If you are in one country and your pension fund is in another, it’s time to consider making an overseas pension transfer. Today, we invite Dan Abrahams, Co-Founder of MyCurrencyTransfer to help out with some expert advice
British expats can take advantage of a Qualifying Recognised Overseas Pension Scheme or QROPS for short. You have worked hard for your money over the years and it is important to ensure you get access to your money in the best possible way.
QROPS are often referred to as offshore pension schemes because the companies supplying them are based outside of the UK. There are over 3000 different schemes running in over 46 countries and that’s great news for those shopping around for the best scheme to suit their needs.
The First Step - Finding A Good Financial Advisor
A professional financial advisor experienced in both UK and overseas pension schemes will ensure that you have access to the most suitable and profitable pension transfer deals available to you. Your advisor can give you tailored advice that takes into account the tax rules for the country you are in and any other aspects of pension transfer that you need to be aware about. Conditions and benefits often vary between countries.
Thinking Of Taking A Lump Sum?
The majority of UK pensions offer a lump sum but limit this to 25% of the pension fund value. However, many QROPS can stretch that to 30% as long as the pension scheme retains 70% of the original pension pot to provide a regular retirement income.
Lump sum flexibility like this can help if you are looking to buy a car in your new country or pay for another big purchase. Again, your financial advisor will be able to ensure you know the options available to you so that you can make a sensible and informed choice.
Income Tax On Your Pension Payments
For any QROPS taken out in the same country where you are based, you will be taxed according to the local tax rules for that country. And if you take out a QROPS in a different country to where you are based, the tax you pay will depend on whether your country and the QROPS country has a tax treaty between them. If they do you might be able to take advantage of some tax breaks. Another option is to choose a pension company offering QROPS that can be moved to another country without having to pay hefty entry and exit fees.
How To Beat Fluctuations In The Exchange Rate
Your UK pension can only be transferred in Sterling no matter what country you are moving your pension to. That means you need to time your transfer well so that you can make the most of fluctuating exchange rates. Exchange rates trade every day and can change quite dramatically during the course of a day’s trading. The good news is that you can monitor these changes by using an exchange rate comparison website. A good financial advisor can also give you advice on how to get the best exchange rate by using an FX broker that offers bespoke money transfer services.