Information

Peter Sanderson and his Dutch wife Peggy met in Belgium in 1979 and having spent a year working and studying in Holland they came to Spain and settled on the Costa del Sol in 1981. Peter has worked as a business consultant and financial advisor for a variety of companies while Peggy has run a family-owned hotel.

They never ceased to be amazed at the number of expatriates who had not thought about keeping their UK state pension up-to-date. After advising several of their friends they decided to create awareness amongst the local UK residents regarding the fact that they could be eligible for a UK state pension. Having showed them how to update and pay their contributions, they are now in a position to offer this service and advice to those expatriates who live in other parts of Europe by means of this web site.

A UK State Pension is available to any person, irrespective of nationality, who has been resident in the UK for a continuous period of 3 years and has contributed to the UK National Insurance scheme. In order to obtain a full State Pension it is currently necessary to have contributed in respect of 44 years for men and 39 years for women. A single person’s pension is £95 per week (£4940 per year) and a married couple’s pension is £152 per week (£7904 per year).

In order to bring your State Pension up-to-date it is necessary to obtain a forecast and it is useful to have available your National Insurance number which is comprised of two letters followed by six numbers and one letter. Should this not be available then steps can be taken to obtain it.

The typical UK expatriate living abroad will have worked earlier in the UK and in all probability will already have built up a considerable number of years of contributions to the UK system. However upon leaving the UK contributions become voluntary and the vast majority of expatriates give no further thought to their UK pension until they realise that they are within sight of retirement age. The UK system currently allows you to catch up all the years subsequent to 2003 at an average cost of £500 per year. With interest rates as they are present it can be seen that this represents an extremely attractive investment. The additional pension received each year following retirement is equivalent to a return of 30% on the money spent enhancing your pension. For those expatriates working officially in the European Union and contributing to an EU social security system there are even more attractive contribution rates which, subject to certain conditions, can translate into a return on your money in excess of 50%.

More specifically the following points should be noted:

  1. It is possible to receive a Spanish Government pension as well as a UK State Pension.
  2. Should your pension record not reach the minimum number of years necessary to receive a payment upon retirement (11 years in the case of the UK and 15 years for Spain) then the EU allows contributions to be grouped together in order to arrive at a pension which might not otherwise be payable.
  3. The amount of the married couple’s pension is arrived at by the wife receiving 60% of her husband’s single person’s pension. From April 2010 the husband will also be able to claim 60% of his wife’s pension. This will naturally only apply when your own contribution record produces a lower payment.
  4. Between 2010 and 2020 the pension age for women will gradually rise from 60 to 65 years of age.
  5. Since April 2000 those expatriates paying into the Spanish social security system have been able to make their contributions at a lower and much more attractive rate. During the last 8 years this annual rate has been around £100. Taking into account the €240 paid monthly by autonomos into the Spanish system it is not difficult to see the value for money provided by the UK system.
  6. The UK system currently allows you to catch up with contributions in respect of the 6 years since April 2003.
  7. The Pension Act, which was approved by Parliament in 2007, made a number of changes to the rules relating to pensions. These included linking the annual increases in the state pension to earnings rather than prices, raising gradually the pension age for both men and women from 65 to 68 between the years 2026 and 2046, setting up a new pension scheme funded by both employers and employees and, most important of all for UK expatriates, reducing the number of years to 30 for which contributions have to be paid in order to receive a full State Pension. This 30-year rule applies to everyone who reaches retirement age on or after April 6th 2010. The Act also removes the minimum number of years that have to be paid in order to receive a State Pension and from April 6th 2010 every year that has been paid up represents 1/30th of the State Pension.
  8. With people living longer it is not unreasonable to expect to live to 85 years of age. Even wealthy UK expatriates who may consider the State Pension to be petty cash might change their mind when they consider the situation of a married couple retired for 20 years who will have received pension payments totalling £160,000 by the time they reach 85 years of age.
  9. In order to receive a payment of £8,000 per year on retirement by way of an annuity it is necessary to have built up a pension fund well in excess of £125,000. The State Pension contributions which can result in a similar payment are negligible when compared to this. While a retirement pension may not be a priority at a certain stage of your life, it can be very easily overlooked and if you are not careful, completely forgotten. The UK State Pension may not represent a fortune but it can be obtained at very attractive contribution rates for those living and working abroad. Pensions may be dull and boring but they will never be as dull and boring as poverty can be in old age.