Financial Planning for Retirement When Relocating Both Short and Long-Term

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Financial Planning for Retirement When Relocating
both Short and Long-Term
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Whether you are moving overseas permanently,
taking up a new job post for a couple of years,
or hedging your bets before you make any
decisions about where youd like to settle down
with your family, your retirement plans should
always be an important consideration. Although
financial planning for retirement might seem
years away, or you may assume there isnt
anything you need to do immediately to protect
your pension wealth, proactive pension management
can make a significant difference to your future
finances. UK nationals who live in another
country for any period of time should evaluate
how this may impact their eligibility for the
State Pension, how they intend to make
contributions to private or workplace pensions
from abroad, and how best to manage pension
products well run through some of the primary
reasons this is worthwhile.
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Managing State Pension Entitlement during an
International Move
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• British expats are entitled to the State Pension
  regardless of where they live, provided they have
  made enough National Insurance (NI) contributions
  during their working lives. In some countries,
  the amount payable may be fixed at the date of
  your relocation, although in other jurisdictions,
  you may benefit from the annual increase
  calculated against the triple lock.
• A common challenge is that anybody who has lived
  abroad, even if for a short period, could find
  that their NI contributions have a shortfall
  impacting their eligibility to claim the State
  Pension. Disregarding this potential problem may
  mean you have limited opportunities in the future
  to pay shortfalls and secure this income stream.
• The best strategy is to request a State Pension
  statement to see how gaps in NI contributions
  have affected your eligibility. However, the
  sooner, the better because if you have a large
  shortfall stretching over a few years, it may be
  more feasible to make this up in stages rather
  than as a lump-sum payment.

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• Partial years can also be upgraded to full
  years with minimal contributions, often beginning
  at 15, which is an easy and low-cost way to
  avoid losing out on the State Pension, currently
  worth 10,600 per year.
• The State Pension is always remitted in GBP, so
  you may wish to think about how exchange rates
  will affect the value or decide whether to retain
  a UK bank account if there is the potential you
  will split your time between locations.
• We have previously looked at Expat Retirement
  Planning and examined why this level of planning
  is important, regardless of your age now or when
  and where you intend to retire.

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Dealing With Workplace Pensions When Living
Overseas
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• If you are relocating long-term, you may have
  clearer options in terms of deciding what to do
  with a defined benefit or defined contribution
  pension scheme if there is a certainty you wont
  be returning to the UK or wont be making any
  further contributions to the fund.
• Otherwise, the right way to proceed could depend
  on the terms and policies attached to the scheme,
  whether you can access your pension fund from
  abroad, and how this would affect your tax
  liabilities both in Britain and your overseas
  home.
• Most personal and workplace pension products are
  accessible from any location, although you may
  not be able to draw on the fund until you reach
  the minimal claimant age, and other conditions
  may apply. For expats living overseas
  permanently, a pension transfer is often the
  optimal solution but that isnt always the best
  financial solution.

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Transferring UK Pension Schemes Overseas
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• A defined contribution scheme could be
  transferred to an overseas pension fund,
  reinvested in a UK-based privately managed
  pension, or invested in a different product
  without necessarily impacting the gross value
  saved and offering options to structure your
  retirement savings efficiently.
• Defined benefit schemes are more complex as
  moving your funds could remove your right to a
  fixed income for life or of a minimum value on
  retirement. Our advice is always to consult with
  an experienced financial adviser who will
  evaluate your circumstances and the pension
  products you currently hold. They will create a
  tailored strategy to indicate the available
  options and which will be most advantageous.

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• Ignoring the issue, or assuming that you do not
  need to take action because you may return to the
  UK, could be a bad move. One example relates to
  the Lifetime Allowance (LTA), a recently
  abolished limit on the amount of pension wealth
  you can save in the UK without being exposed to
  additional taxation.
• If you were to move this year and transfer your
  pension, you would remove any exposure to this
  tax being reinstated likelihood this may happen
  if there is a change of governing party changes
  at the next general election. Failing to act
  could mean you miss a potentially short-term
  opportunity to significantly reduce the tax
  exposure linked with a higher-value pension.

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Tax Rules for Expats Drawing on a UK Pension Fund
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• Further considerations apply to financial
  products such as ISAs, tax rules in your overseas
  destination, and investment products which may
  make up part of your pension planning portfolio.
  ISAs are tax-efficient products for UK savers,
  but expats living abroad are not permitted to
  make any contributions, which could mean an
  alternative savings option is more appropriate.
• A similar analysis should be conducted to decide
  how best to manage any other products, savings,
  investments or assets since they may not be
  accessible from another country or may lose value
  if you relocate due to cessations in
  contributions, the risk of currency exchange
  rates, or rules on drawing funds from abroad.

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• The tax rules in your country of residence will
  also influence the viability of your pension
  planning, where some countries offer attractive
  flat-rate taxes for expats against
  foreign-sourced pension income. Others may
  include pension benefits in income tax
  calculations, which may impact the most
  beneficial way to proceed.
• In any circumstance, the key takeaway is that
  financial planning for retirement is important
  for every expat, at every stage of a move, and
  whether you expect to live overseas temporarily
  or want to build a new life in your dream
  destination.
• Please get in touch with your nearest Chase
  Buchanan Wealth Management team for more
  information about anything discussed in this
  guide or to arrange a convenient time to consult
  on your pension plans.

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etirement-relocating/