UK Pension Transfers
Statement of the obvious, but those considering UK pension transfers should do so only after consideration of the facts. UK members of pensions are being recommended overseas pension transfers often on the basis of a considerable amount of misinformation about the health of UK final salary pension schemes.
We prefer to put the actual facts across to our clients without bias and without the need to sell a product.
There are more and more websites recommending UK pension transfers for expats, with regard to the facts, and this can lead to “group think confirmation“ whereas the reality is often different from these sales driven websites .
A UK pension transfer based on the fear of the imminent collapse of the UK pension system is not likely to be in the long term best interests of the member.
The Pensions Regulator has just released its annual DB funding statement.
Key points are-
For valuations in 2017, 85 % to 90% of employers are able to manage the deficits and currently have no long term sustainability issues (Having a deficit and managing a deficit does not on its own provide a reason for a UK pension transfer).
Interestingly, the schemes that are under stress often appear to be better continuing than winding up (this appears to be the least damaging for members).
Those companies making big profits and making disproportionate dividend payments, rather than funding the pension, are likely to find the Pensions Regulator will intervene. Those with large dividend payments will be expected to repair a deficit more speedily. The Pensions Regulator is likely to intervene where schemes are not being treated fairly, particularly in circumstances where recovery plan end dates are being extended unnecessarily (for example where the recovery plan end date has been extended but there is sufficient affordability to increase contributions to the scheme)
All schemes need to have contingency plans which should involve taking appropriate action to recover their funding position and to mitigate against any further downside events.
Before considering a UK pension transfer, have a look at the scheme, the employer’s balance sheet and don’t make a decision based on headlines designed to promote a sale. The decision to make a UK pension transfer from a final salary pension must be based on more than a warning about deficits.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published on 16th May 2017
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