How Does Pension Transfer Advice Work for UK Expats?

In this guide, we’ll explain how professional pension transfer advice can help UK expats transition to a new pension scheme with minimal stress and risks.

What Is Pension Transfer Advice?

Pension transfer advice is a service you receive from a financial adviser regarding moving your pension to a different scheme or provider. It covers every aspect of a pension transfer, from an objective assessment of your current scheme to the personalised recommendation on the best option to help you avoid high tax charges and ensure legal compliance.

A pension transfer typically refers to moving a defined benefit (final salary) pension or a defined contribution workplace pension to a defined contribution personal pension. It can also be associated with moving your personal pension from one scheme to another.

Do I Need Pension Transfer Advice?

The UK law mandates you to seek pension transfer advice from a qualified specialist if you:

1. Want to transfer a defined benefit pension with a transfer value of £30,000 or more.
2. Are transferring a defined contribution pension that has a guaranteed annuity rate (or any other benefit) with a value that exceeds £30,000.

Pension transfers are complicated, and mistakes in the process can be costly, which is why seeking professional advice on your pension transfer is always recommended. A pension transfer financial adviser can:

• Review your current situation.
• Offer their recommendation on whether to proceed with the transfer and which scheme aligns with your circumstances and plans the most.
• Help you with paperwork to prevent mistakes and delays.

What Can You Get UK Pension Transfer Advice On?

Pension transfer advice covers several key areas, including:

• Compliance with relevant laws: The advice should disclose relevant rules and regulations that dictate the transfer process and help you transfer your pension while remaining fully compliant.
• Tax implications: Pension transfers often include complex taxation, and the advice you receive should present the implications that apply to your circumstances. It should also cover the best way to make your transfer as tax-efficient as possible.
• Best way to maximise benefits: If your goal is to maximise your income in retirement, the advice should recommend schemes with high investment flexibility to help you diversify your portfolio with minimal risks.
• Tailored solutions: Professional pension transfer advice is always personalised to your circumstances. When structuring advice, a specialist will observe your current pension scheme and retirement plans, as well as market trends, interest rates, and investment opportunities, to determine the best solution for your retirement needs.

Types of Pension Transfer Advice UK Expats Can Get

Pension transfer specialists can offer two types of advice:

1. Abridged advice
2. Full advice

Abridged Advice

Abridged advice is an optional service that involves examining your circumstances and retirement plans to a certain extent. For example, it cannot cover the topic of lifetime allowance, even though it may be relevant to you. Some of the areas it may analyse include:

• Your desired age of retirement.
• The risks of not transferring the pension.
• The implications of switching from guaranteed to flexible income.
• Your experience in terms of financial investments and attitude towards risk.
• Your financial needs in the future and whether the current scheme can meet those needs.
• Potential alternatives to transferring.

Abridged advice is a viable option for those who have doubts about their suitability for the transfer and don’t want to invest in full advice yet. If you eventually decide to seek full advice, the cost of the abridged advice will typically be offset against the full price.

Alternatively, if you’re looking for an even faster, low-commitment way to gain insight into your options, consider scheduling a complimentary discovery call with Titan Wealth international.

In this 15- minute session, we’ll:

1. Understand your goals and challenges.
2. Explain our approach to managing pension transfers.
3. Outline how our comprehensive pension transfer assessment report can help you make the right decision and determine your suitability.

According to the Financial Conduct Authority (FCA), abridged advice can have two potential conclusions, as presented in the following table:

Full Advice

Full advice is the “standard” service every regulated pension transfer specialist offers. It involves a thorough evaluation of your situation, expenses, and goals to determine the best transfer option. A specialist will create a report containing the pros and cons of the transfer, a detailed financial assessment, and guidance on pension consolidation (if applicable).

As the research is more extensive, the full advice process takes longer than abridged advice—but it’s the only way to get an expert recommendation on how to proceed with the transfer.

What Does the Pension Transfer Advice Process for UK Expats Entail?

The transfer advice process can vary in length and complexity depending on factors such as:

• Your current pension scheme.
• Your country of residence.
• Your long-term plans.
• The specialist you’re working with.

If you choose to seek pension transfer advice from the experts at Titan Wealth International, you’ll receive a complimentary pension transfer review. This comprehensive process includes a thorough analysis of your current pension scheme, providing detailed insights into the pros and cons of transferring to a different one.

