Advice pls; Retirement on a UK Pension

[middlesexMDS]

Hi All,

Can anyone advise on how it works when a Brit retires to Thailand with a private UK pension?

Firstly, I assume you lose your state pension.

So then what happens to a private UK pension when it's paid to an expat living in Thailand?

Do you need a certain type of bank account? Is there any tax deducted in Thailand? If you get £1k a month after UK tax do you simply get that translated into Baht (assume FX fee on top?) into your Thai account?

Any others legal factors or requirements?

Anyone getting a pension who can explain/confirm how it works?

Also, any known changes coming in the next 5-10years that would affect the current process?

I wish I could say I was asking for myself [emoji20] but I'm of the generation for which 'retirement' will mean dying at a desk in the office or stocking the shelves at B&Q aged 80 something.

[CharlieH]

MOVED

to Home country forum.

There is a PINNED thread at the top of the forum on UK Pensions

[nzexpat]

Whoever is asking these questions is in serious need of advise which would be best obtained in the UK .

The Citizens Advice Bureau or the local bank manger may be good sources of free advice .

No one can predict what the financial/tax situation will be in 5-10 years !

[evadgib]

<moved>

Edited April 11, 2015 by evadgib

[middlesexMDS]

Yeah, such advice will be sort. But I was interested in getting info from people already in that situation though - direct from the horses mouth, so to speak.

In terms of the future, changes can be announced long before they take effect so, again, just looking for pension issues retired UK expats are talking about.

[evadgib]

Yeah, such advice will be sort. But I was interested in getting info from people already in that situation though - direct from the horses mouth, so to speak.

In terms of the future, changes can be announced long before they take effect so, again, just looking for pension issues retired UK expats are talking about.

Living in Thailand

[middlesexMDS]

Thank you, that link is actually very helpful - I never realised it existed.

Any help on the private pension side though?

[JohnC]

1) you do not lose your state pension although it is frozen when you move here or at the rate you first claim if you already live here.

2) private pensions can be paid into a bank of your choice, UK or Thailand, many of us use City Bank UK who then transfer to your Thai Bank ( Bangkok Bank in my case ).

3) UK has a reciprocal agreement with Thailand whereby pensions are taxed at source so pensions earned in UK are taxed in UK so there is no tax liability in Thailand.

4) the current UK government had a proposal from one of their think tanks that state pensions for those living abroad should be stopped, the suggestion got no further but with an election next month who knows what the future holds?

Crystal ball anyone??

[billd766]

1) you do not lose your state pension although it is frozen when you move here or at the rate you first claim if you already live here.

2) private pensions can be paid into a bank of your choice, UK or Thailand, many of us use City Bank UK who then transfer to your Thai Bank ( Bangkok Bank in my case ).

3) UK has a reciprocal agreement with Thailand whereby pensions are taxed at source so pensions earned in UK are taxed in UK so there is no tax liability in Thailand.

4) the current UK government had a proposal from one of their think tanks that state pensions for those living abroad should be stopped, the suggestion got no further but with an election next month who knows what the future holds?

Crystal ball anyone??

1) This is correct. You do not lose your state pension in Thailand. Be aware however that when you are retired you need 800,000 baht in a Thai bank account in your own name, or a provable income of 65,000 baht or I believe a combination of the two.

2) This is correct also. I gave each of my pension providers all my bank details and specified the transfer to be in GBP £. Be aware that for some reason the bank transfer is instant from the UK but it usually takes 2 more days to reach your Thai bank account. ANY holidays when the Thai banks are closed will add that many days to the transfer, even in these modern days of hi-speed internet etc.

3) Also correct and HMRC will almost certainly be chasing you to get the last pound of flesh and drop of blood to get their tax money from you. Their people around who say that they have got away with not paying tax for years and perhaps they have but if HMRC get a sniff of that remember that the government not only pays your pension but can also stop it too, to pay back taxes. I do a self employed tax return on line and the staff up in Newcastle are very helpful and friendly.

4) I think if any UK government tried to stop paying state pensions to us pensioners living abroad they would have a big problem. That said they are politicians who don't live in the real world.

