Brexit to fuel demand for UK pensions to be moved out of Britain
Brexit will be a trigger for more people to move their British pensions out of the UK, said Nigel Green, chief executive of deVere Group.
As the reality of what a Leave result in the EU referendum means for personal finances sinks in, people will now be reassessing their retirement planning strategy, Green said.
“We can fully expect demand for HMRC-recognised overseas pension transfers to be further boosted thanks to the UK’s decision to leave the European Union.
“Due to the huge amount of uncertainty that’s created, more and more people who are eligible to do so – that’s to say expats and those who are considering retiring outside Britain – will be seeking to safeguard their retirement funds by transferring them into a secure, regulated, English-speaking jurisdiction outside the UK.”
He continued: “Arguably, the most pressing concern – and therefore the main trigger for people to consider transferring their pensions out of the UK – is the significant fall in the pound following the Brexit result.”
Green said eroding retirement income due to currency fluctuations could be mitigated by transferring UK pension into a Qualifying Recognised Overseas Pension Scheme (QROPS).
“One of the main benefits of a QROPS is that you can choose which currency you wish to receive payments in. This eliminates the risk of exchange rate fluctuations, which makes the individual’s financial situation more predictable, consistent and secure,” Green said.
The demand for QROPS is set to soar as expat numbers are likely to increase. Over the next two years, whilst Britain is still a full member of the EU, those who are thinking about retiring to places like Spain and France will do so sooner rather than later.
QROPS started under EU law, but now there are separate agreements in place between the UK and individual jurisdictions, such as Malta, regarding pensions transfers.
This means that when the UK leaves the EU, these agreements will remain intact. Therefore, the pension funds established in these jurisdictions will still meet the criteria to be recognised as Overseas Pensions Schemes under UK legislation, Green said.