People with overseas pensions are urged to review their retirement savings, in the light of a new charge. From Trevor Simms, Founder and Managing Director of Birchwood Investment Management.
Since 9 March 2017, new measures have seen a 25 percent charge applied to transfers on qualifying recognised overseas pension schemes (QROPS), which could affect a number of former, prospective and existing expats. Under the new rules those who can demonstrate a genuine need, such as where the individual and the pension are located within the European Economic Area, will be exempt. There is also an exemption for those who had a QROPS provided by their employer. The Government has said that the measure has been introduced to promote ‘fairness in the tax system’.
It says that the new system will allow overseas transfers from pension schemes that have had UK tax relief that are made when people leave the UK, helping them to take their pension savings with them to their new country of residence. To me this seems like another ‘tax’ on pension savings at a time when saving for a pension has never been more important. With Brexit on the horizon the UK is likely to see an increased number of pension transfers overseas and it feels like the Government may be trying to cash in on the movement of people into and out of the UK.
Overseas pension holders should seek professional independent advice if they weren’t sure what the implications of the charges might be on their retirement plans. I would thoroughly recommend that people regularly review their retirement plans with a qualified expert to ensure that their current arrangements reflect their aspirations for the future.