5) The state pension alone will not give you a very good standard of living in Thailand, certainly not in the cities so you will need more income and also there is NO free health system for us farangs in Thailand so try to get good insurance cover as early as you can.

quote "Also, any known changes coming in the next 5-10years that would affect the current process?"

Nobody can predict that far ahead and the main stumbling blocks are the politicians in power at the time and how scared they are before the next election.

[lungbing]

I have lived in Thailand 14 years and my advice would be as follows:

1. Keep a UK address. This useful for UK post, bank statements etc as post from the UK doesn't always reach here.

2. Contact your local government returning officer to keep a postal vote at your UK address.

3. Open an account with Nationwide International on the Isle of Man. You can do that through any branch of the Nationwide Building Society.

Register for internet banking with that account. Have your pensions paid into that account then from anywhere via internet banking you can

transfer your pensions to your Thai bank account. I use Kasikorn Thai bank and have never had a problem with them.

4. Do not tell your local UK bank that you are moving here. They don't like it and may close the account. Give them your UK address.

5. Your state pension is paid without tax being deducted, but it is taxable. HM Inland Revenue will give a new tax code to your private pension

provider who will deduct all the tax owing on the sum of your two pensions, less your tax-free allowance.

6. Don't burn your bridges, ie keep open the possibility you may need to or want to return to the UK.

7. It's different living here than visiting for a few weeks holiday. Believe me!

8. To get a visa extension based on retirement you will need either 800,000 baht in a Thai bank or a provable income of 65,000 baht a month or indeed a

combination of the two. You'll have to do the maths on that one but a decent private pension plus your state pension should be enough. You will need to

show the British Embassy written evidence of the two incomes, and they will then issue a letter for Thai immigration stating that you have enough income.

9. Be aware that at the moment the pound is weak, the baht strong, roughtly 47 baht to the pound. Don't cut it too fine with living costs.

10. Get medical insurance as there is no NHS here.

11. As noted above your state pension will be frozen when you leave the UK at the then prevalent rate if you are already drawing it, or at the rate you start to

draw it at if you leave before drawing it. Note that for any time thereafter when you are in the UK, even for a holiday, you get the full amount for that period

if you inform them of the dates you are in the UK.

I don't recommend this, but it is a possibilty, the risk is up to you. You can come here and tell nobody in the UK that you are here. That way pensions are upgraded yearly and the NHS is available when you go back. Stay registered with a doctor.

[MaeJoMTB]

Why would you tell anyone you moved out of the UK?

Keep an address there.

Open an account with HiFx.com

Buy your foreign currency online with your UK bank debit card.

Nobody can see where your money goes, even with a court order on your UK bank account.

Edited April 12, 2015 by MaeJoMTB

[angiolo]

Why retire here ? Keep your home in uk. come here with 1 year multi entry visa. Use Atm with you normal uk bank. Your pension and any other income eg rental income to your Uk bank. Pay any income tax through you bank. No problems you are a uk citizen on holiday in Thailand. Even your NHS is there for you.I have done this for many years. Oh yes i pay council tax. live well on state pension and rental income. Go home for a few weeks every year. No problems

[topt]

Why retire here ? Keep your home in uk. come here with 1 year multi entry visa. Use Atm with you normal uk bank. Your pension and any other income eg rental income to your Uk bank. Pay any income tax through you bank. No problems you are a uk citizen on holiday in Thailand. Even your NHS is there for you.I have done this for many years. Oh yes i pay council tax. live well on state pension and rental income. Go home for a few weeks every year. No problems

Perhaps because you have other "income" that means you are better off being UK non resident for tax..........or any other reason. perhaps you just don't want to reside in the UK.............

I would also suggest that you would need a hell of a lot of rental income to top up only a state pension to "live well" in the UK (or even Thailand) - but then again everyone's version of living well is different.........

[middlesexMDS]

Thank you all for the advice and explanations; they have been really helpful. I guess I can summarize it as the below - but with one final question...

