British Expatriate Executives and Oil and Gas Pension Contributors Rushing to Get their UK Pensions Offshore Before Pension Rule Changes in April 2014
British expatriates, in particular those in high salaried careers such as oil drillers, oil & gas workers, construction managers, software developers, engineers, analysts and corporate directors are increasingly moving their pensions out of the UK due to a decision by Chancellor George Osborne to reduce the Lifetime Allowance (LTA) on UK pensions according to those in the pension industry. Those in high paid industries such as oil & gas and banking need to make sure that they are protected from the LTA increase coming in April 2014. Those with pensions in oil and gas pension funds should look at the possibility of moving their pensions offshore.
The LTA will go down from the 6th April, 2014 from the current £1.5 million to £1.25 million and is a real cause for concern for many British expats as more than 1 in 10 Brits now live abroad. QROPS Specialists are seeing pension flows offshore into QROPS from high paid oil & gas workers living in Dubai, Qatar, Oman and British expats living in Thailand, Vietnam and around Asia.
Some of the largest financial advisory firms are seeing 35% month-on-month increase in enquiries from British expats seeking a transfer out of a UK pension scheme into a QROPS.
This follows on from a 15% increase in pension transfers year-on-year. Many British expats who have their pensions in the UK, but have a new home in France are increasingly worried about the new limit and there have been an increasing number of enquiries from expats trying to move their pension out to a QROPS before they get hit with the new higher taxation.
From the 6th April, 2014, the amount that can be saved tax free in a pension will fall by a quarter of a million pounds (£250,000). The reduction in the LTA threshold will put those with retirement funds over this limit at risk of facing taxes of up to 55%.
Once UK pension funds are outside the UK tax net, they will become exempt from the LTA limit even if the pension pot increases in the future. Seeing as the LTA and other pension allowances are being targeted by UK politicians, it makes sense to try to get high valued pension pots outside the UK tax net where possible.
Mounting UK government debt, an ageing population and rising pension liabilities are compelling reasons why British expats are getting their pensions outside the UK tax net whilst they still can. New government think tanks are already looking into new ways to tax pensions and reduce tax allowances on pensions, especially on higher rate tax payers.
A pension pot with 1m GBP in there already and growing at 5% per year will breach the LTA in less than five years.
Once a pension is transferred into an offshore QROPS, there are a number of benefits that QROPS Specialists can help you with:
- Transfer pension to EUR or USD to avoid exchange rate charges and fluctuations.
- GBP has fallen 20% against EUR in the last 5 years. On a 1m GBP pension pot, that is a fall in your annual pension income from 50k GBP to 40k GBP per year!
- Invest in the mutual funds or ETFs you wish. Pick the top performing managers in the world such as Warren Buffett or JPMorgan.
- Spread risk of currency depreciation by investing in silver or gold if you want
- If you are risk averse, park your pension monies in cash, bonds or a good money market fund to take advantage of exchange rate fluctuation.
- If you have a final salary scheme, normally the spouse only receives half your salary as an income upon death. Under a QROPS, your spouse would get the whole pot as a lump sum. That means the spouse gets 1m GBP as a lump sum rather than 25k GBP per year.
- You can choose who gets your pension pot upon death. You choose the beneficiaries, e.g. 50% to wife, 25% to child one, 25% to child two… or donate to charity.
Send your pension enquiries to us at firstname.lastname@example.org://plus.google.com/u/0/109576387463330539887