While there are many things to arrange when moving abroad, UK pensions are probably not high on the list of things to review. However, this does not mean that offshore financial advisers won’t be interested in looking to invest your money as soon as you arrive.
If you are approached to discuss your pension, take your time and remember that a rushed decision is rarely a good decision.
Once you are settled in to your new host country, it is then worth taking the time to then review your UK pensions.
UK Pensions – Points to Consider
Initially, there is the UK State Pension; get a pension forecast here.
Did you know that you can still increase your UK State Pension by making Class 3 national insurance contributions while abroad? More information is here.
Final Salary Pensions – These provide a guaranteed income in retirement and you should take care before considering transferring these to:-
- A SIPP – a UK pension that allows a wide choice of investments, albeit with the attached risk on of investment.
- A QROPS – an overseas pension that may offer some tax advantages, albeit with the attached risk of investment, often lower regulatory oversight and higher fees than a SIPP.
Advice on the transfer of a final salary scheme must be given by a UK advice firm with the relevant permissions for values over £30,000.
Money Purchase (or Defined Contribution Schemes) – These do not provide guarantees, although some of the 1980s variants may have in-built guarantees that would be lost on transfer. Again, these can also be transferred to SIPPs and QROPS.
UK Pensions – Quality of Advice
There is plenty of empirical evidence that advice given to holders of UK pensions, having moved away from the UK, has been poor in the majority of cases. Many holders of a UK pension would have been better off had they retained their pension in the UK, or been advised by more professional advisers. Many are now looking at substantial losses – quite an achievement given that we have experienced year upon year of stock market growth recently.
Often, as is the case when moving to Spain for example, there are country specific issues that may need the advice of a local accountant as well as an adviser.
Your pension may be your biggest asset, aside from your house. It could be the difference between a comfortable retirement and barely making ends meet on a UK State Pension that may not be getting inflation increases (dependent on Brexit negotiations).
Check that your adviser is properly licenced and qualified, and take tax advice if necessary.
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 accept 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 republished on 18th February 2020.
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- Final Salary Pension to QROPS
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