Pension & Visa:

· Visa requirement: 800k Baht in your Thai bank account and/or a provable income of 65k Baht per month

At current FX rate: Approx £16k lump sum and £1,300 net monthly income (or Approx £20k gross annual pension pot)

· State pension frozen from year you leave UK

· Provide British Embassy written evidence of the 2 incomes which confirm your income is enough.

· Due to reciprocal tax agreement pensions taxed at source in UK and no tax liability in Thailand.

General Points:

· If you live outside of the UK for 3+ months a year, the NHS is no longer free (only emergencies which are free to all). Take out medical insurance in Thailand.

· Keep an address in UK and register for postal votes

Assuming the points above, it seems there are two main payment options for pensions: 1) direct to Thai bank or 2) to UK/international account and transferred to Thai account. So, which incurs the most fees and/or FX rate difference in average? Maybe easier to ask what ball-park figure or % is lost each month in such charges?

[Ricardo]

Assuming the points above, it seems there are two main payment options for pensions: 1) direct to Thai bank or 2) to UK/international account and transferred to Thai account. So, which incurs the most fees and/or FX rate difference in average? Maybe easier to ask what ball-park figure or % is lost each month in such charges?

I use option-2, because that way I remain in-control of when I make the transfers, and can watch exchange-rates changing (on www.xe.com) and my slowly-declining balance in my Thai bank-account.

Why make monthly-transfers, when you might make just one or two per-year, and pay far fewer transfer-fees ?

And my bank (HSBC-Jersey) charge me GBP15-20 per-transfer, but then the receiving-bank (SCB) also charge me, built-into the exchange-rate I receive, for my pounds as they arrive/convert.

[middlesexMDS]

Thanks Ricardo, what's the approx. exchange difference (for the built in charge)? Is it more than a 1 baht difference Vs the standard FX rate; as playing with the figures a 1 baht difference on the required net income of £1300 is approx. £25 in charges. So, with a transfer charge and FX difference that means approx. £40-£45 per month (as realistically it would be done each month in this case) - so 2000 Baht less to play with. Over the year that an extra £550 (near 25k Baht) in charges.

Anyone have a example of charges/fees for payment from pension direct into Thai account to compare this to? Sorry for all the questions but as Tesco say 'Every little helps'.... plus I'm work in finance so number often help me weigh things up (even if it's not me retiring ..lol...)

[MaeJoMTB]

Thank you all for the advice and explanations; they have been really helpful. I guess I can summarize it as the below - but with one final question...

Pension & Visa:

· Visa requirement: 800k Baht in your Thai bank account and/or a provable income of 65k Baht per month

At current FX rate: Approx £16k lump sum and £1,300 net monthly income (or Approx £20k gross annual pension pot)

· State pension frozen from year you leave UK

· Provide British Embassy written evidence of the 2 incomes which confirm your income is enough.

· Due to reciprocal tax agreement pensions taxed at source in UK and no tax liability in Thailand.

General Points:

· If you live outside of the UK for 3+ months a year, the NHS is no longer free (only emergencies which are free to all). Take out medical insurance in Thailand.

· Keep an address in UK and register for postal votes

Assuming the points above, it seems there are two main payment options for pensions: 1) direct to Thai bank or 2) to UK/international account and transferred to Thai account. So, which incurs the most fees and/or FX rate difference in average? Maybe easier to ask what ball-park figure or % is lost each month in such charges?

Just to point out taking lump sums out of company pensions is often unwise.

5k a year extra pension Vs 16k in your hand ............. I would take the extra pension.

If you need the 16k, better to get a bank loan against your increased pension, paid off over 4 years then you have all your pension back.

Lump sums disappear very fast. You are making a decision that makes poor financial sense.

Pay pension to UK bank, use your debit cart to buy Baht through a company like HiFx.

Once you set up a HiFx account, you can move around all over the world and buy whatever currency you like delivered direct to your local account.

Hifx charge 1-2% off the mid rate depending on the amount you change at the time.

[chiang mai]

1) you do not lose your state pension although it is frozen when you move here or at the rate you first claim if you already live here.

2) private pensions can be paid into a bank of your choice, UK or Thailand, many of us use City Bank UK who then transfer to your Thai Bank ( Bangkok Bank in my case ).

