An expat pension review looks at your existing pensions, retirement savings and investments to assess whether they remain suitable for your circumstances and retirement plans.
For British expats, a review can also consider how living abroad affects your UK pensions, including tax treatment, currency exposure, investment risk, charges and access to benefits. Where appropriate, it can compare the advantages and drawbacks of keeping your existing arrangements with other options available to you.
What You Will Learn
- Understand the importance of pension reviews in aligning your retirement goals.
- Discover why regular reviews are crucial, especially for British expats and during life changes.
- Learn how pension reviews can help maximise your retirement income and reduce risk.
A pension review aims to identify any potential shortcomings or areas of improvement in your retirement strategy. Doing so helps ensure that your retirement income and financial security are sufficient and aligned with your retirement goals. Regular pension reviews are crucial as they account for changes in your circumstances, financial markets or pension regulations. These changes can impact the performance of your pension funds and the suitability of specific retirement strategies, making it essential to adjust plans accordingly. Several factors should be considered during any pension review. These include:
- The current value of your pension pot and investments.
- Your projected retirement income.
- The fees associated with your pension plans.
- Whether retaining or transferring the pension could change the costs, investment options, withdrawal arrangements or currency exposure, and what tax consequences would arise in your country of residence.
- When you can access your UK pension under the scheme rules and whether part of the benefits may be available as a pension commencement lump sum.
- The performance of the pension funds and their risk levels.
- Your retirement goals and any changes in your circumstances.
- The impact of any regulatory changes on the pension plans.
- How much will your current pension(s) pay you vs. alternative options for your specific scenario?
- For defined benefit pensions, the review should check how your benefits increase before and after retirement, including any inflation measure, caps or other rules that apply to different parts of the pension.
- For British expats, the implications of living abroad on pension regulations, taxes, and access to pension funds.
As an expat, regular pension reviews are crucial to optimise your savings, manage currency risks, and navigate tax systems, ensuring a secure and comfortable retirement.
Ryan Yeomans
Private Wealth Director
Types of Pension Reviews
There are several different types of pension reviews which include:
- Pension plan review.
- Pension scheme review.
- Pension fund review.
- Personal pension review.
Pension Plans Review
There are two types of pension plans you can have reviewed:
- Defined Benefit (DB) pension plans
- Defined Contribution (DC) pension plans.
Defined Benefit Pension Plans (DB)
Defined benefit pensions pay an income calculated under the scheme rules, usually based on pensionable salary or career-average earnings and length of service. A defined benefit pension review will involve the following:
- Reviewing the scheme’s funding position and, where relevant, the financial strength of the sponsoring employer, together with the protections that may apply if the employer or scheme gets into financial difficulty.
- Outline any potential benefit changes to your plan.
- Explain the impact of inflation on your retirement income.
- Analyse your wider financial position, including how the abolition of the Lifetime Allowance and the introduction of new pension lump sum allowances may affect your retirement plans. If you are eligible for UK pension tax relief and your scheme uses relief at source, an £80 contribution is normally increased to £100 in the pension. Higher- and additional-rate taxpayers may be able to claim further relief. If you live abroad, your eligibility for UK pension tax relief will depend on your circumstances and the rules that apply after leaving the UK.
- Where a transfer is available, the review may compare keeping the defined benefit pension with transferring to another arrangement. A transfer means giving up the scheme’s safeguarded benefits, including its promised retirement income. If your UK defined benefit pension has safeguarded benefits worth more than £30,000, UK law will normally require you to obtain appropriate independent advice from an FCA-authorised firm before the trustees can transfer those benefits to a defined contribution arrangement. This requirement also applies if you live overseas.
- Where regulated advice is being provided, the adviser should assess whether keeping the existing pension or transferring is suitable for your circumstances.
Defined Contribution Plans (DC)
For defined contribution (dc) pension plans, the retirement income depends on your contributions and the investment performance of those contributions. What you receive from a defined contribution pension depends on factors including how much has been paid in, investment performance, charges and how and when you take the money. A pension review for defined contribution plans involves the following:
- Check all contributions made and where the funds have been invested.
- Examine the investment options, fees, and overall performance to ensure they align with the individual’s retirement goals.
- Review the pension provider, investment structure and relevant protections, as well as the investments, charges and asset allocation within the pension.
- Analyse your wider financial position, including how the abolition of the Lifetime Allowance and the introduction of new pension lump sum allowances may affect your long-term plans. Where you remain eligible for UK pension tax relief and your pension operates relief at source, an £80 net contribution is normally increased to £100. Higher- and additional-rate taxpayers may be able to claim further relief. For British expatriates, eligibility for UK pension tax relief depends on your circumstances and the rules that apply after leaving the UK.
