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Frozen State Pension News: What UK Expats Need to Know in 2026
Hoxton Blog • Frozen State Pension News: What UK Expats Need to Know in 2026
The All-Party Parliamentary Group (APPG) on Frozen British Pensions estimates that approximately 450,000 British expatriate pensioners are currently affected by the government’s frozen pension policy, meaning no annual increases.
Over time, this can reduce real income. Knowing which countries are affected and planning alternative retirement income can help UK expats manage the long-term impact.
Why Frozen State Pensions Matter for UK Expats in 2026
For many UK citizens planning to retire overseas, the State Pension is expected to provide a stable base level of income.
What is less widely understood is that where you live can influence how that income changes over time. In several countries, the UK State Pension does not increase annually, which can affect long-term retirement planning.
The financial impact is often gradual rather than immediate. In the early years of retirement, a frozen pension may still cover day-to-day costs. Over longer periods, inflation, rising healthcare expenses, and currency movements can reduce purchasing power.
Research published by the House of Commons Library shows that this issue continues to affect hundreds of thousands of pensioners living abroad, with no indication of a near-term policy change.
Why Listen to Us?
Hoxton Wealth works with clients internationally to support UK expats with cross-border retirement planning involving UK State Pensions, SIPPs, QROPS, U.S. 401(k)s, and Australian superannuation, helping clients understand how different systems interact over time.
What Are Frozen State Pensions?
- A frozen State Pension is a UK State Pension paid overseas without annual inflation increases.
- If you retire to a country without a reciprocal pension uprating agreement with the UK, your pension stays fixed at the rate first paid, even if you have a full National Insurance record.
- The Department for Work and Pensions confirms that uprating depends on bilateral social security agreements. Where no agreement exists, annual increases do not apply.
- As a result, two pensioners with identical contribution histories can receive very different incomes purely based on where they live.
- For context, the full new State Pension for the 2025–26 tax year is £230.25 per week, or around £11,973 per year.
- The basic State Pension is £176.45 per week.
- UK-based pensioners received a 4.1% increase in April 2025 under the triple lock, but this did not apply to frozen pensions.
- Government and Office for Budget Responsibility projections suggest the April 2026 increase could be around 4.8%, equating to roughly £575 per year in lost income for someone overseas receiving the full new State Pension.
Countries Where the UK State Pension Is Frozen
Australia
Australia is one of the most common destinations for UK retirees. Despite strong historic ties, the UK does not uprate State Pensions paid there. Pensioners receive the amount first paid, with no annual increases. Over long retirements, this can reduce real income as living costs rise.
Canada
UK State Pensions paid in Canada are also frozen. Parliamentary research highlights Canada as one of the countries with the largest number of affected UK pensioners. While Canada has partial social security agreements with the UK, these do not cover pension uprating.
South Africa
In South Africa, State Pensions remain frozen from the date of claim. Some retirees find that lower local living costs offset this initially, although inflation and currency movements can affect outcomes over time.
New Zealand
New Zealand does not receive the UK State Pension uprating. Given longer average life expectancy, the cumulative effect of missed increases can be significant over extended retirements.
United States
UK State Pensions paid in the United States are frozen. This can be particularly relevant given healthcare and insurance costs, which may increase independently of pension income.
According to the DWP’s official frozen countries list, pensions are also frozen in Thailand, China, Pakistan, Bangladesh, most Caribbean nations, all African countries except Mauritius, and several British Overseas Territories including the Falkland Islands, Cayman Islands, and Anguilla.
Financial Impact of a Frozen State Pension
The effect of a frozen State Pension tends to compound over time. Inflation steadily erodes purchasing power, and where income is paid in sterling but spent in another currency, exchange rate movements can add a further layer of uncertainty. What may feel like a small shortfall in the early years of retirement can become much more material over longer periods abroad.
This pattern is reflected both in individual cases and in broader modelling. A frequently cited example in parliamentary research is Anne Puckridge, who moved to Canada in 2001. Her State Pension was frozen at the rate payable when she first claimed it. At age 100, she receives £72.50 per week, compared with £176.45 had her pension been uprated in line with increases applied in the UK. House of Commons Library analysis estimates that the cumulative difference over her retirement exceeds £130,000, illustrating how the impact of freezing can widen significantly over time.
Illustrative modelling based on historic State Pension uprating data shows a similar effect when applied more generally. While figures will vary depending on inflation, uprating levels, and time spent abroad, the long-term divergence can be substantial:
|
Time Abroad |
Uprated Pension (UK) |
Frozen Pension |
Estimated Difference |
|
5 years |
~£60,000 |
~£25,000 |
~£35,000+ |
|
10 years |
~£120,000 |
~£45,000 |
~£75,000+ |
|
20 years |
~£240,000 |
~£85,000 |
~£155,000+ |
|
30 years |
~£360,000 |
~£200,000 |
~£160,000 |
These figures are indicative only and are based on Department for Work and Pensions pension rates and historic uprating assumptions. They are intended to illustrate the potential scale of the difference over time rather than predict individual outcomes.
Why Does the UK Freeze Pensions?
- The UK State Pension is only increased each year for people living in countries that have a reciprocal social security agreement with the UK, which specifically includes pension uprating.
- Where no such agreement exists, the State Pension is paid at the rate first received and does not increase in line with UK uprating.
