Pensions

The trend is seeing people certain Brits take extended breaks from work to travel

Certain Brits planning to take a year off work have been warned they could face a £10,000 pension trap if they use their retirement savings to fund a so-called ‘golden gap year’.

The trend is seeing people in their 50s, 60s, and beyond take extended breaks from work to travel, volunteer or simply enjoy more freedom after decades of employment and family commitments. But experts are warning that a dream year in the sun could come with a hefty financial sting if pension rules are overlooked.

The warning comes as many people prepare to make the most of the final bank holiday of the summer – and potentially start thinking about how they want to spend their later years. PensionBee says taking time out later in life is becoming increasingly attractive, particularly after redundancy, burnout or when children have left home.

But unlike a traditional gap year taken at 18, taking a year out at 58 can have consequences for retirement income. One of the biggest issues is the Money Purchase Annual Allowance (MPAA).

Someone aged 55 or over may be able to access a defined contribution pension, but taking taxable income flexibly can trigger the MPAA. This can reduce the amount they can subsequently pay into a pension with tax advantages to £10,000 a year.

That could be particularly important for anyone planning to return to work after their year away and rebuild their retirement savings. The normal annual pension allowance is currently £60,000, although some higher earners and people who have already accessed pensions can face different limits.

Maike Currie, VP personal finance at PensionBee, said: “For years, the words ‘gap year’ conjured up images of backpacks, hostels and young people heading off to see the world before starting their careers. But increasingly, it’s older generations who are taking time out.”

She added: “After decades spent working, raising families, paying mortgages and saving for retirement, it’s understandable that more people want to enjoy some of that freedom while they’re fit and healthy enough to make the most of it.”

But there are several other financial checks people should make before booking flights.

State Pension

Taking unpaid leave can potentially result in gaps in a person’s National Insurance record. People normally need at least 10 qualifying years to receive any new State Pension, while those whose National Insurance record started after April 2016 generally need 35 qualifying years for the full new State Pension.

It is therefore worth checking your State Pension forecast before taking a year away from work. Some missing years can potentially be filled through National Insurance credits or voluntary contributions.

Workplace pension

A sabbatical or period of unpaid leave could also mean that both employee and employer pension contributions stop, depending on the terms of the workplace scheme. That means the true cost of a year away could be considerably greater than the salary sacrificed.

People should check with their employer before leaving work to establish exactly what will happen to their pension.

Keep saving if possible

Even people with little or no relevant UK earnings can generally receive tax relief on pension contributions of up to £3,600 gross a year, subject to eligibility. Under relief-at-source arrangements, this can mean paying £2,880 personally, with £720 added in basic-rate tax relief.

For someone taking a year away, maintaining even modest pension contributions could help limit the damage to their longer-term retirement plans.

Think twice before raiding your pension

Using pension savings to pay for the trip may appear an easy solution, but it can have consequences extending long after the holiday is over.

Taking taxable pension income flexibly can trigger the MPAA and leave someone with much less scope to build up their pension when they return to work.

Don’t blow the lot

Financial experts also warn against spending every penny on the adventure. Anyone taking a long break should retain an emergency fund and continue to budget for unavoidable costs such as rent or mortgage payments, insurance and household bills.

Money should also be set aside for the period after returning home, particularly if there is no job waiting.

Ms Currie said: “A golden gap year is really about buying yourself something incredibly valuable: time. But you don’t want the trip of a lifetime to leave a lasting hole in your retirement. Think of it as planning for two journeys at once. There’s the adventure you want to have now, and the much longer retirement still ahead of you.”

She urged people to check their State Pension, understand what will happen to workplace pension contributions and think carefully before accessing retirement savings.

The idea of taking a ‘golden gap year’ comes as Government research has found that 55% of people aged 40 to 75 who had not yet retired said they would definitely or probably consider a Midlife MOT.

The Retirement Abroad Index 2026 has ranked 20 countries across five key areas including healthcare, cost of living and visa accessibility – and the results may surprise you.

While you might be drawn to these sunny spots for a holiday, have you ever considered they could be the perfect place to spend your retirement?

As Brits approach retirement age, plenty contemplate purchasing a property in well-loved retirement havens such as Spain and France, but there are warmer, more affordable locations that could offer greater advantages, according to the latest figures.

