Retirement News & Insights

Since the UK government introduced pension reforms in 2015, there has been a huge increase in pension scams with unscrupulous firms targetting the over-55s with advice regarding what they can do with their retirement savings. Statistics issued by the Pensions Regulator in January, show that, on average, victims of scams lost £91,000 in 2017. 

Last year the Association of British Insurers (ABI) provoked something of a panic among British expats in Europe. Those who in some way rely on insurance products, such as annuities and life insurance, for the payment of income and expat pensions were understandably alarmed when Huw Evans of the ABI said that a no-deal Brexit could leave insurance contracts in legal limbo because of a risk that payments could not be fulfilled for contracts written pre-brexit. (Read more in our blog.)

The number of British pensioners living as expats in the European Union (EU) fell from 468,790 in 2017 to 462,680 in 2018, according to figures based on data derived from the Department for Work and Pensions.

It is the first time in more than a decade that there has been a decline in the numbers of British pensioners abroad and it is thought that Brexit and the uncertain future of expat pensions are the major factors behind the decline.

Although the draft withdrawal agreement seems to have provided some security for Brits abroad concerned about their expat pension and legal residency rights, this is only assured until 2020,

For many retirement savers finding the best way to realise pension plan benefits will be the key to unlocking a financially secure retirement.

Pension transfers, whether from a defined benefit plan into a QROPS, SIPPs or other vehicle, are likely to be an important consideration as part of this process. However, in recent years it has become clear that although pension transfers can be advantageous for many individuals, particularly those who live abroad in the European Union, a minority of advisers are failing to properly examine the question of suitability, thereby resulting in some investors being saddled with an unsuitable product.

Are you yet to draw on your pension and have one or more dormant, frozen pension pots from when you were employed or self-employed? If you have had a number of jobs during your career, you could have a series of separate pension plans which, while individually may not add up to much, you are relying on to provide you with an income during your retirement.

HSBC and The Local Government Pension Scheme are the latest Defined Benefit Pension Schemes to cause upset and worry to thousands of soon-to-be retirees.

Firstly, HSBC has come under fire for cutting the pension payouts of its former staff by up to £2,500 a year, affecting 50,000 members who joined the company between 1975 and 1996. This group had opted to pay less national insurance (NI) contributions whilst working by "contracting out" of the former state pension scheme. This meant that HSBC also paid less NI contributions. In exchange for paying a lower rate, the bank agreed to pay staff a guaranteed minimum pension when they came to retire. Payment records were however not properly maintained leading pensioners to be either overpaid or underpaid. Numerous firms, including HSBC, had used this arrangement and when the errors were discovered, some began to cut pension payouts to compensate for the overpayment.  

Pensions, whether private, workplace or state, are essential to the retirement planning of UK expats all over the world, whether they live as close to the UK as the Netherlands or Norway or as far away as Grand Cayman or the Grand Canyon.

However, around half a million British expats suffer a pensions shortfall of as much as £4,000 a year simply because they have chosen to live in a country or region without a reciprocal agreement with the UK and their pensions have been frozen.

Many of them feel it is unfair that they have no choice but to live on a lesser income or to take steps to redress the situation by consulting their expat financial advisers for inventive solutions. But, things may be about to change as MPs have created a parliamentary alliance to change the expat pensions law.

Few financial decisions are as important to an expat as the question of how and where they invest into a pension scheme.

This is why the Melbourne Mercer Global Pension Index is so useful in terms of assessing the adequacy, sustainability and integrity of different nations' pension systems. The 10th edition of the index was recently published and makes for interesting reading from an expat pension perspective.

The top spot in the list of 34 national pension systems was gained by the Netherlands having scored 80.3 – just a tenth of a point ahead of last year's winner, Denmark.