- If you are a British expatriate, the review may compare keeping your existing UK pension with other arrangements that are relevant to your circumstances, such as a UK SIPP or, where appropriate, a transfer to a QROPS. Other non-UK pension arrangements need to be considered separately.
QROPS Review
If you are a British expat, a pension review may also assess whether an existing or potential Qualifying Recognised Overseas Pension Scheme (QROPS) is suitable for your circumstances. This includes checking the scheme’s current QROPS status and whether it appears on HMRC’s published list of recognised overseas pension scheme notifications. The review should check whether a 25% Overseas Transfer Charge would apply and whether you meet one of the available exclusions. Since 30 October 2024, there is no longer a general Overseas Transfer Charge exemption simply because a QROPS is established in the EEA or Gibraltar.
The review should also check your available Overseas Transfer Allowance. The standard allowance is usually £1,073,100. If a transfer exceeds your available allowance, a 25% tax charge can apply to the excess, even where an exclusion from the Overseas Transfer Charge would otherwise apply.
Pension Scheme Review
Occupational Pension Scheme
Occupational pension schemes are workplace pensions established by an employer and may provide defined benefit or defined contribution benefits.For a defined benefit occupational scheme, the review should focus on the benefits promised under the scheme rules, the scheme’s funding position, relevant employer support and your expected retirement income. For a defined contribution occupational scheme, investment performance, charges and asset allocation are more directly relevant to the value of your pension pot.
Group Personal Pensions (GPPs)
Group personal pensions are defined contribution pensions that some employers offer their workers. If you have a GPPs, you and the employer typically make contributions. Pension reviews for group personal pensions involve assessing the investment options, fees, and overall performance to ensure they align with your retirement goals.
Pension Fund Review
Investment Performance
A pension fund review should evaluate the historical performance and projected returns of the investments held within the pension provider. This involves comparing the performance to relevant benchmarks and assessing the consistency of returns over time.
Fund Management Fees
Examining the fees associated with pension funds is essential to ensure they are competitive and not eroding investment returns. The review should compare the fees with similar funds in the market and evaluate the cost-effectiveness of the fund management.
Risk Assessment
Assessing the risk profile of pension funds is crucial to ensure they align with your risk tolerance and retirement goals. This involves evaluating the fund’s asset allocation, diversification, and exposure to market fluctuations.
Personal Private Pension Review
Self-Invested Personal Pensions (SIPPs)
SIPPs are UK personal pension plans allowing you to make investment decisions. Pension reviews for SIPPs involve evaluating the investment performance, fees, and suitability of the investments in relation to your risk tolerance and retirement objectives.
Individual Retirement Accounts (IRAs)
IRAs are personal retirement savings accounts available in some countries, such as the United States. A pension review for IRAs includes assessing the contribution limits, investment options, fees, and tax implications to optimise the account’s growth and minimise tax liabilities.
Individual Savings Accounts (ISAs)
ISAs receive favourable tax treatment in the UK and can form part of your wider retirement savings. If you already hold an ISA when you move abroad, you can generally keep it, but you will usually be unable to make further contributions while you are non-UK resident, subject to limited exceptions. The UK tax advantages of an ISA may not be recognised in your country of residence, which may tax income or gains arising within the account. A review should therefore consider your existing ISA investments, charges and how the account is treated for tax purposes where you live.
Planning an Expat Pension Review?
Why Do I Need an Expat Pension Review?
There are several reasons British expats should have a regular pension review. These include:
- Ensure your retirement goals are being met.
- Identify gaps in your retirement savings.
- Adjust for any life changes since your last pension review.
- Help you understand the implications of different pension systems.
- Manage currency risk.
- Address any tax implications for your pension.
- Explaining how to access your state pension.
- Seeing if you are suitable for a pension transfer.
Ensuring Your Retirement Goals Are Met
Pension reviews are essential to meet your retirement goals. By assessing the performance and suitability of your pension plans, investments, and overall retirement strategy, you can make informed decisions to stay on track towards your desired retirement income and lifestyle.
Identifying Potential Gaps in Retirement Savings
Regular pension reviews can help identify any potential gaps in your retirement savings. By spotting these gaps early, you can take the necessary steps to increase your contributions, adjust your investment strategy, or consider additional sources of retirement income.
Adjusting for Life Changes
Life changes, such as marriage, divorce, or a change in employment, can significantly impact your retirement planning. A pension review helps you reassess your retirement strategy and make any necessary adjustments to ensure that your pension plans remain aligned with your goals.
