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British pensioners planning to retire overseas this tax year could forgo more than £77,000 in state pension income over 20 years if they move to a country where payments are frozen, new analysis from Rathbones, one of the UK’s leading wealth and asset management groups, reveals.
The UK’s triple lock ensures the state pension rises each year by the highest of inflation, average earnings growth or 2.5%. However, for retirees who move abroad to certain countries* - including Canada, Australia and New Zealand - state pension payments are frozen at the rate first received, with no future increases.
With another year of triple lock increases now in effect, the long-term financial impact of retiring to a frozen UK state pension destination is increasingly severe.
Olly Cheng, a Financial Planning Divisional Lead, at Rathbones, says: “We often speak to people hoping to retire overseas, many of whom don’t realise that this decision could significantly affect their state pension entitlement.
“The state pension is uprated every year under the triple lock to help keep pace with the rising cost of living. If your pension is frozen when you move abroad, those increases stop entirely. Over time, inflation steadily eats away at its value, meaning your state pension buys less each year in real terms. What looks like a modest shortfall at first can quickly snowball into tens of thousands of pounds in lost income over retirement, and once your pension is frozen, there’s very little you can do to undo the damage.”
Losses mount quickly for those retiring overseas
Rathbones’ calculations show that pensioners who move abroad to a country without an uprating agreement face rapidly escalating losses compared with those who remain in the UK.
A pensioner who lives overseas for 20 years could lose £77,585 in state pension income alone - entirely due to missed annual increases. This assumes full new flat-rate state pension totalling £12,547.60 from April 2026, uprated by 2.5% per year (in line with the triple lock).
The loss of income could be even greater if inflation or average earnings growth exceeds the 2.5% minimum guaranteed under the triple lock.
Even over shorter periods, the impact is significant. After just 10 years abroad, retirees could be more than £18,600 worse off, rising to over £42,000 after 15 years.
Nearly half a million pensioners already affected
Around 450,000 British pensioners living overseas are already affected by the UK’s frozen pension policy.
Rathbones’ analysis shows that over the decade since the new state pension was introduced in April 2016, a pensioner who retired that tax year to a country where the UK state pension is not uprated under the triple lock would have missed out on almost £19,400 in state pension payments simply because their pension was frozen.
Replacing the lost income is a major challenge
Replacing the income lost to a frozen state pension would require a substantial private financial buffer. A loss of £77,585 over 20 years is equivalent to around £3,880 a year, or £320 a month over 20 years, that retirees would need to generate from other sources.
Olly Cheng, adds: “Anyone planning to retire abroad should start by checking their National Insurance record to make sure they’re entitled to the maximum state pension, particularly if future increases won’t apply.
“It’s also vital to understand how much private income you’ll need to replace any lost state pension, as well as factoring in local tax rules, healthcare costs and currency movements, all of which can materially affect how far your money stretches overseas.
“Given the complexity and the irreversible nature of some decisions, taking professional financial advice before committing to a move can help avoid costly mistakes later on.”
