Make sure retiring abroad won't penalise your pension

Pick the wrong place and you could be many thousands of pounds out of pocket over a typical retirement lifespan.
According to pension company Standard Life the top retirement spots for Britons this year are, in descending order, Spain, Australia, USA, France and Ireland. These figures are based on the where the 3,000 overseas bank accounts Standard Life pays pension into are based. Last year the list was Spain, France, USA, Canada and Ireland. Canada has slipped to sixth place this year, thanks to Australia zooming up the list. Others in this year’s top 20 include Cyprus, South Africa and Germany.
Many retiring overseas do so thinking life think will be cheaper abroad. But unless they take into account exchange rates, currency fluctuations, local tax laws and what will happen to their state pension if they move away from the UK, they face an impoverished retirement in the sun.
The state pension is one of the most important things to consider. Unless you retire to the EU or one of the countries with a reciprocal agreement with the UK (such as the USA or Israel), then your state pension will be frozen at the rate it was when you retired abroad. If there is a reciprocal agreement, then you’ll get the same increases you would if you’d stayed in the UK. Without a reciprocal agreement, then over a 20-year retirement the basic state pension could half in value in real terms.
There are around 150 countries where the state pension is frozen including Australia, Canada, South Africa and New Zealand. Around 540,000 Britons who live abroad get frozen state pensions and 90 per cent live in these places.