Adapting to Different Pension Systems
If you’re a British expat you may find yourself navigating different pension systems in your new country of residence. Pension reviews can help you understand the implications of these systems on your retirement planning and make necessary adjustments to ensure they continue working towards your retirement goals.
Managing Currency Risk
For British expats, currency fluctuations can significantly impact the value of your pension savings, both in your home and host countries. Regular pension reviews can help you assess the currency risk associated with your pension plans and investments and make informed decisions to minimise the impact of currency fluctuations on your retirement income.
Addressing Tax Implications
The tax implications of holding pension assets in different countries can be complex for British expats. A pension review alongside UK expat tax advice can help identify tax liabilities and opportunities for tax efficiency in your home and host countries, ensuring that you maximise your retirement income and minimise your tax burden.
Accessing State Pension Benefits
A review can also check your UK State Pension entitlement and whether it will continue to increase while you live abroad. The UK State Pension is payable overseas, but annual increases are not available in every country.
Considering Pension Transfers
As a British expat, you may be able to transfer certain UK pension benefits to a Qualifying Recognised Overseas Pension Scheme (QROPS), depending on the type of pension you hold and your circumstances. A QROPS is not necessarily suitable simply because it is based in your country of residence. Before considering a transfer, you should check the scheme’s QROPS status, tax treatment, charges, investment options and regulatory position, as well as whether the 25% Overseas Transfer Charge or Overseas Transfer Allowance could apply. Getting advice on expat pensions can help you assess whether a transfer is suitable for your circumstances, taking into account the potential benefits, costs, tax implications and risks.
Pension Advice Tailored for Expats and Global Citizens
Ensuring that your pensions are aligned with your financial goals requires expert advice. At Titan Wealth International, our pension advice services for expats provide holistic strategies to help expats and global citizens optimise their retirement planning, manage existing pensions, and ensure future financial security.
Expat Pension Review Benefits
There are several benefits to reviewing your pension, these include:
- Maximising your retirement income.
- Minimising your risk.
- Ensuring you are tax efficient.
Maximising Retirement Income
One of the primary benefits of a pension review is the potential to maximise your retirement income. By regularly evaluating the performance of your pension funds, investments, and overall retirement strategy, you can make informed decisions that help grow your savings and optimise your retirement income.
Minimising Risk
Pension reviews allow you to assess the risk profile of your pension funds and investments. This ensures that your investments align with your risk tolerance and retirement goals, helping you minimise risk and protect your retirement savings.
Ensuring Tax Efficiency
Understanding the tax implications of your pension plans and investments is crucial for minimising tax liabilities and maximising retirement income. A pension review can help you assess the tax efficiency of your pension plans and recommend any adjustments to improve tax efficiency.
How Often Should I Request a Pension Review?
It’s recommended to have a pension review every few years or when significant changes in your financial situation or pension regulations occur. This helps you stay informed about your pension, get a good estimate of your pension transfer value (CETV) and make necessary adjustments to align with your retirement goals.
Book a Complimentary Discovery Call
Book a complimentary discovery call with one of our experts to discuss your UK pension arrangements as an expat. The call is an initial, non-obligatory conversation designed to help you understand the options that may be available, which could include retaining your pension in the UK, transferring to an alternative arrangement, or considering an international structure where appropriate.
During the call, we can help you explore:
- The key features, potential advantages, and limitations of the main UK pension options for expats.
- How UK pension rules may interact with overseas tax systems, including the relevance of double taxation agreements.
- How factors such as residency, intended retirement location, and long-term plans can influence which options may be suitable to explore further.
This is an information session only; it will not include a personal recommendation. If regulated financial advice is required, we will explain how this can be provided.
Finding the Right Adviser for Your Pension Review
To find the right adviser to help with your pension review, you should consider the following:
- What are the adviser’s credentials and experience?
- Do they have a transparent fee structure?
- What are their reviews like?
Credentials and Experience
Ensure the pension review financial adviser you choose has the qualifications and experience to provide the best advice. If the review involves a UK defined benefit pension transfer, check that the UK firm providing the transfer advice is FCA authorised and has the necessary pension transfer permissions. This remains relevant even if you live abroad. Additionally, consider the pension expert’s experience in pension reviews and their familiarity with UK pension regulations and schemes.
Transparent Fee Structure
Understanding the fee structure of the pension review adviser you choose is crucial. Opt for a provider with a transparent fee structure that details any charges associated with the review process.
