Claiming your pension in Portugal

Moving to Portugal holds a particularly tremendous appeal to those who are keen to make the most of their retirement years.

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Portugal is traditionally one of the most popular European countries with British pensioners for many reasons.

Of course, if you are in this position, one of the most important things you will need to consider here is how exactly you are going to get your hands on your pension and fund your life – followed by how and where you pay your tax on this money.

 

If you are in receipt of a UK state pension, this will usually be paid to you directly into your UK bank account – which makes it a good idea to maintain your UK bank account after you move, and if you have pension income regularly credited, your bank is unlikely to object to changing your contact address to one in Portugal.

If your state pension is paid into your UK bank account, there are a number of ways that you can draw this money out – but the best by far is to set up a regular payments plan with a currency exchange specialist, such as Smart Currency Exchange. There is no fee for this service, and you can set up a standing order that automatically sends your funds across at a pre-agreed exchange rate – enabling you to plan your budget with price certainty.

If you are entitled to the state pension in the UK, you should receive a pension claim form from the Pension Service in the months before you retire. If you move to Portugal before this time, you should make sure the Pension Service has your new address in Portugal so that you receive all important documentation.

When considering tax on any of your pension income, it’s so important to seek financial advice to ensure you are paying correctly and in the right place – especially as you may find that you are liable for tax in Portugal that you didn’t have to pay in the UK. Fiscal residency in Portugal is determined by quite specific criteria - and broadly speaking, once you become properly resident in Portugal, and cut ties with the UK, you will be taxed in Portugal on your worldwide income. One exception to this is if you are in receipt of a forces or public service pension - these pensions are always liable for tax in the UK.

Despite the fact that you may have to pay extra tax on some income, you may find that certain allowable tax deductions and the combining of allowances for married couples mean that you find you have more disposable income once you have moved to Portugal – which of course has a direct impact on how much delicious Portuguese wine you can afford during your retirement years!

So many British retirees in Portugal receive their pension every day with no issue, so there is no reason why you should experience any. The most important thing to do is make sure you have the right advice and conduct enough research to ensure that everything goes to plan.


Further reading for Living In Portugal

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Finding work in Portugal

There are a number of ways that UK expats can fund their lifestyle in Portugal.
Read more...

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Social life in Portugal

The best way to get settled in Portugal is to find out as much as you can about your new community.
Read more...

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Heathcare

One of the first things you need to do once you arrive in Portugal is find out where your nearest hospital is.
Read more...

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Education in Portugal

Are you emigrating to Portugal with school-age children?
 

Read more...