Britons living in countries like Spain and Italy could end up working until their late 70s
MADRID/ROME – News that the Government is changing the rules around people living abroad and paying into a state pension has come as a blow to British expats in countries like Spain and Italy.
Chancellor Rachel Reeves announced the change in her Budget speech on Wednesday, saying that: “The Conservatives allowed thousands of people abroad to buy their way into the state pension for as little as £3.50 a week, debasing the purpose of our pension system.”
Reeves added that she would abolish the system that allowed expats who have only worked in the UK for a few years to pay relatively low voluntary national insurance (NI) contributions and access a state pension, “increasing the time that someone has to live or work in Britain to ten years and increasing the contributions they must pay”.
For Maureen Smith, who lives in southern Spain, the news came as a shock, and she said it could impact her future plans.
Like thousands of other Britons living abroad, the 55-year-old nurse has been making regular class two voluntary NI payments and had hoped to keep making them, in order to receive a full UK state pension when she retired.
Thirty-five years of NI contributions are generally required to be eligible for the full state pension, which is set to rise to £12,547 a year in 2026, up from £11,973.
Originally from Liverpool, Ms Smith told The i Paper she worked in the UK for seven years before moving to Spain.
She has lived in Mijas Costa for 20 years and has been paying £3.50 a week in UK NI contributions in the expectation of qualifying for a British pension when she eventually stops working. She is unclear what Reeves’s announcement will mean for her retirement.
“This seems so unfair. I am quite happy to keep paying extra into the UK pensions system if necessary but now they are going to stop me,” she said. “It seems political point-scoring – to get back at expats like me just because of something that the Tories brought in.”
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Ms Smith does not have another pension and will be fully reliant on her UK state pension and her savings when she retires. She aimed to work another ten years in Spain.
“My plan was to retire in Spain on a British pension but I do not know what I shall do now,” she said.
The Budget announcement also caught Italy-based plumber and electrician Paul Roberts* off-guard when his sister called him from Liverpool to relay the “terrible news”.
“I was fixing the kitchen sink of a client near Rapallo, and it came as a shock. If UK Government plans go ahead, I can say ciao to my UK pension and will have to work until I’m at least over 75,” Mr Roberts, 50, told The i Paper.
He left London 25 years ago and has been living in Liguria, near the village of Cicagna, working as a “handyman” for many regular clients he now considers friends.
Mr Roberts left the UK after working for just three years in London as a self-employed plumber. He has regularly paid his extra NI contributions and is feeling lost.
“Does this mean I need to return to the UK to work another seven years to reach the 10-year new target in the Budget?” he asked. He questioned whether the new rules would apply retrospectively, to long-term expats rather than just to people moving abroad now, and how much increase there would be in the NI contributions.
Mr Roberts, who rents a one-bed cottage in northwest Italy for €500 (£438) per month, wonders if he could make up the NI contribution shortfall, and still qualify for the UK pension.
He no longer has a home in the UK or family besides his sister, and the thought of going back at his age to work “as a teenager” frightens him. He
“I think it’s really unfair. But to be honest, I haven’t been very clever. I’m a resident in Liguria paying income taxes in Italy but I never thought of setting up a private or public Italian pension fund, as I had my UK one. If I were to do that now, in Italy, I doubt I could even apply at my age, and then what happens to the UK pension I’ve built during these past decades scares me.”
The worst-case scenario for him would be having to give up his “right” to a UK pension and not having the time to build an Italian one.
“That would sentence me to work indefinitely until I was physically unable to do so … Never retiring.”
Names with a * have been changed