The Expatriate Group, a specialist provider of international health insurance serving expats and retirees globally, has published The Retirement Abroad Index for 2026. The study assessed 20 countries, evaluating them across five crucial categories, including healthcare, visa accessibility, health insurance requirements, cost of living, and community and integration.

Drawing from these essential factors, it’s evident which destinations emerged as frontrunners for retirees and which have fallen in the rankings, with some surprising contenders.

Lee Gerry, director of Expatriate Group, said: “Retiring abroad has never been more achievable, but the decisions that matter most – healthcare access, visa routes, and the reality of day-to-day costs – are often the least well understood.”

“This index is designed to cut through the noise and give people an honest, data-led picture of where the real opportunities are.”

The top destination for retirement, according to the index, was the Philippines, with a Special Resident Retiree’s Visa that ranks among the most accessible globally. It requires a fixed deposit of roughly £11,000 for those receiving a pension.

What’s more, it achieved impressive marks for affordability and anticipated integration, which, combined with its tranquil beaches and stunning scenery, makes it an idyllic spot to enjoy your retirement years.

The second choice is perhaps less of a shock, as it’s certainly more familiar to Brits, though still not typically considered the top pick: Thailand.

The nation boasts several well-established and vibrant cities, each providing a flavour of its rich culture, but most prominently, Bangkok, Chiang Mai and Phuket all feature internationally recognised private hospital networks.

Thailand secured a perfect 20 out of 20 on the scoring index, excelling in the healthcare category alongside Spain and France. Regarding visas, their Non-Immigrant O-A Visa demands coverage of at least $100,000, approximately £74,000, per policy, per year, as a visa requirement.

The third country, which may surprise some retirees, is Colombia, offering one of the most straightforward retirement visa routes among the 20 destinations and, remarkably, achieving a cost of living score of 18 out of 20.

According to their findings, the report indicates a retired couple can generally enjoy a comfortable lifestyle in Medellín, the capital of Colombia, on roughly £1,000 to £1,500 per month. In contrast to most British cities, it boasts reliably warm weather and possesses a lively atmosphere that’s difficult to match elsewhere.

Portugal emerged as the first European nation to feature on the list as an ideal spot to spend your golden years, claiming fourth place. Joint fifth went to Sri Lanka and South Africa, while Malaysia and the UAE shared sixth position, before Mexico secured a solid seventh spot.

While Spain continues to be among the most favoured destinations for British retirees, it didn’t appear until eighth on the list, achieving 18 out of 20 for healthcare, though it was let down by the cost of living and visa complications.

It also shares eighth place with Indonesia, which is cherished for its relaxed way of life and renowned for its strong emphasis on wellness culture. Packed with stunning beaches and particularly attracting visitors to Bali, it has climbed to the top of countless people’s bucket lists as a must-visit destination.

Coming in at number nine is Panama, followed by Qatar. Panama has made headlines in recent years for its ‘Pensionado’ programme, which offers a generous range of discounts designed to make retirement far more affordable.

The scheme also requires retirees to demonstrate a lifetime income of just £738 or so per month, with an extra £184 for each dependant.

Due to several countries sharing identical scores, the top 10 is actually made up of 13 nations in total. These are:

• Philippines
• Thailand
• Colombia
• Portugal
• Sri Lanka
• South Africa
• Malaysia
• UAE
• Mexico
• Spain
• Indonesia
• Panama

June 15 (Asia Today) — Salt-damaged farmland once unsuitable for either agriculture or aquaculture has become a source of pension income for residents of islands in southwestern South Korea.

Shinan County in South Jeolla Province operates what it calls a “Sunlight Pension,” sharing part of the profits from solar power projects with local residents. The program is regarded as a social economy model that connects large-scale renewable energy infrastructure with household income and local spending.

The county began distributing the pension on Anjwa and Jara islands in 2021 under a renewable energy profit-sharing program. It has since expanded the program to Jido, Saokdo, Imjado and Bigeumdo.

Under the program, part of the profits generated by solar power projects is distributed to residents through local cooperatives.

