Living on UK pensions in Turkey: budgeting with 30% inflation and a wobbly lira

Your pension arrives in pounds, and your shopping in Fethiye is priced in lira that lose value every month. Both can work in your favour or against you, so the trick is to budget in pounds and spend in lira.

The short version

• Turkish consumer prices were up 29.77% in the year to October 2026, down from 32.87% a year earlier and 42.12% in January 2025 [6].
• The Central Bank's policy rate is 36% after a cut on 23 October 2026 [7]. High lira savings rates aren't free money: inflation eats most of them.
• Turkey is on the DWP list of countries where the UK State Pension is uprated every April, so it isn't frozen [2].
• The DWP can pay your State Pension into a Turkish bank in lira, every 4 or 13 weeks, after a 0.39% conversion charge, or into your UK account [3].
• Under the UK–Turkey treaty, private pensions and social security payments are taxable only in Turkey if you live there [4], and Turkey generally exempts pensions from foreign social security institutions [8].

How Turkish inflation feels on the ground

Back home in Blighty, UK inflation was 3.5% in the year to September 2026 [9]. In Turkey it's been running near ten times that. Monthly figures show how lumpy it is: prices jumped 4.84% in January 2026 and 4.18% in April, as new-year price rises and wage settlements fed through, then rose by around 1–2% a month over the summer [6].

Source: Central Bank of the Republic of Türkiye, consumer price data from TÜİK [6].

What this means in a Fethiye kitchen: if a weekly shop at the market costs TRY 4,000 (about £59) this November, a 30% rise means TRY 5,200 (about £77 at today's rate) next November. Whether that hurts depends on the lira. When the lira weakens against the pound as fast as prices rise, your pounds buy roughly the same. When it doesn't, Fethiye gets dearer in pound terms, and Brits who moved for cheap living notice it in restaurant bills and rent first.

Rents and anything priced in euros or pounds (much of the property market, private health insurance, flights) behave differently from the market stall. Our guide to the cost of living in Fethiye has current prices.

Budget in pounds, spend in lira

Most retired Brits here settle into a simple system:

1. Keep your pensions paid in pounds where you can. The State Pension can come to Turkey, but workplace pensions and annuities usually pay into a UK account.
2. Hold a sterling buffer. Six months of spending in a UK account or a Turkish foreign currency account lets you wait out a bad week for the rate rather than converting in a panic.
3. Convert monthly, not yearly. With 2–5% monthly inflation, a big lira lump loses value sitting in a current account. Convert what you need for the next few weeks.
4. Review your budget in pounds every quarter. Lira prices will always go up; the real question is whether your pound budget still covers them.
5. Expect the January jump. Many prices, wages and official fees reset in the new year, as the January inflation figures show, so have extra lira ready for January and February.

Lira savings and deposit rates

With the policy rate at 36% [7], Turkish banks advertise eye-catching lira deposit rates. Compare them with inflation, not with your Halifax savings account: a deposit rate close to the inflation rate leaves you roughly where you started in lira terms, before any tax and before a fall in the lira against the pound. Lira deposits suit money you'll spend locally within months, not your long-term savings. Our guide to banking in Turkey covers foreign currency accounts.

Getting your UK State Pension paid

Turkey is one of the countries outside the EEA where the DWP pays the yearly increase, thanks to a social security agreement [2]. The full new State Pension is £241.30 a week in 2026/27, up from £230.25 in 2025/26; the old basic State Pension is £184.90 [5]. The full new rate works out at about £1,045 a month, roughly TRY 70,500 at our rate.

How payment works [3]:

You claim through the International Pension Centre once you're within four months of State Pension age [1]. If you split the year between the UK and Fethiye, you have to choose one country for payment [3]. GOV.UK's payment page doesn't mention life certificates, but the DWP may write to pensioners abroad asking them to confirm they're still alive, so keep your address up to date and reply promptly. Our guide to the UK State Pension abroad has more, including voluntary National Insurance to fill gaps.

Tax on your pensions

The UK side

Non-residents usually don't pay UK tax on the State Pension [1]. Under Article 18 of the UK–Turkey double taxation agreement, private pensions, social security payments and annuities paid to a Turkish resident are taxable only in Turkey. Government pensions (civil service, armed forces and other state schemes) stay taxable only in the UK unless you're a Turkish national living in Turkey (Article 19) [4]. To stop HMRC taking tax from a private pension at source, you apply with form DT-Individual.

The Turkish side

Turkey taxes residents on worldwide income, but Article 23 of the Income Tax Law exempts retirement, disability, widow's and orphan's pensions paid by foreign social security institutions [8]. That's generally read as covering the UK State Pension. Private and workplace pensions from abroad aren't covered by that exemption and may have to be declared, as wage or investment income depending on the scheme [10]. If you've paid UK tax on income Turkey also taxes, Turkey gives a credit capped at its own tax [4].

There are grey areas, especially with UK lump sums and drawdown, so a tax adviser who knows both countries can check your case before you take a big withdrawal. Our guide to Turkish taxes for Brits covers residence and the 2026 rates.

Don't be tempted to move the pot

High inflation and a falling lira lead some Brits to wonder about moving pensions offshore. Transfers need regulated financial advice, can trigger the overseas transfer charge and attract scammers who target retirees abroad. Read UK pensions abroad and the transfer warnings first.

A realistic monthly plan

Two retired Brits in a rented flat in Çalış, both on the full new State Pension, have about £2,090 a month between them before any workplace pension, roughly TRY 141,000 at today's rate. That's a comfortable base in Fethiye, but remember the costs priced in hard currency: private health insurance (needed for an ikamet until you can join the state scheme), flights home and car insurance. Swapping budgets and exchange-rate tips is a regular thread in our community group for Brits in Turkey.

Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = TRY 67.4414). Lira figures change quickly; recheck them before relying on them.

Sources

1. GOV.UK: State Pension if you retire abroad and Tax on your UK income if you live abroad (updated 30 September 2026)
2. GOV.UK (DWP): Countries where we pay an annual increase in the State Pension
3. GOV.UK: State Pension if you retire abroad, how you're paid
4. GOV.UK (HMRC): 1988 UK–Turkey Double Taxation Agreement, in force
5. GOV.UK (DWP): Benefit and pension rates 2026 to 2027
6. Central Bank of the Republic of Türkiye: Consumer prices (October 2026 data)
7. Central Bank of the Republic of Türkiye: One-week repo rate
8. Muhasebe News: taxation of foreign pension payments in Turkey, citing Income Tax Law article 23 (August 2025)
9. Office for National Statistics: Inflation and price indices (September 2026 CPI, released 21 October 2026)
10. Vergide Gündem: taxation of pensions from abroad (January 2016)

Keep reading

• Turkish taxes for Brits: the UK link and your State Pension
• Cost of living in Fethiye vs London and the UK average
• Healthcare and health insurance in Fethiye
• The UK State Pension abroad: frozen or uprated