On the 9th of October last year I posted an article about the potential legal issues faced by UK pension and insurance firms post Brexit in regard to their ability to carry on servicing their clients based in the EU. One such issue was specifically their ability to continue making pension payments to their clients. The article can be found here:-
I concluded the above article stating that I thought it would be likely that a resolution to the problem would be achieved. However, 11 months on and the issue has once again been raised and covered in the press as it seems we are no nearer to a resolution:-
“Hugh Savill, director of regulation at the Association of British Insurers (ABI), said on Thursday that leaving the EU without a deal would cause “major inconvenience” to millions of pensioners, travellers and drivers.”
“retirees in countries like Spain risk losing access to pensions paid into U.K. banks.”
“One of the most significant parts of the no-deal advice published on Thursday said that, without an agreement, any UK insurance company paying – say – an annuity to a UK expat in the EU would no longer be authorised to do so.”
https://www.bbc.com/news/business-45296001 25 / 08 / 2018
When I first wrote about this issue in October of last year I genuinely felt pretty certain that a resolution would be reached in time thus avoiding British expat pensioners living in Spain not receiving their pension payments. I am still of that same opinion but with far less confidence and the possibility of this not being resolved now seems to me to be a very real possibility. We are now just 7 months from March 29th 2019 and there doesn’t seem to be many positive noises coming from the people responsible for ensuring that a smooth transition occurs. If anything, a large degree of focus seems to have been assigned to putting in place contingency plans in the event that a hard Brexit takes place. This reason amongst others has prompted many expats to review their UK sited pensions often resulting in them switching to a more EU friendly and future proof structure such as a qualifying recognised overseas pension scheme. For expats, the privilege of being able to review and potentially transfer their pensions in this manner is afforded to them as a result of an EU directive with which the UK has to comply – namely the ‘free movement of capital’. Obviously the UK will no longer need to comply with this directive post Brexit meaning that the option of moving a pension away from the UK into a more favourable structure / environment could be revoked. It is for this reason that it is more important than ever for any expat still holding UK sited pensions whether in payment or yet to be accessed at retirement, review those pensions whilst the facility to do so remains.
The decision to transfer a UK pension is not one that can be made without a full financial review which takes an analytical look at both the pros and cons of leaving the pension where it is in contrast with moving it to another jurisdiction. For many people the right decision is often to leave the pension in the UK and retain the benefits offered by the existing pension scheme. Alternatively there are also many people whom could heavily benefit by transferring to a qualifying recognised overseas pension scheme for many different reasons. It could also be very detrimental to leave a pension in the UK in certain circumstances. As I have outlined in a previous article, the vast majority of defined benefit (final salary) schemes are massively underfunded with many collapsing and being absorbed into the pension protection fund.
If you have a UK personal or occupational pension which you are yet to review then please contact me so that we can conduct a free no obligation review whilst the opportunity is still there.
Chris Pickering – International Financial Adviser
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