These deals ensure retirees in those countries receive the same annual increases as UK-based pensioners. However, many popular retirement destinations lack such arrangements, leaving British expats vulnerable to frozen pensions.
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Many Britons have opted to move to other countries as expats but the decision could impact their retirement
GETTYMyron Jobson, a senior personal finance analyst at interactive investor, urged pensioners to take action if they believe their retirement will be impacted.
He said: “Planning ahead is key. Make sure you’ve checked whether your chosen destination is affected and consider topping up any gaps in your national insurance record to maximise what you’re entitled to. Deferring your state pension can boost the amount you get, though it won’t help with uprating in frozen countries.
“Most importantly, building a strong private pension pot can help provide the financial cushion you’ll need to maintain your standard of living abroad, regardless of state pension freezes.
"Budgeting carefully and preparing for rising living costs can go a long way in making your retirement overseas both comfortable and secure. It is worth considering seeking advice from a financial adviser to fully understand the implications of retiring abroad and plan accordingly."
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