- The list of countries where pensions are uprated is set by government policy, not by individual circumstances or contribution history.
- Department for Work and Pensions policy statements confirm that this approach has been in place for several decades.
- The issue of frozen State Pensions has been raised and debated repeatedly in Parliament, including through select committees and private members’ motions.
- Despite ongoing discussion, no broad reform to extend uprating to all overseas pensioners has been implemented to date.
Planning Steps to Protect Your Retirement Income
Step 1: Check Your Destination Country Status
Before moving abroad, confirm whether your destination appears on the official Department for Work and Pensions (DWP) list of countries where the UK State Pension is uprated.
- The DWP publishes a definitive list showing which countries receive annual State Pension increases and which are subject to a frozen pension. This status should always be verified directly, rather than assumed.
- If your destination is not on the uprated list, your State Pension will be paid at the rate first received and will not increase, regardless of inflation or how long you live abroad.
- Where the State Pension is expected to be a core income source, countries that receive uprating should be considered carefully as part of relocation planning.
- Over a 20–30 year retirement, the cost-of-living impact can be significant. Modelling based on historic uprating indicates cumulative differences of £150,000+ over 20 years and around £160,000+ over 30 years compared with an uprated pension.
- If retirement spending is in a non-sterling currency, exchange rate movements can further affect real income and add long-term uncertainty.
This step establishes whether additional income will be required to maintain purchasing power throughout retirement.
Step 2: Maximise National Insurance Contributions Before April 2026
Your UK State Pension entitlement is determined by your National Insurance (NI) record, making this one of the most time-sensitive planning steps for expats.
- A minimum of 10 qualifying years is required to receive any UK State Pension.
- 35 qualifying years are required to receive the full new State Pension.
- Gaps can be identified by checking your NI record and State Pension forecast on gov.uk.
- Voluntary Class 2 contributions currently cost £182 per year (2025–26) and are available to many expats working abroad.
- Each additional qualifying year can increase the State Pension by up to around £340 per year, depending on individual circumstances and pre-2016 contribution history.
- From 6 April 2026, most expats will no longer be able to pay Class 2 contributions for periods abroad, leaving Class 3 contributions, which cost £923 per year, as the main alternative.
Acting before April 2026 can therefore materially reduce the cost of building entitlement and increase lifetime retirement income.
Step 3: Build Private and Investment Income to Bridge the Gap
For many expats, a frozen State Pension alone is unlikely to provide sufficient retirement income.
- A frozen pension can be as low as £72–£97 per week, depending on entitlement, equivalent to roughly £3,700–£5,000 per year.
- Many expats therefore aim to generate an additional £35,000–£50,000 per year from private pensions and investments to support long-term spending and offset inflation.
- This is commonly achieved using International SIPPs, which are preferred in most cases due to flexibility, transparency, and suitability for multi-jurisdictional planning.
- QROPS may still be appropriate in specific situations, but they are no longer the default solution for most expats.
- Complementary investment portfolios and regular savings structures can be aligned alongside pensions to create diversified, sustainable income sources.
The objective is to reduce reliance on State Pension policy and build an income that can adapt over time.
Step 4: Review Cross-Border Planning With Specialist Expat Advisers
Cross-border retirement planning benefits from regular oversight and specialist expertise.
- Reviews should be carried out with advisers who focus specifically on expat financial planning, rather than general UK-based reviews.
- Advice should cover the interaction between State benefits and global assets, including International SIPPs, QROPS, U.S. 401(k)s, Australian superannuation, and other overseas arrangements.
- Hoxton Wealth works with internationally mobile clients through global offices, supporting coordinated pension, investment, and retirement income planning.
- Advice is particularly important before moving abroad, in the years approaching retirement, following major life events, and as part of ongoing annual reviews.
- Structured financial planning services help ensure income remains aligned with spending needs, tax residence, and currency exposure as circumstances change.
Conclusion and Next Steps
Frozen State Pension rules remain a significant consideration for UK expats in 2026. Living in certain countries can mean missing years of pension increases, which can affect long-term income and purchasing power. Planning ahead, reviewing National Insurance contributions, and building alternative income sources can help create greater clarity. For personalised guidance, contact Hoxton Wealth.
FAQs
What happens to my UK State Pension if I retire abroad?
Your State Pension can be paid overseas. Whether it increases depends on your country of residence and whether the UK has an uprating agreement in place.
Which countries allow annual increases?
Annual increases apply in the UK, the European Economic Area, and a limited number of other countries with reciprocal agreements, according to DWP guidance.
Can I transfer my frozen State Pension?
The State Pension itself cannot be transferred. Moving to an uprated country may restart increases, but missed rises are not backdated.
How can I protect my income if my pension is frozen?
Many expats supplement their income through private pensions, SIPPs, and investment accounts, alongside reviewing National Insurance contributions.
Is the UK State Pension paid in Australia or Canada?
Yes, but it does not increase annually, which can reduce purchasing power over time.
What changed in recent frozen State Pension news?
Recent upratings of more than 4% did not apply to frozen pensions, and higher National Insurance top-up costs are expected from April 2026.
What alternatives can replace lost pension income?
Alternatives may include workplace pensions, international SIPPs, regular savings plans, and diversified investments, depending on residence and tax position.
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