To ensure clarity and confidence in your decision-making, the review is structured into three key stages, each designed to guide you seamlessly through the transfer process:

Step 1: Initial Documentation and Pension Details

The process begins with you completing a Letter of Authority, enabling our pension department to liaise directly with the trustees on your behalf. This step involves gathering critical details about your pension, including:

• Cash Equivalent Transfer Value (CETV) and a full breakdown of GMP and contracting-out benefits.
• Member’s length of pensionable service, observed salary, and date of exit from employment.
• Expected retirement date or age, including any early retirement options and penalties.
• Contracting-out status of the scheme and any applicable dates.
• Details of any AVCs, purchase of added years, or transfers made by the member.
• Information on death benefits, including spouse/partner options, guarantee periods, and lump sum death benefits (pre- and post-retirement).
• Revaluation and escalation rates for all retirement benefit sections.
• The scheme’s funding status.
• Assumed leaving date if the scheme is currently active.

Step 2: Personal Financial Assessment

Once the required pension details are received, an advisor will contact you to discuss your current financial situation and future goals. During this session, the advisor gathers key information, including:

• Anticipated future income from all sources.
• Your current expenses and financial obligations.
• Where you currently reside and which county you plan to retire in.
• Whether you require immediate funds upon retirement for a significant expense or prefer a steady income stream.

This step typically takes 30 to 90 minutes, depending on the complexity of your situation.

Step 3: Delivery Pension Transfer Assessment Report

In the final step, we provide you with a comprehensive Pension Transfer Assessment Report. This report combines the details of your pension with your financial situation to offer tailored recommendations. It includes:

• Assessment of your defined benefit scheme: A projection of how your current scheme is expected to perform during retirement, including income and tax forecasts.
• Cashflow forecast: A detailed overview of your expected income during retirement, incorporating current assets anticipated to generate income.
• Available transfer options: A comparison of your transfer possibilities, explaining the differences between not transferring, transferring to a UK SIPP or an overseas QROPS.

Risks of Not Getting Pension Transfer Advice From a Specialist Firm

If UK expats choose not to work with specialist firms that are accredited to handle complex cross-border transfers, they could face the following risks:

Minimise these risks by seeking pension transfer advice from a reputable and accredited specialist firm like Titan Wealth International. Our financial advisers will thoroughly evaluate your situation and offer a custom solution that complies with relevant laws, reflect the best practices in expat pension advice and align with your needs.

Pension Transfer Advice Checklist

If you suspect you’ve received pension transfer advice that isn’t in line with your retirement goals or carries risks you’re not comfortable with, here are a few questions that could help you identify poor pension transfer advice before you act on it:

1. Do you believe the advice matches your financial situation, preferences, and goals? A reputable specialist will ask about your retirement plans, current salary and expenses, health, investment and other income sources, debts, and readiness to take risks.
2. Do you feel the advice takes into account your current pension scheme? The advice should explain the pros and cons of your current pension scheme and what you will be giving up with the transfer. It should present an alternative to the transfer—if there is one that would allow you to achieve your retirement goals.
3. Do you think the advice you’ve received is objective and unrestricted? Some advisers work for specific pension providers and can only recommend their products, which doesn’t give you access to the widest possible range of pension solutions.
4. Does the advice discuss potential tax charges and other expenses you may face? The advice you receive should include details about potential fees to ensure you’re aware of all involved costs.
5. Do you feel the advice discusses unusual investments? Advice offered by reputable and qualified specialists will involve investing in reliable, well-performing funds, not parking schemes, forestry, or other atypical options.

If you suspect you received unsuitable advice, you can complain to the adviser directly, contact the Financial Ombudsman Service, or submit a claim to the Financial Services Compensation Scheme.

Get a Complimentary Pension Review

Get expert guidance on your final pension transfer with our complimentary pension review. Here’s what you’ll receive:

1. CETV analysis & pension tracing: We’ll retrieve and analyse your CETVs and track any lost pensions.
2. Pension transfer assessment report: A personalised report outlining the pros and cons of a transfer, including tax implications, long-term benefits, and our recommendations.
3. Retirement planning: Comprehensive financial assessment covering property, investments, and cross-border considerations, helping to create a tailored retirement plan.
4. Pension consolidation: Guidance on merging final salary, personal, or stakeholder pensions into one streamlined plan for easier management and reduced costs.
5. Second opinion review: Have you already received advice? We offer a complimentary service to provide a second opinion on advice you have received.