South Korea’s Ministry of the Interior and Safety regards the Shinan program as a social economy model that converts local resources into resident income while keeping spending within the community. The program brings residents, local government and private businesses together to ensure that some profits from power generation remain in the region.

The model is also consistent with the national government’s initiative to create “Sunlight Income Villages,” where communities receive income from renewable energy projects.

Shinan County enacted an ordinance in 2018 establishing a system to share profits from renewable energy development with residents. Residents do not directly pay the cost of building the power plants. Instead, resident cooperatives participate in the projects and receive dividends from the resulting revenue.

The dividends are paid through local gift certificates, encouraging recipients to spend the money within Shinan County.

“Existing residents are guaranteed dividend benefits, while benefits for new residents vary according to age to encourage younger people to move here,” a county official said. “New residents age 40 or younger are eligible immediately, without a waiting period.”

The program has produced measurable results.

Renewable energy development dividends generated cumulative revenue of 24.71 billion won, or about $16.1 million, between April 2021 and April 2025. Of that amount, 22.32 billion won, or about $14.6 million, was distributed through the Sunlight Pension.

An additional 2.39 billion won, or about $1.6 million, was distributed as a Sunlight Child Allowance for residents younger than 18.

Of Shinan County’s 16,483 residents, 13,284 are members of participating cooperatives, representing a participation rate of 81%.

The Anjwa Solar City power plant serves as the foundation of Shinan’s Sunlight Pension model.

The facility has a combined generating capacity of 288 megawatts, consisting of a 96-megawatt first phase and a 192-megawatt second phase. The first phase began commercial operations in November 2020, followed by the second phase in January 2023.

Plant officials said the project cost about 560 billion won, or approximately $366 million. It generates annual revenue of between 80 billion won and 85 billion won, or roughly $52.3 million to $55.6 million.

The history of the site is also significant.

The land was originally used for farming but became unsuitable for both agriculture and aquaculture because of salt damage and years of use as fish farms. A 2019 revision to South Korea’s Farmland Act allowed salt-damaged farmland to be used temporarily for other purposes, clearing the way for the solar project.

The land is scheduled to be restored to farmland after the solar facilities cease operations.

Anjwa Solar City is considered a leading example of South Korea’s resident-participation renewable energy profit-sharing system. Large solar projects can generate local opposition when residents receive few tangible benefits, making the profit-sharing structure a central element in securing community acceptance.

The Shinan model, however, may be difficult to reproduce in every region. Large renewable energy projects require several conditions, including government approval, resident consent and access to transmission infrastructure.

Project profitability and local acceptance must also be considered to maintain a stable dividend system.

“The Sunlight Pension was designed to ensure that development profits remain with residents and circulate within the community,” the county official said. “We plan to expand the profit-sharing program beyond solar power to offshore wind and other renewable energy projects.”

— Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260615010005065

There’s a time limit

A bank is tempting new customers with 10,000 Avios Points.

J.P Morgan Personal Investing confirmed the deal was running until July 31, 2026. The bank revealed customers could put their points towards flights at a time when concerns are mounting over potential fare increases.

The offer is open to new customers who invest £500 or more in a single payment before the end of July.

To qualify for the points, new clients must keep at least £500 invested from August 1, 2026, until February 1, 2027, after which the Avios will be awarded within 55 days of this holding period concluding. New clients can open a Stocks and Shares ISA, Junior ISA, Lifetime ISA, Personal Pension or General Investment Account.

New investors will need to complete the sign-up form, accessible via the promotional page. J.P Morgan reminded customers that their capital was at risk and that transfers in were excluded from the offer.

Claire Exley, head of advice and guidance at J.P. Morgan Personal Investing, said: “Many UK savers are curious about investing for the first time but unsure when to get started. Over the long term, it’s often more important to stay invested over several years than to try to time the market and pick the ‘perfect’ moment.

“For those thinking about starting to invest, our Avios offer is designed to help make that first step in investing feel a little more rewarding. With the cost of travel on many people’s minds, those Avios points could help towards a future holiday or bring a dream trip a bit closer.

“Whether you’re using a Stocks and Shares ISA for the first time, investing for your children, or topping up your pension, what often matters most is choosing an approach you’re comfortable with and staying invested for the long term.”