Robert Burns BA (Hons), FCCA , Cert PFS

Director

Premier Pension Solutions SL

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By Robert Burns BA (Hons), FCCA , Cert PFS - Mon 21st Nov 2011

 

Tumbit Approved Partner

If at some stage in the past you have worked in the UK then the overwhelming probability is that the answer to the question, “do you have a UK pension fund?” is “yes.”However, it is likely, if past experience is anything to go by, that you have little or no idea about how much your UK pension rights are worth or indeed how they are invested (if at all).

If you worked in the public sector perhaps as a doctor, nurse, or teacher, then you will have a deferred pension (sometimes called a frozen pension) in one of the UK public sector pension schemes. No fund as such is associated with these schemes as the cost of providing benefits comes mainly from the UK taxpayer of today.

THE DAMAGE ON PENSION FUNDS OF A CHANGE FROM RPI TO CPI

You may have read that the attempts of the UK Government to reduce their long term liability by reducing the benefits from public sector pension schemes is being challenged by strike action which will see more public servants walk off the job than has been seen for a generation.

Even those with deferred pensions have been affected. UK pension rights are generally protected in order to preserve their purchasing power by increasing them to allow for inflation. This inflation linking has to date been provided by way of a link to inflation measured by the Retail Prices Index (RPI). Although it sounds innocuous, the inflation link is now against the Consumer Prices Index (CPI). As over time the CPI is less than RPI by up to 1.5% p.a. this does immense damage to the real value of deferred UK public sector pensions.

THE PROSPECT OF FURTHER ATTACKS ON UK PENSION FUNDS

The wishes of the UK Government to reduce the UK deficit will no doubt result in further attacks on UK pension funds. No wonder that many of those who have UK pension rights but no longer live and work there have already exercised their right to take a transfer value and have transferred to a non UK scheme known as a Qualifying Recognised Overseas Pension Scheme (QROPS).

Doing this gives peace of mind and the opportunity to have control over how the pension fund is invested. There is a large selection of QROPS available in various jurisdictions. Some (like those in New Zealand) may allow for the immediate availability of a lump sum of up to 100% of the fund irrespective of age. Others in jurisdictions like Guernsey and the Isle of Man offer tax free investment growth, and critically control over the timing and amount of the income you are able to take once you are over age 55.

PASS ON UNUSED FUNDS UPON DEATH TO LOVED ONES

The icing on the cake is the ability to pass on the entirety of your pension fund after your death without any tax charges. Leave your pension fund in the UK and following your death 55% of it may be taken by the UK taxman, regardless of how long you have been a non-UK resident.

For further information about QROPS and Pension Planning opportunities please contact us today by clicking the link Here and leaving a few basic details on the form at the foot of the page.