The popular retirement hotspots that could quietly cost you THOUSANDS – and where to go instead

DREAMING of a retirement life filled with sandy beaches or gorgeous mountain landscapes? That could be your reality – but be aware you could be missing out on thousands of pounds in pension payments. If you’re planning to retire abroad, you’ll likely be looking at the cost of living, healthcare facilities and whether you’ll need to learn another language. Canggu beach in Bali, Indonesia, where retirees often flock for a better quality of life Credit: Alamy Railay Beach in Krabi, Thailand, another popular retirement hotspot for Brits Credit: Getty However, you should also be thinking about whether you’ll be able to access your state pension. Some countries will FREEZE your state pension at the amount it was when you moved abroad. Sign up for the Money newsletter Thank you! The state pension is paid out when you reach retirement age, and the full amount is £241.30 per week – or £12,548 a year. The amount rises every year because of the triple lock policy, which increases each April by whichever is highest out of average wage growth, inflation or 2.5%. Recent years have had pretty hefty increases – in April, the amount increased by 4.7%, or a massive £575 a year for retirees receiving the full new state pension. That means if your state pension remains frozen for years, you could end up losing out on thousands of pounds worth of free money. Research by Rathbones has revealed UK pensioners retiring to frozen-payment countries could lose up to £77,000 over 20 years. You could also have your pension amount eaten into by rising inflation, particularly if you’re in a country with similar living expenses to the UK. Most read in Money Get FREE pension advice and boost your pot by £1,000s *If you click on this link we will earn affiliate revenue Sticking with your current provider could cost you thousands of pounds in retirement. That’s why Pense is offering free pension advice for people with pots of all sizes – whether it’s a drawdown or annuity. Speak to one of their specialists to get a detailed breakdown of your options. Book your free consultation NOW Pense Ltd is authorised and regulated by the Financial Conduct Authority number 231629. Of course, this doesn’t mean you have to completely reconsider your move if you’re set on a retirement destination – but it’s worth being aware. You will likely have your state pension frozen if the country you’re moving to doesn’t have a reciprocal social security agreement with the UK. Most European countries, as well as nations like the US and Jamaica, do have reciprocal agreements that let you benefit from increases to the state pension. But even some retirement hotspots popular among Brits will freeze your state pension payments. Here are some of them… Australia You could move somewhere like Brisbane, Australia – but be aware of the financial cost Credit: Alamy You might have thought that Australia‘s long history of ties to the UK would mean the two countries have a reciprocal agreement. In fact, there was originally an agreement that allowed pension payments to be uprated for UK expats in Australia but this was ended in 2001. You can still claim your state pension in Australia, but without annual increases it could quickly be eroded by inflation. Australia is generally 10-25% more expensive than the UK for everyday living costs, according to PSS International Removals. This is usually offset by higher wages, but if you’re just receiving a pension then it’s something you should factor in. Australia also requires you to get private health insurance, costing around £100 to £300 a month. However, many expats still choose to move to Australia for its warmer, sunnier climate and relaxed pace of life. You could go for the Sunshine Coast for warm beach living, Adelaide for affordable city culture, or Mandurah in western Australia for a budget-friendly coastal alternative. Thailand Thailand has beautiful beaches and scenery, like on the island of Koh Mook Credit: Getty Thailand is one of the most popular retirement destinations for UK citizens and it’s not difficult to understand why. It’s got beautiful scenery, world-class food, welcoming residents and an extremely low cost of living. But a major drawback is that your state pension will remain frozen if you retire to Thailand. It does have a double taxation agreement with the UK, which means your pension will only be taxable in Thailand. But you will be missing out on likely thousands of pounds worth of state pension rises if you move. This could be cancelled out by the much lower cost of living, as Numbeo estimates this is about 90% lower in Thailand than in the UK. But it’s much more worth considering a move to Thailand if you have significant pension savings beyond just the state pension. You could choose destinations like Chiang Mai, the most popular UK retirement hub, the beach resort of Hua Hin, the island of Phuket, or the lively beach city of Pattaya. Canada Yoho National Park is one of the stunning natural landscapes you can find in Canada Credit: Getty Images More than 100,000 UK