Good news only, please

The importance of putting money into a pension cannot be understated, and the British government has a regulation in place – the pension tax relief scheme – to encourage people to save. But many experts are predicting significant changes to the scheme. If you’re planning to retire overseas as an expat and take advantage of international pension transfers, you’ll need to stay updated with these changes.

How does pension tax relief work?

The pension tax relief scheme is an incentive to entice people to put money into their pension pot. To reward people for thinking ahead to their retirement, the government currently tops up their pension contributions based on the rate at which they pay income tax. So, basic rate taxpayers will receive 20 per cent tax relief (meaning they only need to pay £80 into their pot to get £100), while higher rate taxpayers are entitled to 40 per cent relief.

What should you do if you are an expat and are considering a retirement transfer? Mindful of Brexit’s impending reality, do you make an expat retirement transfer as soon as possible or, fearful of restricting yourself and missing out on any possible opportunity, do you hang on to see what the future holds and wait until after March 31 2019.

There could be risk in waiting, of course, and it is considerable risk. By hesitating now you risk losing the opportunity to take advantage of all the EU expat retirement transfer benefits currently offered to those who choose Self-Invested Personal Pensions (SIPPs) or Qualifying Recognised Overseas Pensions (QROPS) right now.

This is not to say that these advantages will instantly disappear come spring 2019, but the reality is that Brexit is turning out to be drawn-out process with little current certainty and that it will take some time for any agreed changes to take effect.