3) UK has a reciprocal agreement with Thailand whereby pensions are taxed at source so pensions earned in UK are taxed in UK so there is no tax liability in Thailand.

4) the current UK government had a proposal from one of their think tanks that state pensions for those living abroad should be stopped, the suggestion got no further but with an election next month who knows what the future holds?

Crystal ball anyone??

Point 3 is incorrect, UK Pension is not taxed at source, the determinator for that is whether the pensioner is UK Tax Resident or not and the total of their income that arises in the UK.

Point four is absolute nonsense and totally incorrect.

[middlesexMDS]

Point 3 is incorrect, UK Pension is not taxed at source, the determinator for that is whether the pensioner is UK Tax Resident or not and the total of their income that arises in the UK.

.........

Cheers Chiang mai. So, assuming all income arises fro the UK, the factor of importance is being a UK Tax resident - but can you still remain that if you officially retire (i.e. retirement visa and live all year round) in Thailand? and then if you're not, it can't due taxed in both countries surely?

[Craig krup]

Why retire here ? Keep your home in uk. come here with 1 year multi entry visa. Use Atm with you normal uk bank. Your pension and any other income eg rental income to your Uk bank. Pay any income tax through you bank. No problems you are a uk citizen on holiday in Thailand. Even your NHS is there for you.I have done this for many years. Oh yes i pay council tax. live well on state pension and rental income. Go home for a few weeks every year. No problems

Yeah

I've been thinking - how difficult would it be to keep all your personal crap down to a minimum and stick it in the attic in (say) September? My local university is always looking for rental accommodation for visiting lecturers and post-doc students for six months. It's really the winter that I can't be bothered with, so (effectively) swapping climates for half the year with a Malayan mathematician might be an option.

[Ricardo]

Thanks Ricardo, what's the approx. exchange difference (for the built in charge)? Is it more than a 1 baht difference Vs the standard FX rate; as playing with the figures a 1 baht difference on the required net income of £1300 is approx. £25 in charges. So, with a transfer charge and FX difference that means approx. £40-£45 per month (as realistically it would be done each month in this case) - so 2000 Baht less to play with. Over the year that an extra £550 (near 25k Baht) in charges.

Anyone have a example of charges/fees for payment from pension direct into Thai account to compare this to? Sorry for all the questions but as Tesco say 'Every little helps'.... plus I'm work in finance so number often help me weigh things up (even if it's not me retiring ..lol...)

I never really know what rate SCB will give me, until after it arrives here, these rates do change very frequently (as you'll know) throughout the day.

Sometimes I get better-than-expected, other times it's worse, but it's always better than changing it into Baht in the UK before sending it !

By "the standard FX rate", remember that's a mid-point between Buy/Sell, and never a rate you'll get in reality.

And I don't understand why you would send money monthly, unless you had to, because of being hand-to-mouth ? It accrues in your UK/offshore bank-account monthly, but when you transfer it is up-to-you !

[chiang mai]

Point 3 is incorrect, UK Pension is not taxed at source, the determinator for that is whether the pensioner is UK Tax Resident or not and the total of their income that arises in the UK.

.........

Cheers Chiang mai. So, assuming all income arises fro the UK, the factor of importance is being a UK Tax resident - but can you still remain that if you officially retire (i.e. retirement visa and live all year round) in Thailand? and then if you're not, it can't due taxed in both countries surely?

Most UK citizens have income that arises in the UK that can be moved offshore, savings and the like, if that person becomes non-UK resident for tax purposes then that income is not taxable in the UK. Even if those savings were moved to say Thailand, the first THB 300k interest income that is taxed here can be easily reclaimed from the Thai tax authorities. Putting those savings into Channel Island or IOM banks means all the interest is tax free, provided the account holder is not UK/EU resident.

So using the above, it's not too hard to reduce UK arising income to below the level of the UK personal allowance (which expats may or may not keep in future years).

The decision to remain or not, UK tax resident, is your choice, the visa you hold and/or where you live, has no bearing on that.