Quality of Their Reviews
Customer reviews are vital in understanding any adviser or advisery’s suitability to do your pension review. Look for providers that offer prompt communication, accessibility, and a willingness to address your concerns and answer your questions. Reading reviews and testimonials from previous clients can help you gauge the quality of a potential pension review provider.
Frequently Asked Questions
If you have lost track of an old UK workplace or personal pension, start by gathering details such as the names of previous employers or pension providers and the dates you worked for them. The government’s free Pension Tracing Service can help you find contact details for the relevant scheme or provider, although it will not tell you whether you have a pension or what it is worth. Once you have the contact details, you can approach the scheme or provider directly for information about your benefits.
If you remain eligible for UK pension tax relief, relief on personal contributions is generally available on contributions up to 100% of your relevant UK earnings. Separate rules can allow tax relief on contributions of up to £3,600 gross where relevant UK earnings are lower or nil.
With relief at source, you make a net contribution and the pension provider claims basic-rate tax relief from HMRC. For example, an £80 net contribution is normally increased to £100 in the pension. Higher- and additional-rate taxpayers may be able to claim further relief.
For British expatriates, eligibility for UK pension tax relief depends on whether you continue to meet the relevant UK individual rules after leaving the UK. The annual allowance is a separate pension tax rule and may also need to be considered.
If you live abroad, the tax treatment of your UK pension will depend on the tax rules in your country of residence and the relevant double taxation agreement with the UK. Many UK tax treaties give the country of residence taxing rights over private pension income, but the position varies between treaties. Government-service pensions and pension lump sums may be treated differently. A pension lump sum that is tax-free under UK rules should not be assumed to be tax-free in your country of residence.
You may be able to take a pension lump sum that is tax-free under UK pension rules, subject to the applicable allowances and your scheme’s rules. However, your country of residence may apply its own tax treatment to the payment, and the relevant double taxation agreement may affect which country has taxing rights. You should therefore check both the UK and local tax position before taking a pension lump sum.
A Qualifying Recognised Overseas Pension Scheme (QROPS) may be worth considering in some circumstances, but transferring a UK pension overseas is not automatically beneficial simply because you live abroad. The decision depends on factors including the type of UK pension you hold, your country of residence, the location and status of the QROPS, charges, investment options, local tax treatment and whether the Overseas Transfer Charge or Overseas Transfer Allowance applies.
If you have a defined benefit pension, transferring also means giving up safeguarded benefits, including the scheme’s promised retirement income. Additional UK advice requirements may apply before a transfer can proceed.
The Lifetime Allowance was abolished from 6 April 2024. The current regime includes the Lump Sum Allowance and the Lump Sum and Death Benefit Allowance. For many people, the standard allowances are £268,275 and £1,073,100 respectively, although the amounts available can differ where protections or transitional rules apply.
For British expatriates considering an overseas pension transfer, the separate Overseas Transfer Allowance may also be relevant. A pension lump sum that is tax-free under UK rules may still be taxable in your country of residence, depending on local tax law and the applicable double taxation agreement.
Your UK State Pension can be paid overseas, but whether it increases each year depends on where you live. Annual increases generally apply if you live in the EEA, Gibraltar, Switzerland or a country where a relevant social security agreement with the UK provides for increases. Some countries with UK social security agreements, including Canada and New Zealand, do not receive annual UK State Pension increases. Your country of residence should therefore be considered when estimating your future State Pension income.
There is no fixed review interval that suits every British expatriate. A review may be appropriate periodically and when something material changes, such as moving country, changing tax residence, approaching retirement, changing your intended retirement location or following a significant change to pension or tax rules.
Key Takeaway
For British expats, a pension review can help determine whether existing UK pensions and retirement savings still suit your circumstances and plans. Living abroad can affect how pension income is taxed, how currency movements affect its value, and whether options such as retaining, consolidating or transferring a pension are appropriate.
There is no fixed timetable for reviewing your pensions, but it makes sense to revisit them when something significant changes, such as moving country, changing tax residence or approaching retirement. A review can also identify changes to pension rules, costs, investment risk or benefits that may affect your plans.
Schedule a complimentary discovery call with Titan Wealth International to discuss your UK pensions and the options that may be relevant while living abroad.
The information provided in this article is not a substitute for personalised financial, tax or legal advice. You should obtain financial advice and tax advice tailored to your particular circumstances and in respect of any jurisdictions where you may have tax or other liabilities. Titan Wealth International accepts no liability for any direct or indirect loss arising from the use of, or reliance on, this information, nor for any errors or omissions in the content.
