Pension Transfer Services

Will my loved ones receive my pension when I pass away?

When considering the distribution of pension benefits to family members, knowing the limitations of a defined benefit pension is crucial. Typically, a spouse receives only 50% of the pension, while children over 21, or in full-time education over 23, or those who are 18 and working, receive nothing.

However, by transferring to a Personal Pension, you gain control over the distribution of your pension funds. You can precisely choose who receives the funds, determine the exact amount they receive, and decide whether it should be a lump sum or regular income.

You could leave 100% of your pension and provide them with the financial support they need by exploring our pension transfer options today.

Whilst you may deem death benefits a high priority, it is worth noting that any pension, including a scheme pension, is designed primarily to provide you with an income in your lifetime.

Having money left over in your pension to pass on is considered an ancillary benefit to any pension.

How can I secure a lifetime income from a pension transfer?

We understand that losing guaranteed benefits, such as a lifetime income, can be worrisome when considering a transfer from a defined benefit pension.

However, it’s essential to understand that the Cash Equivalent Transfer Value (CETV) represents the amount needed to provide an income for life.

It is possible to transfer your benefits and use some or all of your money to buy guaranteed income in the form of an annuity, which could provide even higher income than your defined benefit pension scheme offers.

If you want guaranteed income but don’t require the amount you are being offered or wish to buy an annuity on a single-life basis, this could be an alternative option worth considering.

Due to your reduced life expectancy, you may be in ill health and could be entitled to an enhanced or impaired life annuity (you could get a higher income).

Securing a lifetime income with a portion of your pension transfer and then having the rest invested could provide you with a blend of flexibility and guaranteed income.

Our pension transfer service offers comprehensive support to help you navigate this transition and make informed decisions regarding your CETV.

Please note that your scheme’s guaranteed income is a valuable benefit. You should only consider exchanging a portion (or all of your guaranteed income) if you have sufficient guaranteed income elsewhere to meet your retirement expenditure.

Am I at risk of losing my UK pension due to company insolvency?

The fear of losing a UK pension due to company insolvency is a valid concern for British expats. However, rule changes means the Pension Protection Fund (PPF) provides a safety net by protecting 100% of your pension entitlements in case of insolvency.

However, you will loose the right to make a pension transfer if the scheme goes insolvent.

Therefore as an expat, if you are considering a pension transfer it becomes crucial as it offers control over your retirement savings, helping to secure your financial future more effectively.

Am I limited by the general investment strategy of my DB scheme?

Trustees of defined benefit schemes make investment decisions at a generalised level, while with a personal pension, your investment strategy can be tailored specifically to you and your unique retirement goals.

Although the scheme trustees, along with guidance, decide on how the scheme pot is invested, they also take on all of the different types of investment risk, fund, platform and adviser charges, as well as inflation and longevity concerns, and provide you with a guaranteed income for life.

If you were to have control of your investments, you would have to take on the different types of investment risk, as well as inflation and longevity concerns yourself. You must manage this or pay for an adviser to manage your investments.

In addition, if the investment markets fall, you are still promised your guaranteed income with a defined benefit pension, and the sponsoring employer has to make up the difference via a contribution to the scheme.

However, you could outlive your pension pot if you suffered investment loss following a pension transfer. That’s why it’s imperative that you speak to a pension transfer specialist.

Can I access my pension funds earlier than the UK retirement age?

British expats often desire greater flexibility in accessing their pension funds, hoping to retire earlier than the UK retirement age. They seek the freedom to pursue their dreams and enjoy their desired lifestyle without restrictions.

You can also access your scheme pension from age 55, which may be ten years earlier (if your normal retirement age (NRA) was 65).

However, most schemes will apply what is called an Early retirement factor. This is wrongly viewed as a penalty instead of an early retirement reduction.

If you were to retire at age 55, and your NRA was 65, then you would have been drawing from your pension for the last ten years by the time you reach age 65, as opposed to someone who has waited until they are aged 65 to draw benefits.

If you received the income from age 55, and it was not reduced, then it wouldn’t be fair on the person who waited until they reached age 65 to draw on benefits.

Therefore, the early retirement factor isn’t a penalty, but making it fair, as you have ten years’ worth of income that the person at age 65 wouldn’t have received.

Some schemes are generous, and for certain members, they allow you to take your pension early without any early retirement factor reductions.

Therefore, you can access your pension benefits from age 55 whether you transfer your pension or not, so please keep that in mind.

Am I exposed to fluctuating exchange rates by keeping my UK pension?

If you have decided to remain long term overseas from the UK and retire in a country where a different currency is used, then income from a pension denominated in GBP could lead to fluctuations in the amount received.

Many pensions in the UK provide multiple currency options, and therefore discussing these with an adviser, may provide a suitable solution to mitigate future fluctuations in currency markets, impacting the pension benefits you take.

*AHR do not provide currency trading advice, nor advise any clients in relation to currency speculation.

Will my UK pension be subject to high tax in my new country of residence?

British expats often worry about the potential tax implications of their UK pension in their new country of residence. They seek clarity on tax obligations and ways to minimise tax burdens.

At AHR Group we have a broad wealth of knowledge with tax advisors and financial planners to help you structure your pension in the most tax-efficient manner possible.

Does my 25% PCLS remain tax free in my new country?

Many pension schemes in the UK allow members to take up to a 25% lump sum at their retirement age. This is called a Pension Commencement Lump Sum (PCLS) and, within the UK, is a tax-free payment.

Although the accessibility of the PCLS remains for many expats, the tax treatment of the lump sum changes from country to country.

Therefore, seeking advice from a pension specialist before accessing your PCLS to prevent unexpected local tax liabilities is vital.