Working and living abroad is a reality for many UK citizens. And while some are comfortable with the financial implications of living as an expat, others worry that it will impact their flexibility to use their pensions. Fortunately, regardless of where you live in the world, a UK citizen is entitled to become a member of any pension plan or scheme registered in the UK. What are your options?
Leaving your pension funds in the UK
Whether your pension comes from a private entity or from the state, the provider will continue to hold on to the funds until you file a claim. Pensions for Expats work in the same way where an early payment at the age of 55 is allowable. If you plan to use your pension as part of an investment portfolio while still living as an expat abroad, it’s best to seek the help of an expert to ensure that you’re following all regulations.
Can you transfer your pension to your country of residence?
This question is a common concern for expats, especially those who are considering retiring abroad. However, this can be quite tricky because transferring your pension overseas is subject to certain conditions. In the UK, there is what’s known as the Qualifying Recognised Overseas Pension Scheme. But, not every pension plan meets the necessary qualifications. Also, there have been some controversies about this practice, which is why it’s critical to consult an expert first before making a move.
Paying for a UK pension fund while staying overseas
Even if you live abroad or work for an overseas employer, you can still take out a personal pension plan registered in the UK. This strategy is helpful in case you want to augment the pension your employer provides. However, the disadvantage of this option is that you may not be eligible for tax relief.
How will you enjoy your pension while living abroad?
Pension providers typically don’t pay out your pension into a foreign bank account. If you transfer the money from your UK account to your bank account overseas, the funds will be subject to additional fees and charges. Instead of transferring the money to a foreign account, it’s best to keep your pension in your UK account. You can still continue to transact online, albeit in a limited manner.
Can you invest your UK pension?
Yes, investing in your pension is an excellent financial strategy, even if you’re living abroad. Many expats invest in offshore stocks and bonds to take advantage of tax reliefs. Investing your money years before you retire is one way to grow your funds and ensure you live out the rest of your years comfortably.
Final thoughts
A pension scheme is intended for retirement use but should not be depended on as your only source of funds. Living abroad gives you plenty of opportunities to consider investing. If there’s an option to include your pension as part of your investment portfolio, then ask your fund manager about it. Although there are limitations to receiving a payout from or paying into your pension while living as an expat, there are still workarounds that will allow you to maximise its benefits.
