Posts Tagged ‘Expat pension transfer’

UK Expat Pension Members in Australia

Thursday, February 4th, 2010

A large percentage of migrants that enter Australia each year come from the UK. Indeed, around about 30,000 of the migrants that enter Australia each year come from the UK, according to a study in 2008. Putting this into perspective, this is more than New Zealand migrants to Australia (around 27,000) and those from India and China (around 22,000 from each country).

For those UK migrants living in Australia many of them would have UK pension benefits held in the UK. Should a UK expat pension member in Australia transfer their UK pensions to Australia?

Whether a UK pension transfer to Australia is a good idea or not is a big issue, not just for a UK expat pension member but also for a returning Australian that has returned to Australia after a period of work in the UK.

The benefits from a UK pension scheme can vary. This is because historically the UK has a variety of pensions that provide different benefits. For example, a final salary (defined benefit) scheme is not a common type of scheme throughout the world. The benefits from this type of scheme depend on the years of service an individual has from their employer, their final remuneration and the scheme accrual rate. This is unlike an Australian scheme where benefits depend on the fund size at retirement – where there are no guarantees.

If you are a UK expat pension member of a final salary scheme how can you compare two totally different types of benefits, in two different countries, in order to decide whether a pension transfer to Australia would be advantageous or not?

The advisers at UK based IFAs Global QROPS Ltd have many years of experience advising on pension transfers to Australia from the UK and can make firm recommendations to UK expat pension members in Australia deliberating on what to do with their UK pensions.

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UK Expat Pension Members in Retirement

Thursday, January 14th, 2010

There are many UK expats that are currently working overseas for foreign companies or for the overseas arm of a UK company. For the majority of these people the original intention would be to earn a living abroad but return to the UK to retire, however, recent surveys have shown that this is no longer necessarily the case.

Due to the increasing cost of retirement in the UK and the taxable nature of UK expat pension member’s retirement income in the UK, an increasing number of expats that are working abroad are choosing to remain abroad in retirement. For UK expat pension members (ie members of UK pension schemes that are living abroad), overseas pension transfer advice is required to assess whether their funds should remain in the UK or transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme).

The surveys have shown that 60% of expats abroad retire in Europe (with France and Spain being the most popular destinations), with the purpose of being close to their family. For other expats, the USA, Canada, Australia and New Zealand are the popular destinations – largely because they are English speaking countries. Wherever an individual retires overseas, though, they have to weigh up the better climate and quality of living against issues such as the standard of health care, emergency services and the tax system of their new country.

When funding for retirement, recent statistics have shown that expats look at their savings as the highest source of retirement funding with 27% coming from this source. The other major sources of retirement funding include the UK State Pension (23%), private pensions (20%) and rental income from property (6%).

What is surprising is that private expat pension funds makes up only 20% of retirement benefits. There may be QROPS options available that could increase pension provision for a UK expat pension member.

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UK Expat Pension Members Decide to Retire Overseas

Monday, January 11th, 2010

According to a recent study, conducted by a prominent financial institution in the Isle of Man, UK expats that have taken up positions in employment overseas – throughout their working life – are deciding to stay abroad in their retirement rather than return to the UK.

The main reason cited for remaining abroad, throughout retirement, is the cost of retiring in the UK is perceived to be too high. Indeed, the figures in the study suggested that £400,000 was the minimum level of wealth needed in the UK for a successful retirement.

Given this situation, what are the options for UK expat pension members that have accrued benefits in UK pension schemes, as well as benefits in their foreign employment schemes?

One of the main disadvantages of UK pensions, for UK expat pension members, is that the income from a scheme (either in the form of an annuity or drawdown) is assessable for tax in the UK – should the member return to the UK in retirement.

Tax on retirement income is not applicable from every type of scheme for every jurisdiction or country in the world, however, which can give a UK expat pension member the choice of overseas pension scheme to transfer their UK funds to – providing it is a QROPS (Qualifying Recognised Overseas Pension Scheme).

If an individual has retired to country that is a tax haven, such as the United Arab Emirates, or to a country that does not tax pension income from their own pension schemes (such as Australia and New Zealand), a transfer to an appropriate QROPS could lead to a tax free retirement abroad – which can appeal more to an individual than retirement in the UK.

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