pensioners are living in Canada, which is famous for its beautiful mountain landscapes and friendly people. It’s popular among British retirees as it offers better quality of life, a publicly funded healthcare system and unparalleled natural beauty. You can receive your state pension while living in Canada if you have at least 10 qualifying years of National Insurance contributions. The amount will stay frozen, although you won’t be double taxed on your pension income. Prices are broadly comparable to the UK, although groceries and restaurants are more expensive in Canada. Housing also tends to be more expensive in Canadian cities than in the UK, but utility and energy costs are generally lower. Therefore if you want to make the move to Canada, you would need substantial private pension savings or another form of income. Top retirement hotspots include Vancouver Island for mild weather, the Okanagan Valley for vineyards, and Calgary for stunning mountains. New Zealand Roy’s Peak in Wanaka, New Zealand, where British retirees may head for an outdoor lifestyle Credit: Getty New Zealand is a dream destination for many British retirees, with its beautiful landscapes, familiar culture and great medical care. But there are some major drawbacks that can hit your pension savings. The state pension is permanently frozen and you’ll also need to meet high income thresholds to make the move. You need to invest a huge £325,000 in the country and have a minimum annual income of at least £26,000. You will also need an additional £217,000 as a maintenance fund to show you can afford the live in the country. The state pension amount is also deducted from your New Zealand Superannuation (NZ Super). All New Zealand residents aged 65 and over receive the NZ Super, worth upwards of 555 New Zealand dollars (£241) per week, regardless of work history. However if you get the UK state pension, it will be deducted dollar-for-dollar from your NZ Super. It means you won’t benefit from having a UK state pension as you’ll get the exact same amount as any New Zealand citizen. If you do still want to make the move, areas such as Tauranga, the Kapiti Coast, Wellington and the Bay of Islands are popular. Indonesia The famous temple of Pura Ulun Danu Bratan in Bali, Indonesia Credit: Alamy British retirees often head to popular expat communities in Indonesia including on the islands of Bali, Lombok and Java. They’re often drawn in by the low cost of living, warm tropical climate and rich culture. But like with most Asian countries, your state pension will be frozen if you move to Indonesia. There is also no double taxation agreement with the UK, which means both countries could try to claim tax on your pension income. Still, the lower cost of living could make the move worth it. Numbeo estimates the cost of living in Indonesia is around 64% lower than in the UK. You’ll find meals out are much cheaper, particularly if you go for local-run restaurants, as well as house prices and grocery shops. Turkey A view of Icmeler, in the district of Marmaris, Turkey Credit: Getty Turkey is one of the most affordable retirement destinations for British pensioners. Retirees often love its rich cultural heritage, delicious cuisine and beautiful coastlines. But unlike most European countries, your state pension will be frozen if you move to Turkey. The UK and Turkey do have a double taxation agreement, so you won’t be taxed twice on your pension income. Prices are generally cheaper in Turkey than in the UK, although the country has been dealing with soaring inflation in recent years. That could eat into your pension if your income as stuck at the same level. More affordable expat communities include Kalkan, known for large luxury villas with infinity pools, as well as Dalyan and Fethiye. More countries where your state pension will be frozen The full list of countries where you state pension will be frozen includes: Costa Rica Panama Dominican Republic The Bahamas Hong Kong India Saint Lucia Malaysia Mexico Japan China Where you should consider instead Paleokastritsa, nestled on the northwest coast of Corfu, Greece Credit: Nick Brundle Photography If you plan to rely heavily on the state pension, it’s better to retire to countries where you can get the triple lock increases each year. You’ll have more cash to spend in retirement and you’re less likely to get caught out by rising inflation. Countries in the European Economic Area (EEA), Switzerland, and Gibraltar all allow the UK state pension to be uprated. Some specific countries also have reciprocal agreements with the UK that allow the increases. Popular retirement destinations that allow uprating include: Ireland The US Spain France Italy Cyprus Greece Portugal Malta Croatia Jersey Guernsey Philippines Barbados Remember to check whether the UK has a double tax treaty with the country you’re considering retiring to. You should also look at visa requirements, if you need a minimum level of income, and the general cost of living. Looking for the perfect retirement hotspot with 300 days of sunshine and amazing food? Sun Money has you covered with this guide. Comment now