"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"
- Olly Cheng - Rathbones
British pensioners planning to retire overseas this tax year could lose more than £77,000 in state pension income over 20 years if they move to a country where the UK state pension is frozen, according to new analysis from wealth and asset manager Rathbones.
The UK's triple lock guarantees the state pension rises each year by the highest of inflation, average earnings growth, or 2.5%. For retirees who move to certain countries, including Canada, Australia, and New Zealand, however, payments are frozen at the rate first received, with no future increases applied. With another year of triple lock rises now in effect, Rathbones says the long-term financial impact of choosing a frozen destination is growing more severe.
Olly Cheng, financial planning divisional lead at Rathbones, said: "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."
Rathbones' calculations are based on the full new flat-rate state pension of £12,547.60 from April 2026, uprated by 2.5% per year. On that basis, a pensioner living overseas for 20 years could lose £77,585 in state pension income, purely from missed annual increases.
The losses mount even over shorter periods: after 10 years abroad, retirees could be more than £18,600 worse off, rising to over £42,000 after 15 years. If inflation or earnings growth exceeds the 2.5% triple lock minimum, the shortfall would be larger still.
Around 450,000 British pensioners living overseas are already subject to the frozen pension policy. Those who retired in April 2016, when the new state pension was introduced, have already missed out on almost £19,400 in payments as a result of the freeze.
Replacing that lost income demands a significant private financial buffer. A £77,585 shortfall over 20 years works out at roughly £3,880 a year, or £320 a month, that retirees would need to generate from other sources.
Cheng said careful preparation was essential for anyone considering the move. "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," he said. "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."
He added that the irreversible nature of some of these decisions made professional advice particularly important. "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."
