Frozen Pension Plan For Expats
LEARNING OBJECTIVES
We provide relevant, high quality and up-to-date financial information to Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
What a frozen pension plan is and what it means for you
How to access a frozen pension pot
Your main options for transferring your frozen pension
Key considerations when taking advice
A frozen pension plan is an old workplace pension that you no longer contribute to. You will have many frozen British pensions if you worked for multiple companies whilst resident in the UK.
A frozen pension plan is usually a defined contribution plan but can be a defined benefits pension.
Upon changing your country of residence it is easy to lose track of your former employee pension plans.
If you worked in the UK for 10 years or more, your pension will be a central component of your retirement. As an essential part of your retirement plan, it will provide one of the main income sources once you stop working.
Ensuring your retirement accounts are invested in line with your position should be a priority for implementing a financial plan with your financial advisor.
Can You Transfer A Frozen Pension?
Based on the kind of pension you have, it should be possible to transfer to another plan. You can also consolidate several frozen pensions into one pension policy.
Before deciding to transfer your pension scheme, it's important to understand what your existing scheme allows you to do and not do.
For defined benefit schemes, as the pension holds protected rights that will provide a guaranteed income in retirement, you may not be able to transfer out of the scheme.
Note, for defined benefit plans, retaining the scheme benefits of a guaranteed income for life, is usually the suitable option.
Does A Frozen Pension Still Grow?
Yes, however, the growth is based on the value of the underlying investments going up. Subject to the investment values increasing, the accrued benefits will increase with it.
Old company schemes tend to be UK-centric with their investment allocation. As such, the majority have significantly underperformed the global equity market.
Frozen Pensions Options
If you have one or more frozen plans, your options are;
Do Nothing - if your frozen pension continues to perform well and you retain control over it, it may be prudent to leave it where it is
Transfer and Consolidate - transfer to another scheme that you can access and manage in the way you require. Or, consolidate one or more schemes to reduce cost and allow an overall investment strategy to be implemented.
Encash or Drawdown - if you're 55 or older, you can start receiving pension income right away.
Expat Financial Advice
The Wealth Genesis helps expats outside of the UK with their financial planning needs. We specialise in UK Pension transfers and consolidation, tax-efficient investing including drawdown and Inheritance tax mitigation.
As a cross-border pension transfer specialist we understand the complexities of dealing with UK pensions as a non-UK resident.
Depending on your country of residence and main objectives, there are various options available to you. We provide a bespoke wealth management service, specific to your needs rather than a generic one size fits all approach.
Contact us today to discuss your frozen UK pensions and the options available to you.
FAQs
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Yes, if you are age 55 or over you can cash in 100% of your pension scheme. Depending on the value, there can be a significant income tax applied by HMRC.
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You can access your pension from age 55 and not before.
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This will depend on your workplace pension scheme.
Usually, there is no termination fee. For older with profits funds schemes, there can be a loss of terminal bonus. This means you lose a guaranteed amount due at the normal retirement age. -
You can take your tax-free lump sum if your scheme allows. Note it is tax-free in the UK and not in most other countries.
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The Wealth Genesis charges a flat £3000 initial advice fee and 0.85% ongoing management charge.
This is to transfer one or consolidate a number of frozen pensions.
