Should I Consolidate My Pensions As An Expat?

This article is intended for British Expatriates with UK pension pots.

If you live outside the UK and have several UK pensions, consolidating your pension pots into one scheme can provide several benefits.

We aim to provide a greater understanding of how consolidating your pensions can work and the benefits of doing so.

Consolidate UK Pensions

Consolidating your UK pensions involves combining two or more existing pension schemes into one pension. This can include defined contribution pensions such as workplace pensions, personal pension plans, and money purchase schemes.

Defined benefit schemes, also referred to as final salary pensions, can be consolidated into a single pension plan. However, due to the extra benefits they provide, a stringent advice process needs to be followed.

Benefits Of Consolidating Your UK Pensions

There are numerous advantages to combining various pension funds into a single plan, such as;

01 Improved Investment Performance

Holding all your pensions in one place makes it easier and more efficient to implement an investment strategy. This allows you to more effectively match your risk tolerance and objectives by providing clarity on where and how your funds are invested.

02 Keeping Track of your Pension Schemes

Receiving numerous reports from different schemes in varying formats makes keeping track of your pensions all the more difficult. Bringing them together in one place, with a single portal to review simplifies the entire process and makes it easier to manage.

03 Estate Planning

Holding all your pensions in one place ensures a smooth transition for your loved ones in the event of death. The alternative is a complicated and drawn-out process of dealing with multiple providers with different processes.

04 Flexible Pension Income Access

Having one pension pot significantly simplifies all withdrawals. whether it is your pension commencement lump PCLS sum of 25%, regular income, or ad hoc withdrawals. The paperwork required and the process involved are far smoother and cost-efficient with one pension scheme.

Furthermore, most older pension schemes dating pre-2015 do not allow flexible access. By transferring to an International SIPP, you can access your pension pot from age 55 (57 from 2028) however you wish.

05 Reduced Fees

All pension providers have their own set of fees as well as the investment platforms' investment funds. Every time you change employer in the UK you will open a new pension policy. By consolidating into one policy, you remove the numerous sets of trustees and other fees. This also contributes to improved performance as fees are a guaranteed drag on growth.

Considerations Before Combining Your UK Pensions

Key areas to consider before consolidating your UK pensions are:

01 Type of Scheme Held

If you hold a defined benefit pension scheme with a value over £30,000, you're required to receive advice from an FCA authorised pension transfer specialist. Additional costs are incurred and you will also be giving up substantial benefits.

02 Exit Penalties

Depending on your existing pension policies there can be exit fees from the funds held, or the policy itself. Older, 'with profits funds' can also charge a market value reduction. As such, It's important to understand the costs of leaving your existing arrangements. Particularly if the exit fees are on a sliding scale as it can be prudent to wait a year or more before transferring.

03 Adviser Fees

Financial adviser fees vary considerably when transferring your pension. Understanding the costs associated with consolidating your schemes is fundamental before making an informed decision. Any cost incurred has to be made back before your pension can achieve growth.

International Financial Advice

The Wealth Genesis provides expert cross-border financial advice globally. We can assist you in combining your pensions and your overall financial planning needs. While there are many benefits in consolidating your UK pensions, it may not be the best solution for everyone.

Talk to us today to discuss your position and requirements in greater detail.

FAQs

• Can I consolidate my pensions?

  If you hold UK pensions or Qualifying Recognised Overseas Pension schemes you can consolidate them into one pension pot.

• How do I consolidate my pensions?

  The first step should be to speak to an expat financial advisory firm. Transferring your retirement savings is an important financial decision and should not be made lightly.
  
  Your pensions are likely to make up a large part of your retirement provisions. As such, a comprehensive financial plan should be implemented as part of your overall retirement goals.

• How can I find lost pensions?

  We can help you find and consolidate your lost pensions. If you have worked at many companies whilst in the UK it's hard to keep track. This can be further complicated with pension providers often being bought out or merged with existing schemes.