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UK Pension Changes:
for better or for worse?
UK pension legislation is forever changing, Defined Benefit Schemes, often referred to as Final Salary Schemes, and Defined Contribution schemes, often known as Money Purchase Schemes are the two offerings.
Broadly, Defined Benefits are the Gold Standard because they offer guarantees at retirement, but they have experienced issues in recent years with employers struggling to fund them, Defined Contribution schemes don’t have the same guarantees and rely purely on contributions made, investment returned by the fund and the annuity.
If you are living or moving overseas and have either or both we have pension experts who can advise you on the benefits of transferring your UK Pension to a SIPP or a QROPS giving you the freedom to take your pension where you want and the flexibility to take it how you want.
Contact us and one of our transfer specialists can help you assess whether a transfer would be beneficial in your circumstances.
The Lifetime Impact of Pension Transfer Decisions
Why International Pension Transfer Advice is Important
We save for decades towards retirement, with aspirations of a comfortable, happy lifestyle.
It is essential to review your pension savings, anticipated income and fund performance before deciding on an overseas pension transfer route to make those aims a reality.
As an expat, there are multiple considerations, each fundamental to your ongoing financial security:
- The type(s) of pension funds you hold and the regulations around them.
- Pension income taxation regimes in the UK and your chosen country of residence.
- Levies against overseas pension transfers and the Lifetime Allowance.
- Your expectations for retirement income – including when and where you wish to retire.
As a leading wealth management advisory team working with clients worldwide, Chase Buchanan will evaluate every aspect of your retirement plan, making recommendations to ensure your pension transfers – or alternative investment decisions – provide for a secure retirement.
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Retiring is an exciting time, with the freedom to explore and enjoy experiences in beautiful overseas destinations.
Whether in the UK or under the Mediterranean sunshine, the best way to prepare for retirement is to seek professional advice tailored to your requirements.
Your circumstances significantly impact the approach we recommend. The right way to manage an overseas pension transfer will depend on whether or not you are already retired and when you anticipate drawing upon your pension.
Let’s run through some of the many factors that affect your preparations for expat retirement abroad:
- Savings and Investments: even a robust portfolio of savings and investments can stagnate, and there are often opportunities to attract higher returns and boost your retirement funds.
- Risk tolerance: a careful analysis of your existing pension products and investments, along with an evaluation of your risk tolerance, is vital to ensure any pension transfer decisions align with your acceptable exposure levels.
- Tax planning: strategic tax planning can make a considerable difference to your pension finances, particularly when factoring in where you hold investments and the regimes in place impacting your pension overseas.
Expert pension transfer advice matters because there is no one-size-fits-all retirement solution appropriate for every global expat.
Instead, it requires an in-depth assessment of your residency status, available investment schemes, pension withdrawal plans and desired retirement lifestyle.
Crucial Considerations in Planning a UK Pension Transfer
There are two primary ways to transfer a British pension product overseas:
• SIPPs – Self-Invested Personal Pensions
• ROPS – Recognised Overseas Pension Schemes
SIPPs don’t constitute a jurisdictional transfer as such but act as an investment fund with greater flexibility to choose how to manage your investments, with an experienced financial adviser to guide your decision-making.
ROPS also offer a range of benefits, from higher tax-free lump sum withdrawals, the ability to craft your succession planning strategy, and flexibility about when and how you access your pension funds.
We define the risks and rewards of both transfers in far more detail in our SIPPs v ROPS Guide, but the choice will depend on what type(s) of pension you have.
For example, sacrificing a Defined Benefit scheme may not be advantageous if the lifetime guaranteed income is sufficient to offset tax exposures and currency exchange risks.
ROPS are a popular option, with a diverse range of schemes available worldwide. However, any transfer must be to a fund provider recognised by HMRC to avoid substantial 55% tax levies against unauthorised transfers.
Therefore, you need to establish whether there are suitable pension funds in your new home from home and what charges you would be exposed to on transferring (such as the Overseas Transfer Charge).
We can also help weigh up ways to manage the possible tax charges if your pension assets reach the Lifetime Allowance.
UK Pension Transfer Advice From the Global Wealth Management Experts
As we’ve seen, pension transfers are complex and require diligent analysis of the relevant factors to make sound, long-term decisions to support your financial security throughout retirement.
Professional advice is the key to unlocking access to a broad range of transfer options, tax efficiencies, and beneficial investment strategies that support you and your family in selecting optimal ways to make your wealth work harder for you.
Chase Buchanan is a leading financial advisory service supporting British expats worldwide, with offices throughout Europe, the USA, Canada, and our UK Administration Centre.
We offer a comprehensive pension review service to help us identify the best opportunities to leverage your pension products to ensure your aspirations are achievable.
Please download our complimentary Guide to Retirement Planning to learn more, or contact your nearest Chase Buchanan office to organise a convenient time to discuss how we can help.
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Quality advice.
UK pension legislation is forever changing, making specialist pension advice from our transfer specialists a beneficial move.
Feel free to ask a question below or download your free guide here.