State pension warning as 450,000 Britons miss out on £26,000 in retirement

These pensioners do not receive the annual increases provided by the triple lock, meaning their payments remain fixed at the rate they were first paid.

The triple lock, introduced in 2010 and in place since the 2011/12 tax year, ensures the state pension rises each year by the highest of three measures – inflation, average earnings growth or 2.5 per cent.

But this only applies to those living in the UK or in countries with a reciprocal social security agreement.

Pensioners in countries such as Australia, Canada and New Zealand are excluded.

If they moved abroad without an uprating agreement in place, their payments have remained frozen ever since.

Myron Jobson, Senior Personal Finance Analyst at interactive investor, said: "Many pensioners dream of spending their golden years overseas – whether it’s for a warmer climate, an improved quality of life or to be closer to family and friends.

"But while the lifestyle may be appealing, it’s vital to consider how such a move could affect your state pension entitlement."

Jobson added: "If you move to a country where the UK has no uprating agreement, like Australia or Canada, your state pension will be frozen at the level you first receive it.

That means you won’t benefit from the valuable triple lock increases that pensioners in the UK enjoy each year, and over time, that can seriously erode your spending power."

The financial gap can be significant. A pensioner who retired abroad in 2010 would now be receiving £5,077 a year, compared to £9,175 for someone who remained in the UK. Over 15 years, that adds up to a loss of £25,832.

Someone who left the UK 10 years ago would have missed out on £13,162. A move abroad five years ago results in a shortfall of £7,391. Even pensioners who relocated just one year ago are receiving £471 less than they would have in the UK.

These figures are based on the full rate of the basic state pension and new state pension. Whether or not a state pension increases annually depends entirely on the destination.

Retirees living in the European Economic Area, Switzerland, Gibraltar, or countries with specific social security agreements with the UK continue to receive annual upratings.

The All-Party Parliamentary Group on Frozen British Pensions estimates that approximately 450,000 UK pensioners are affected by the current policy. Campaigners have long called for reform, arguing that the freeze is unfair to those who have paid into the system but now live abroad.

Interactive investor warns that the issue could grow in scale, as more Britons consider retiring abroad in search of lower living costs or a better quality of life.

Jobson said: "Planning ahead is key. Make sure you’ve checked whether your chosen destination is affected and consider topping up any gaps in your national insurance record to maximise what you’re entitled to.

"Deferring your state pension can boost the amount you get, though it won’t help with uprating in frozen countries.

"Most importantly, building a strong private pension pot can help provide the financial cushion you’ll need to maintain your standard of living abroad, regardless of state pension freezes.

"Budgeting carefully and preparing for rising living costs can go a long way in making your retirement overseas both comfortable and secure.”

“It is worth considering seeking advice from a financial adviser to fully understand the implications of retiring abroad and plan accordingly.”