British pensioners considering retirement abroad could miss out on nearly £70,000 in state pension payments over 20 years, new research shows.
The triple lock, introduced by the Conservative–Liberal Democrat coalition Government in 2010, ensures that the state pension rises each year by the highest of three measures: 2.5%, inflation, or average earnings growth. However, due to the Government’s frozen state pension policy, some state pensioners may find their payments frozen at the rate they left, depending on the country they retire to. This means they could miss out on tens of thousands of pounds of payment increases as the years go by.
The calculations, carried out by interactive investor, are based on the current full new state pension rate of £11,973 per year, and assume payments are uprated by 3.7% in 2025 in line with the Office for Budget Responsibility’s inflation forecast for September 2025, and by 2.5% per year thereafter in line with the triple lock.
Even over shorter timeframes, the gap between UK and frozen overseas payments is significant. Interactive investor’s calculations show Britons could miss out on £37,477 over 15 years, £15,838 over 10 years, £3,666 over five years, and £443 over one year.
Whether a British citizen’s state pension is frozen depends on the country they move to. Retirees relocating to a country within the European Economic Area, Gibraltar, Switzerland, or a country with a social security agreement with the UK (except Canada, Australia, and New Zealand) will continue to receive annual increases in their pension.
The All-Party Parliamentary Group (APPG) on Frozen British Pensions estimates that approximately 450,000 British pensioners are currently affected by the Government’s frozen pension policy.
Myron Jobson, senior personal finance analyst at interactive investor, 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.”
The amount of state pension any person can get depends on how many years they’ve accumulated on their National Insurance (NI) records. People accumulate NI years through active employment or by receiving National Insurance (NI) credits, which are granted during periods of unemployment, illness, or while fulfilling parental or caregiving responsibilities.
Most people need around 35 years of contributions to receive the full new state pension, but some may need more. Those with gaps can purchase missing years or claim missing credits if eligible, through the GOV.UK website.
Mr Jobson continued: “Deferring your state pension can also boost the amount you get, though it won’t help with uprating in frozen countries.”
Another way to cushion the blow of a frozen state pension is to focus on boosting your private pension pot. Mr Jobson said: “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.”
He added: “It is worth considering seeking advice from a financial adviser to fully understand the implications of retiring abroad and plan accordingly.”
The state pension increases every year for Britons living in the following countries:
- Austria
- Belgium
- Bulgaria
- Croatia
- Cyprus
- Czech Republic
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Iceland
- Ireland
- Italy
- Latvia
- Liechtenstein
- Lithuania
- Luxembourg
- Malta
- Netherlands
- Norway
- Poland
- Portugal
- Romania
- Slovakia
- Slovenia
- Spain
- Sweden
- Barbados
- Bermuda
- Bosnia-Herzegovina
- Gibraltar
- Guernsey
- the Isle of Man
- Israel
- Jamaica
- Jersey
- Kosovo
- Mauritius
- Montenegro
- North Macedonia
- the Philippines
- Serbia
- Turkey
- USA
