Expats need more reliable info on pension options

Experts in the field of expat finance are now realising clients are being short-changed by their providers once they stop paying in to their pension funds.

Debates over the rights of deferred members who stop contributing to their pension but still have a fund are hotting up in the trade after research revealed under a third of providers offer advice and fund updates to their deferred members. A large number of savers affected are now living overseas and are mostly uninformed about their retirement options other than the small amount of advice given by their providers. The onset of Brexit is likely to result in a good few more deferred members, whether they’re Brits heading back home or EU expats returning to their countries of birth.

For both the above groups, it’s important to remember pensions based in the UK will only pay out in pounds sterling, with the true value shrinking further as the pound falls. Pension spending power in the remaining 27 EU member states as well as other world countries is falling, and will continue to fall as March 2019 approaches, Those looking to transfer to a QROPS will find it’s now impossible, either because the switch is against the laws of their home country or expat pensions aren't even offered. US expats heading home will find America doesn’t allow UK pension transfers to IRAs or 401Ks, whilst Canadian pension savers can’t transfer their pension pots to an RPS. Indian citizens can only transfer to a QROPS.

Basically, whatever the country of origin, it looks after its resident population first, giving very few or no options for cross-border pension savings transfers. In addition, UK expats still living overseas are being urged to get savvy over foreign tax laws relating to their pension savings. As most foreign tax laws relating to pension savings are treated differently than in the UK, it’s vital for expat workers with pensions to be fully aware of their rights concerning the cashing in of retirement savings.

Other problems include currency fluctuations and wrong advice given by unqualified, unregulated IFAs. For example, a new rule due to be introduced next January forces direct benefit pension providers to give savers crystal-clear statements on the value of their benefits and funds. Unfortunately, the new rule only applies within the EU, so will only help those with UK-based pensions until March 2019.