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8 top tips for clients moving abroad

24 September 2017

With clients often considering a move abroad when they retire, it’s important to plan ahead for the financial implications it may have on their pension, says Jamie Smith-Thompson, managing director at pension advice specialist Portafina. Here he outlines his tops tips to help prepare those setting up home abroad.

1. Accessing UK pension from abroad

A private pension or money purchase scheme will offer the same access as in the UK. For final salary schemes, it will depend on scheme rules as to when a client can access their money or whether they can take it from 55. Those retiring abroad have two choices; either leave their pot in the UK and access it from abroad or move the money to the country they’re living in.

2. Don’t forget exchange rates

Pension schemes will only pay funds into a UK bank account, so if clients need to transfer funds into an overseas account, they should factor in transfer fees and exchange rate variations, which could impact the money they receive.

3. Consider a QROPS…

For those savers who have contributed to a defined contribution, final salary or private UK pension, they can move it to a Qualifying Recognised Overseas Pension Scheme. QROPS benefit from zero taxation at source, reduced tax liability and more options for passing on wealth.

4. …But don’t forget QROPS limitations

However, the benefits of QROPS only apply to those countries within the European Economic Area and with Brexit looming, the opportunity may not always be available. Tax treatment is also dependent on the client’s individual circumstances and can change.

5. UK state pension still valid

Similar to a personal, private or company pension, those leaving British shores behind will still be eligible to receive the UK state pension.

6. Not everyone eligible for rise in state pension 

Clients living abroad will only receive inflation-related pension increases if they were living in the UK for six months a year or more, in the European Economic Area, Switzerland or any country that has a social security agreement with the UK that allows for pension increases.

7. Pension freedoms may be restricted

Pension freedoms will remain available to those retiring abroad if they leave their pension pot in the UK, but they may be more restricted for choice. Not all pension schemes allow savers to access all the options available; in order to take advantage of pension release or flexi-access drawdown, clients would need to transfer their pension pot to an appropriate UK pension scheme. However, those living abroad will not have a choice of packages or schemes to choose from.

8. Review pension ahead of move 

If a client is thinking of moving abroad, it’s key to keep an eye on how their pension is performing; they need to know the growth of the policy and whether the features are still in line with their needs and new lifestyle.

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