Pensions
Making sure we are financially ready for retirement becomes more critical as the age approaches. That is why it is so important to consult a pension specialist on a regular basis to assess your pension plan.
To make sure your retirement plans are well-prepared and your pension is working as it should, it's a beneficial idea to do a review. A review can reveal any gaps or areas for improvement in your retirement plans.
Pension advice for expats
Did you know that about 60% of expats consider saving for retirement one of their top three goals? That's pretty interesting! However, 52% mentioned that their finances get pretty complicated because of their tax situation.
If you're living, working, or thinking about retiring abroad, planning for retirement can get a bit tricky, and there’s definitely a lot more to think about.
That's why getting personalised retirement advice is important. It can really help tackle some of the challenges that come with retirement planning as an expat.
Understanding the different types of pensions
It can be difficult to determine which pension package is best for you when there are so many available.
Below is a summary of some common pension and pension product types.
A qualifying recognised overseas pension plan (QROPS) is an overseas pension plan that conforms to the guidelines established by HMRC. They allow transfers from pension plans registered in the UK.
People usually use QROPS when they intend to retire abroad and want to take their pension fund with them.
SIPP: One kind of defined contribution pension is a self-invested personal pension (SIPP).
You are responsible for making the investment choices with a SIPP. Your pension savings are now more flexible and under your control. In addition, SIPPs can offer a wider variety of investment options and tax benefits.
QNUPS: An overseas pension plan with no residency requirements is known as a qualified non-UK pension plan (QNUPS). Both UK and non-UK residents can use it.
There are many tax advantages to a QNUPS. The primary benefit is that you may be able to lawfully avoid paying inheritance tax (IHT).
A Universal life insurance policy can also be transferred to a QNUPS by current or returning UK residents, which lowers the tax liability when taking up cash benefits from the policy.
UK State Pension: After a person reaches a specific age, the government will begin to regularly pay them the UK State Pension.
The State Pension can pay for necessities like general living expenses, but it is unlikely to be sufficient to sustain you financially in retirement.
Defined benefit pensions: According to official statistics, around 80% of qualified workers currently have a workplace pension.
One of the two primary forms of occupational pensions is a defined benefit (DB) pension. When you reach retirement age, you will receive a guaranteed income.
Workplace pensions: Your employer establishes a workplace pension plan. Your pension pot, funded by you and your employer, is filled with contributions taken from your pay.
Workplace pensions offer a tax-efficient option to invest for retirement because they receive a tax reduction on contributions.
Defined contribution (DC) and defined benefit (DB) pensions are the two primary forms of occupational pensions.
Pension transfers
A pension transfer is the process of relocating your pension funds from your current plan to another plan or provider.
Pension transfers can give various advantages, such as consolidating multiple pensions into a single, easy-to-manage fund. If an expat plans to retire abroad, transferring their pension may also be beneficial.
While you can transfer most pension types, you should first speak with a pensions consultant to fully understand your options.
Pension consolidation
By merging part or all of your retirement funds into one, you are engaging in pension consolidation.
There are several advantages to consolidating your pensions, including reduced fees and charges and a simpler way to manage your retirement assets.