EDIT: tax treaties exist between the UK and Thailand to where you will not be taxed in both places. The UK State Pension is not taxable in Thailand as long as the funds are not remitted here during the year they are earned. In practice, the Thai tax authorities do not care about taxing UK pension income and I understand (although not 100% confident) that UK State Pension can only be taxed in the UK..

Edited April 14, 2015 by chiang mai

[chiang mai]

To Add:

Your private pension may or may not be UK taxable, that depends on whether or not the total of your UK arising income exceeds your personal allowance.

Having a private pension does not mean that you lose your state pension, there is really no connection between the two and both are very separate things.

Technically, any income earned AND remitted to Thailand during the same financial year, is subject to Thai tax, this include private pensions.

[JB300]

"What Happens if I Retire Abroad": http://www.litrg.org.uk/tax-guides/pensioners-tax/what-happens-if-i-retire-abroad

[alfieconn]

Point 3 is incorrect, UK Pension is not taxed at source, the determinator for that is whether the pensioner is UK Tax Resident or not and the total of their income that arises in the UK.

.........

Cheers Chiang mai. So, assuming all income arises fro the UK, the factor of importance is being a UK Tax resident - but can you still remain that if you officially retire (i.e. retirement visa and live all year round) in Thailand? and then if you're not, it can't due taxed in both countries surely?

Most UK citizens have income that arises in the UK that can be moved offshore, savings and the like, if that person becomes non-UK resident for tax purposes then that income is not taxable in the UK.

Totally incorrect, some income that arises in the UK is liable for tax ( if over the tax allowance), being non-resident make no difference what so ever.

Being Non-resident means you can open an offshore account, transfer any savings there and not pay tax on the interest.

Edited April 15, 2015 by alfieconn

[Bernard Flint]

Point 3 is incorrect, UK Pension is not taxed at source, the determinator for that is whether the pensioner is UK Tax Resident or not and the total of their income that arises in the UK.

.........

Cheers Chiang mai. So, assuming all income arises fro the UK, the factor of importance is being a UK Tax resident - but can you still remain that if you officially retire (i.e. retirement visa and live all year round) in Thailand? and then if you're not, it can't due taxed in both countries surely?

Most UK citizens have income that arises in the UK that can be moved offshore, savings and the like, if that person becomes non-UK resident for tax purposes then that income is not taxable in the UK.

Totally incorrect, some income that arises in the UK is liable for tax ( if over the tax allowance), being non-resident make no difference what so ever.

Being Non-resident means you can open an offshore account, transfer any savings there and not pay tax on the interest.

Corrtect

one can earn 10,600 gbp before paying tax

Edited April 15, 2015 by Bernard Flint

[MaeJoMTB]

You must have a shi_t load of money in savings to be worried about paying tax on the interest!

[alfieconn]

You must have a shi_t load of money in savings to be worried about paying tax on the interest!

Where has anyone said they are worried ? just stating the facts !!!

[chiang mai]

Point 3 is incorrect, UK Pension is not taxed at source, the determinator for that is whether the pensioner is UK Tax Resident or not and the total of their income that arises in the UK.

.........

Cheers Chiang mai. So, assuming all income arises fro the UK, the factor of importance is being a UK Tax resident - but can you still remain that if you officially retire (i.e. retirement visa and live all year round) in Thailand? and then if you're not, it can't due taxed in both countries surely?

Most UK citizens have income that arises in the UK that can be moved offshore, savings and the like, if that person becomes non-UK resident for tax purposes then that income is not taxable in the UK.

Totally incorrect, some income that arises in the UK is liable for tax ( if over the tax allowance), being non-resident make no difference what so ever.

Being Non-resident means you can open an offshore account, transfer any savings there and not pay tax on the interest.

We're at cross purposes here:

Agreed that the personal allowance exists for residents and non-residents (for the time being).

If a person is resident for tax purposes they are taxed on their worldwide income, if non-resident they are are only taxed on income arising in the UK, subject of course to the limitations of the personal allowance - ergo, interest income that is earned offshore whilst non-UK resident for tax purposes is not taxable in the UK.

[chiang mai]

You must have a shi_t load of money in savings to be worried about paying tax on the interest!

Which is why some people chose/choose to become non UK resident for tax purposes!