One of the biggest concerns to people who have previously contributed into a UK pension scheme is what will happen after brexit and how will it effect my retirement income?
The truth is no-one knows!! Although one thing that is probably likely, is that pensions are a very easy target and the cost of brexit will have to be funded somehow, therefore UK pension taxation is likely to rise….
However there is a way that you can take control of your own destiny.In 2006 the HMRC introduced a scheme called QROPS (Qualifying Overseas PensionScheme). This allows an individual to move their pension internationally and it has major tax benefits…
There are 2 types of UK pension defined benefit (final salary scheme) & defined contribution (the money is invested to grow).
With defined benefit an individual from normally age 60/65 gets an index linked fixed income till they die the there is normally a 50% spouses provision but nothing then passes to the children.
Defined contribution pensions can start at age 55 and the individual needs to decide to buy an annuity which like the defined benefit scheme normally finishes when they pass away. However they can choose now to take flexible drawdown and any balance left can pass to the estate tax free if they die under the age of 75. However if you die over the age of 75 the balance will be taxed at the individual UK income tax rate which may be as high as 45%.
Both types of pension would obviously be taxed at source in the UK and paid in GBP…
The benefits of considering moving your pension to a HMRC QROPS are as follows:
Protection from further tax changes in the UK
Income can be taken age 55
25% lump sum available
Income paid in any currency and can be converted at any time.
Income paid gross of taxation
Flexible annual income available
100% of pension paid out tax free upon individuals death.
With the uncertainty of what happens after brexit now would be a good time to at least find out what your options are..
If you wanted more information on the above Simon Byrne from Trafalgar International Europe will be visiting Strasbourg on the 3rd & 4th of December and is offering to give free one to one advice to any readers who think they should be at least reviewing their options. Simon is currently helping clients in the Council of Europe and though-out the ex-pat community.
To book an appointment please contact him on 0044 7757 650 658 or Simon.firstname.lastname@example.org