“I have lived and worked in the UK or Europe and am leaving my home country now, but my private pension is still there!”
Did you know you could bring your company or private pension offshore with you?
Kirk McArdle, independent financial consultant, on the benefits of transferring your pension offshore. Read more here.
If you are reading this and the first thing that comes to your mind is, “Well I have a pension but it is for my retirement” then you need to read this article! I have already written a few months ago on the importance of having investments in place to help aid you in retirement, but what can you do with an existing pension you or your old employer has provided?
To move or not move? That is the question.
Let me just start by saying that no country’s State Pension can be moved offshore at all. The government provides this type of pension to you from your direct taxes or national insurance over your working career.
Any UK personal or old company pension scheme can be moved or “ported” into a regulated offshore jurisdiction with a process called QROPS (Qualified Recognized Overseas Pension Scheme) or, if the pension is in mainland Europe, EURBS (European Union Retirement Benefit Scheme). Typically the pension value should be above £30,000 or €30,000 for this to make the porting process viable.
So what are the benefits of moving my pension?
Well, there are many:
- Your pension with either your provider or the one that your old company uses will be managed by the pension fund manager and will only be able to access a very limited asset scope which will have modest (at best) returns. By porting your pension offshore you get to have a direct input into what the pension is invested into asset wise. Stocks and shares, mutual funds or unit trusts, structured products and low cost Exchange Traded Funds (ETF’s) are but a few investable assets.
- You are able to take (depending on which jurisdiction the pension is transferred to) up to a 30% tax-free lump sum upon inception.
- You can start to access the pension from an age of 50 instead of 55 from a pension still in the UK or Europe.
- This last one deserves it’s own section below!
What happens to my pension when I pass on?
This is the key benefit of why you should make a decision on your pensions future: The beneficiary aspect.
If your personal or company pension remained in the UK or Europe then upon the pension members death, the spouse would receive 55% of the value as a widows allowance and the government would take the remaining 45%.
It gets worse: Upon the spouses death the government takes all of the remaining value!
By moving your pension offshore you are able to nominate your pension payout to the people you want to leave it to. Upon the members death the spouse will receive 90% of the pension with 10% going back to either HMRC in the UK or the European country’s tax authority from where the pension originated.
When the spouse passes on, then the remaining pension values will go to the nominated beneficiaries i.e. children, grandchildren, brothers… whoever you choose to leave your pension to. Wouldn’t it be nice to give your children a step on the life ladder from the pension benefits that you have earned rather than a government or tax authority taking everything?
So is this a simple process?
Yes and no. Austen Morris Associates can make this as simple and streamlined as possible for you with only a simple letter for you to sign to find out what the pension transfer value is. With a few application forms to complete the rest from your side is easy. The real work goes on in the background via companies that specialize in trusts (as for the pension must be held in trust to be offshore), the pension company themselves and Austen Morris Associates as the investment advisors.
The one thing to remember is that this investment is and should always be managed as a pension. The trust company is obliged to report back to the relevant tax authority for at least 10 years to prove the pension is invested correctly and is still there for your retirement.
If the above article has now got you thinking about either QROPS or EURBS then you should make either an appointment to meet with me or reach out via e-mail or a phone call. A brief 30-minute conversation about this process could be the difference between being able to leave a nest-egg or not having one to leave at all.
At Austen Morris Associates we specialize in helping individuals reach their personal financial targets, and there is no one investment that fits everyone. That’s why we like to sit down and talk to our potential clients about their own private situation and to see if we can be of benefit.
If you would like an introduction to Austen Morris Associates and to find out how we can help with asset planning, then please do contact me on +27 11 514 0745 or at firstname.lastname@example.org