Last Updated on 14th February 2025
Retirement planning is one of the fundamental aspects of managing your finances, whether you intend to relocate abroad, restructure your pension funds and investments, or are keen to have the peace of mind that your wealth will be more than sufficient to meet your lifestyle expectations as you approach retirement.
One of the complexities expatriates experience is the number of variables, considerations and aspects that go into verifying that a retirement plan is viable, secure, and will provide enough money to sustain the living standards they expect – especially when tax efficiencies and cross-border pension transfers come into play.
We’ve simplified the step-by-step process to showcase how expatriate retirement planning works. This highlights some of the many benefits of working with an experienced global wealth management and tax advisory team, whether retirement is fast approaching or you’re planning for the years ahead.
Forecasting Expatriate Pension Values and Retirement Wealth
The first phase in retirement planning is to consider your retirement income sources, their current value and performance in terms of returns or interest earned, and the anticipated future value of your retirement savings.
Depending on your circumstances, that could mean looking at:
- Eligibility for the State Pension Scheme
- Private personal pension plans
- Investment assets held within your portfolio
- Workplace pensions – both defined benefit pension funds and defined contribution schemes
This is hugely important because you could potentially have dozens of assets, pension funds, private schemes, and other wealth. Without working through the entirety of your portfolio and putting together accurate forecasts, it’s difficult to make any informed judgements.
The primary goal is to analyse the types of pension savings you have, including those outside of conventional pension schemes, and to arrive at a reasonable estimate of their worth at the point when those assets will become claimable.
Analysing Whether Pensions and Retirement Assets Are Sufficient
Next, our financial planning specialists will discuss your plans, expectations, wishes, lifestyle, and any existing debts or financial outgoings you will likely encounter.
Alongside tax obligations linked with pension transfers or investment earnings, it’s important to know the net value of your financial assets and retirement funds after accounting for fees, charges, deductions, and any other disbursements.
At this stage, we start to gain a better picture of how closely your current finances align with your retirement goals and whether there are any significant gaps between your forecast income or the dates at which retirement assets will become available and the outgoings you’re reliant on that wealth to cover.
Timings matter since most pension funds offer the option of drawing lump sums, for instance, but permit up to a maximum tax-free withdrawal or make lump sum drawdowns available from a minimum age.
Likewise, if you are reviewing options to consolidate, transfer or restructure pension funds, and taxes become payable on a crystallisation event, this could impact the strategies we feel are most tax efficient and that will protect your wealth without attracting unnecessary liabilities.
Factoring in Major Changes, Expenditures and Relocations
Managing your pension will often depend heavily on your plans because the recommendations we make could be impacted by, for example:
- Plans to relocate to another country and whether a pension transfer is likely to be a consideration.
- Where you live now, where you plan to retire, and at what age you intend to stop working.
- The tax-efficient transfer options and overall tax exposure within your intended place of retirement.
- Any big outgoings, such as paying for children’s education, purchasing a new property, covering the costs of a wedding or any other significant expense.
Even if your pension plan seems healthy, it’s essential you review these factors. There could, perhaps, be instances where you’re planning on taking money from your retirement wealth to cover the costs of moving or buying a new home.
In this scenario you need to verify both whether the value of your forecast income streams meets your requirements, and whether those income sources will be able to provide access to your funds at the appropriate time.
Managing Long-Term Tax Efficiency in Retirement
As we’ve seen, expatriate retirement financial planning is a methodical and comprehensive process that moves through several different stages.
The last is often misunderstood as the starting point – but, in reality, you cannot make clear decisions about your future without having evaluated the funds and assets you hold, how well they will provide for your retirement, and where your plans are likely to mean you require more income at certain points than is currently available.
Once we know how much income you need and already have, we can help you determine the right retirement options, whether that means assessing the pros and cons of alternative schemes, investment structures, pension fund locations, or even jurisdictions.
For example, British expatriates keen to avoid the newly extended 25% Overseas Transfer Charge might find that transferring a pension fund now, before it accumulates further value, is the best way forward.
Others might decide that switching funds into a private Self-Invested Pension Plan, with more flexibility and autonomy about how those funds are accessed and invested, better aligns with their longer-term plans.
Tax management is a broad-scope area, but at its simplest, it means you know which types of pension pots or investment products attract higher or lower tax reliefs, exemptions, and charges, as well as how the tax schemes in your intended country of residence will affect your overall tax burden as a retiree.
Accessing Independent Private Retirement Planning Advice as an Expatriate
Our suggestion is always to consult an experienced, accredited private wealth manager or financial adviser with the depth of knowledge around international taxation and pension transfers you need to make the best possible decisions to protect your financial well-being during retirement.
There is no one strategy or approach that is right for everyone, and a one-off decision is not normally ideal. Changes to your circumstances, expectations, and plans might make retirement decisions you take now less relevant or dependable in the years ahead.
If you’d like to begin the retirement planning process, discuss your current pension wealth, or learn how to manage your investments effectively, you are welcome to contact your nearest Chase Buchanan team to schedule a convenient time to talk.
*Information correct as at February 2025