Frozen Pensions, QROPS, Tax Tips

Frozen Pension Unlock Your Pension

Frozen Pension. How to Unlock your Pension for British Expatriates with Personal Pensions or Final Salary Schemes

If you are a British expat living abroad, you can now unlock your pension with a move to a QROPS and get access to a 30% lump sum rather than leave your money in a frozen pension in the UK.British expatriates living abroad can now unlock your pension with a move to a QROPS (Qualifying Recognised Overseas Pension Scheme). New rules in April 6th, 2012 have strengthened the QROPS market and you can now unlock your pension with a move to Malta, Gibraltar, the Isle of Man or New Zealand. Malta has become the de facto place with 59 Double Taxation Agreements in place with Gibraltar popular for British expatriates living in Thailand, the Philippines, the Caribbean and other destinations where no DTA exists between the country you reside in and Malta. New Zealand QROPS are also popular, but don’t allow the investment freedom of Malta and Gibraltar.

Frozen Pension. Britain ‘Agrees to Open Frozen Pension Talks’ with Australia

One of the biggest contentions for British expatriates living overseas is that their state pensions that they have paid into all their lives is not linked to inflation in certain countries, particularly in Australia, New Zealand and Canada. It is inflation linked for British expatriates resident in the Philippines. What this means is that for British expatriates residing in Australia, they would get a much smaller pension than if they had it paid into the UK. There have been a number of groups trying to lobby for reform with no result.

Well, the British Government is to open discussions with Australia regarding the UK’s controversial “frozen pensions” policy, according to Australian Minister, Jenny Macklin. She has heralded the beginning of talks on the frozen pensions issue as a “positive step” in the right direction.

The alleged breakthrough came after a meeting in London last Thursday between Iain Duncan Smith, Britain’s secretary of state for work and pensions, and the Australian government minister responsible for the frozen pensions issue, Jenny Macklin.

Ms Macklin, who is the minister for families, community services and indigenous affairs, has now issued a statement announcing that during their meeting Mr Duncan Smith gave her a commitment that the British Government would open discussions about the policy with the Australian government and to see options put forward by British pensioners living there.

Britain’s frozen pensions policy means that around 500,000 British retirees in over 100, mostly Commonwealth, countries have not had their British pensions increased in line with inflation since they emigrated. In some cases that was over 20 years ago when the basic British weekly pension was £54.15. It is now about £107.

More than half of those expats, about 252,000, are living in Australia. The Australian government provides around 190,000 of them with means-tested Australian assistance to make ends meet. This assistance costs Australia about $A110 million (approximately £71 million) a year.

The International Consortium of British Pensioners (ICBP) has suggested to the UK Government that it abolish Britain’s frozen pensions policy in annual stages, initially by defrosting the pensions of expats who are 85 or older.

Frozen pensioners who are in the 85-plus age group are considered to be the most impoverished of all the expat retirees. Many emigrated when they reached retirement age 20 years ago. In line with the frozen pensions policy they have not had an increase since then. Twenty years ago, the basic British pension was £54.45 a week. It is now £107.45.

The pensioners’ consortium believes that the UK Government is seriously considering phasing in parity. An ICBP spokesman, Canada-based John Markham, said that during a recent discussion with a “senior British cabinet minister”, he pointed out that it would cost a comparatively modest £100 million a year to grant immediate parity to frozen pensioners in the 85-plus age group.

In her statement, Ms Macklin left no doubt that during her meeting with Mr Duncan Smith she made it plain that Australia was losing patience with Britain’s refusal to discuss the issue.

“All UK pensioners paid into the National Insurance Fund under the same rules, in good faith, and the Australian government believes they should be paid their pensions under the same conditions no matter where they now live,” she said.

“I made my feelings on this issue clear to my UK counterpart. He’s now agreed to look at the options that have been proposed by UK pensioners in Australia – it’s a positive step forward on an important issue.”

Before British residents living in Australia get too excited, the Department of Work and Pensions however said that there were currently “no plans” to change the pensions policy and the UK government is trying to reign in debt, not increase it.

“The UK state pension is payable worldwide but is only uprated abroad where we have a legal requirement or reciprocal agreement,” a spokesman said.

“We will continue to speak to officials as part of a wider commitment to exchange views on a range of policies. The Government has no plans to change its current arrangements for uprating pensions paid abroad.”

So, it seems like the DWP would need some sort of reciprocal agreement in place in order to allow state pensions to increase in line with inflation for British expatriates in Australia.

Furthermore, it is not only state pensions that have been frozen, but also Graduated Retirement Benefit and SERPs to supplement the state pension. Luckily, you can move SERPs into a QROPS and reinvest them rather than leaving them frozen in the UK.

Unlock My Pension

So, you may ask, how do I unlock my pension? What would be the benefit if I unlock my pension?

Unlocking a Frozen Pension

For those wishing to unlock your pension scheme, you can move your private pension or final salary scheme to a QROPS which has a number of benefits including:

  • Avoiding 55% tax upon death when drawing benefits that the UK imposes
  • Protection from UK IHT
  • Avoiding UK income taxes which can range from 20% – 45%
  • Moving your pension into the currency of your choice. If you live in Europe, you may want to hold your pension in Euros so that your pension income doesn’t fluctuate with currency fluctuations.
  • Freedom of investment choice. You can move your pension funds into a QROPS ‘in specie’, which means you can use the same funds, but under the QROPS umbrella for tax shelter. Alternatively, you could invest in almost whatever mutual funds, shares,  ETF’s, gold funds, silver funds or bond funds that you choose. You want to own Apple or Google shares, no problem. If you want ultra low risk, we can organize that for you. We also can supply you with an international annuity at a later date if you want.
  • Access to your pension at 55.
  • An increased lump sum of 30% rather than the 25% in the UK if you have been offshore for 5 years.
  • Ability to draw a higher pension income than in the UK if you wish.

If you wish to unlock your pension, please send enquiries to

Frozen Pension Unlock Your Pension by

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