News & Insights

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,

2019 looks like it will be a testing time for investors, from trade wars to political uncertainty.

The European Union (EU) faces a number of challenges, including the ongoing Brexit saga, Germany just escaping recession (for the moment), further tensions with the Italian government, mass social unrest in France (with the potential for contagion) , the continued rise of populism, anti-immigration, anti-establishment and separatism movements and a weakening European economy (real GDP decelerated in 2018).

In the US, President Trump will do everything he can to keep the US economy strong because the success of his presidency relies on it. But at least the threat of a trade war with China has rescinded recently, with Trump delaying tariffs on Chinese goods as he feels substantial progress has been made in trade talks.

Expat financial advisers in the Netherlands discuss many things with their clients – from the best way to structure expat regular savings to pension transfers and inheritance planning.

However, for certain expat parents and grandparents living in the Netherlands education fee planning is integral to the realisation of their wider goals. And why shouldn't it be, university degrees are among the most important and expensive investments you can make in a young person's future.

This is why a recent decision by the Amsterdam District Court should be welcomed by the clients of many expat financial advisers in the Netherlands as it could lead to their education fee burden being reduced dramatically.

Life assurance is an important, although sometimes overlooked, wealth management tool for the expat retirement investor living in Portugal.

There are many potential advantages to life assurance products in Portugal, not least the fact that financial assents under contract do not attract capital gains or income taxes provided that no surrender occurs.

New data from HM Revenue & Customs reveals that the combined value of retirement transfers to QROPS fell to £740 million in the 2017-2018 tax year, the first period since the government introduced a 25% tax charge, with the number of pension transfers down to 4,700 from 9,700.

Given the scale of the pension transfer tax, the drop recorded by HMRC in QROPS transfers should come as no surprise. However, as the figures do not differentiate between transfers made by UK citizens and expat retirement transfers, it is difficult to know what, if any, difference the new levy has had on the decisions of expats.

Many expats earn more abroad than they would at home, have lower tax liability and a range of investment options. However, despite these advantages, some fail to adequately account for one essential aspect of wealth management: expat regular savings.

Unfortunately, for those in this situation it can take a catastrophic event such as the loss of a job, ill-health, an accident or an unexpected liability or capital expense to make them realise there is an expat regular savings shaped void in their financial planning.

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.

A pension transfer is not for everyone and there will be many factors to weigh up before making the decision to transfer from an existing scheme into a QROPS, SIPPs or other structure.

However, a great deal of doubt remains about the long-term viability of the nation's defined benefit plans, with the high-profile collapse of a number of such schemes leading many to question their reliability and suitability.

And these doubts have only been increased by the recent revelation from Mercer that during 2017/18 the accounting deficit for the defined benefit plans of the UK's top 350 FTSE organisations increased by 28% to £41 billion, mainly because of a £19 billion drop in asset values (from £766 billion to £747 billion).