Essential financial planning for retired expats
A long and rewarding retirement is something that all of us look forward to. Having spent our lives working hard, and hopefully making the world a slightly better place, our retirement is the time to put up our feet, relax, spend time in the company of those who we love and explore some new hobbies.
Recent turmoil in global finance has cast a dark shadow over the pensions market, and those approaching retirement age need to think very carefully about their options. Retirement funds across the globe have been decimated, with reductions of up to 25% in some cases. Despite the fact that retirement ages are getting higher, medical advances and general better health means people are living longer. This could result in a retirement that is a lot longer than you had considered. A 20 year retirement is now a very real possibility and this may even stretch to 30 years. Having sufficient funds in place to enjoy a comfortable lifestyle this time is a crucial element to financial planning. Take a look at your State Pension Forecast to see what you can expect to receive from the government.
In an attempt to promote greater transparency in pension provision the government has launched the National Employment Saving Trust, a new pension scheme aimed at the general public in the UK. This scheme follows the money purchase model, meaning your pension contributions are invested in a fund which is then used to purchase an annuity which will fund your retirement. The size of your eventual fund depends on the value of your contributions, how well the fund has been managed and what has been deducted in management fees.
When nearing retirement age it is crucial to research where to get the best deal when purchasing your retirement annuity. A staggering 66% of pensioners take the deal provided by their pension company even though this may not be the best option for them. Ensure that you get independent financial advice offering you the full choice of the market. Shopping around could add as much as 10% to your ongoing annual income so it’s worth spending some time.
If you are a British expat seeking to retire abroad new rules apply, removing many restrictions on how you manage your pension, allowing access to valuable tax benefits. A Qualifying Recognised Overseas Pension Scheme (QROPS) is a new type of pension product that is recognised by the British government and is eligible to receive financial transfers from UK registered pension funds. If you are living outside of the UK you can transfer deferred company and personal pensions to a QROPS. As long as you have not purchased an annuity any pension can be transferred. If it’s a final salary scheme its key that the pension has not commenced yet.
The financial benefits can be very rewarding. If you have been living outside of the UK for five years or more, then HMRC rules about income and capital no longer apply. If you intend to retire overseas, or live in another country for more than five years then you should consider a QROPS. Taxation on income from this pension will be based on taxation laws within the country that you are resident. This can be boon as in many countries these laws can be more favourable than in the UK. It’s vital to obtain independent financial advice about whether this route is the best one for yourself. To help you take a look at the bigger picture in your financial life take a look at MoneyVista, which is packed with useful guides.
Recent turmoil in global finance has cast a dark shadow over the pensions market, and those approaching retirement age need to think very carefully about their options. Retirement funds across the globe have been decimated, with reductions of up to 25% in some cases. Despite the fact that retirement ages are getting higher, medical advances and general better health means people are living longer. This could result in a retirement that is a lot longer than you had considered. A 20 year retirement is now a very real possibility and this may even stretch to 30 years. Having sufficient funds in place to enjoy a comfortable lifestyle this time is a crucial element to financial planning. Take a look at your State Pension Forecast to see what you can expect to receive from the government.
In an attempt to promote greater transparency in pension provision the government has launched the National Employment Saving Trust, a new pension scheme aimed at the general public in the UK. This scheme follows the money purchase model, meaning your pension contributions are invested in a fund which is then used to purchase an annuity which will fund your retirement. The size of your eventual fund depends on the value of your contributions, how well the fund has been managed and what has been deducted in management fees.
When nearing retirement age it is crucial to research where to get the best deal when purchasing your retirement annuity. A staggering 66% of pensioners take the deal provided by their pension company even though this may not be the best option for them. Ensure that you get independent financial advice offering you the full choice of the market. Shopping around could add as much as 10% to your ongoing annual income so it’s worth spending some time.
If you are a British expat seeking to retire abroad new rules apply, removing many restrictions on how you manage your pension, allowing access to valuable tax benefits. A Qualifying Recognised Overseas Pension Scheme (QROPS) is a new type of pension product that is recognised by the British government and is eligible to receive financial transfers from UK registered pension funds. If you are living outside of the UK you can transfer deferred company and personal pensions to a QROPS. As long as you have not purchased an annuity any pension can be transferred. If it’s a final salary scheme its key that the pension has not commenced yet.
The financial benefits can be very rewarding. If you have been living outside of the UK for five years or more, then HMRC rules about income and capital no longer apply. If you intend to retire overseas, or live in another country for more than five years then you should consider a QROPS. Taxation on income from this pension will be based on taxation laws within the country that you are resident. This can be boon as in many countries these laws can be more favourable than in the UK. It’s vital to obtain independent financial advice about whether this route is the best one for yourself. To help you take a look at the bigger picture in your financial life take a look at MoneyVista, which is packed with useful guides.
