Wednesday, 21 October 2015

Essential Planning For Retiring Abroad

If your dream retirement is somewhere with more sunshine and less rain than the UK, then it may be time to ask yourself “how will moving abroad affect my pension?”

The State Pension
You can claim your UK state pension if living abroad, but it will continue to be paid from the UK and in pounds sterling.  (see - Can I transfer a UK state pension?)

This raises questions about transfer fees and exchange rates.  Both of these have the potential to eat into your hard-earned pension.  

You should also note that pension increases will only be applied if you move to a qualifying country.  At current time this is a country in the EEA, Switzerland or a country which has a specific agreement with the UK that the UK will provide these increases.  If you move anywhere else, your state pension will be frozen at the rate when you moved abroad.    (see  Receiving increases to your UK State Pension while living overseas)

Private sector
If you have a private-sector pension, either workplace or personal, then you have the option to pay it into a Qualifying Recognised Overseas Pension scheme (QROP schemes). 

Overseas pension scheme means exactly what it says.  They are special schemes for expat pensions, which are domiciled abroad and which can pay benefits in a currency other than pounds sterling.  

The sticking points are the words ‘qualifying’ and ‘recognised’. 

In very simple terms, QROP schemes are schemes which are recognised by HMRC in the UK. 
Moving your pension to a QROP scheme means that you will pay tax at the local rate rather than at the UK rate. 

It does, however, mean, that your consumer protection rights will be the rights afforded by your host country rather than by the UK. 

QROP schemes can offer (significant) tax advantages to those moving to lower-tax countries.  It is, however, important to ensure that any particular QROP scheme is right for you before you move your money to it.  

It is also important to ensure that any scheme claiming to be QROP-compliant actually is, otherwise you could face a number of nasty surprises. see in particular: What is a QROPS (Qualifying Recognized Overseas Pension Scheme)?, What UK pensions can be considered for a QROPS Pension Transfer? What happens if I move around the world?

Workplace pensions – public sector (defined contributions)
If you have a defined contributions public sector pension, then it will be treated in the same way as a workplace pension from the private sector or a funded defined benefits pension.  

A defined contributions scheme is one in which the employee and employer make a certain level of contributions, which are then invested to create a pension fund for the employee's retirement.  They are therefore, essentially funded schemes.

Glossary of key terms (pg. 43) for definition of defined contributions and defined benefits 

Workplace pensions – public sector (defined benefits)

Defined benefits schemes are those in which the employee is guaranteed a certain level of benefit.  The responsibility for funding this benefit lies entirely with the employer.  In terms of public sector pension, defined benefits schemes can be funded or unfunded.  Funded defined benefits schemes are backed by assets.  Unfunded schemes are paid out of government funds.

If you are a member of a funded, public-sector, defined-benefits scheme, then your pension is treated in the same way as a private-sector pension or a defined contributions public-sector pension.  If, however, you have an unfunded public-sector, defined-benefits pension then new pension rules now stop you from moving your pension into a QROP scheme.

4.31 Public service scheme

In other words you will only be able to receive your pension payments in pounds sterling and will have to deal with transfer fees and exchange rates.  

While shopping around may help you to minimise the former, there is little the average person can do to influence exchange rates.

Pensions are not the only way to finance retirement
While pensions may form a key part of retirement planning, there are other ways of financing retirement and some of these may be more flexible in terms of accommodating those moving outside the UK. 

There may also be options for moving assets and/or generating income in your new home country.  This may help to balance the risk of changing exchange rates.

For more information please do not hesitate to contact the team at Ward Williams Financial Services Ltd on 01932 830664 or by email on

Monday, 19 October 2015

When Can I Retire?

 “How much do I need for my retirement” is arguably one of the most serious questions facing a working-age adult.  The answer ultimately depends on two questions.  When do you want to retire and what kind of retirement do you want to have? 

Planning your retirement 

If you want to retire at 55 and spend the rest of your life cruising the world on your private yacht, you are going to need a whole lot more money than if you want to retire at 75, downsize your house and spend the rest of your life writing, painting and gardening. 

Therefore step one in your retirement planning is to think realistically about how you want to spend your later years.  The more specific you can be about your plans, the better you will be able to budget for them.  This might also be a good time to think about the realities of growing older.  

For example you might need home help or short-term care or even longer-term care in your final years.  Do you have a plan to finance this?  Would insurance be helpful?  Once you have at least some sort of realistic ballpark figure it is time to see what you need to do to reach it. 

What do you already have in terms of retirement savings?

Younger people just starting out in the world of work will have had less time to save for retirement.  On the other hand, they have more time in which to prepare for their later years.  Because of this, it may be tempting for younger people to think “I will start saving for my pension later”.  

The risk is that “later” will be pushed further and further back.  If you find that you are getting closer to retirement age but have still not started saving for retirement, then late is still better than never.  You may have to work to make up for the savings time lost in your younger years, but this is still better than arriving at retirement age with no preparation at all. 

If you have already started saving for retirement, congratulations.  Now is a good time to double-check if you are saving enough for your plans.

What happens if you are saving too little for your dream retirement?

You have various options available in this situation.

Option 1 is to rethink your retirement plans.  There may be ways for you to achieve the goals which really matter to you, whilst scaling back on some of the optional extras.

Option 2 is to work for longer and/or phase in retirement.  How feasible this is depends on various factors, in particular your health and your skills.  Even if you are in a physically-demanding occupation, you may still be able to find ways to earn money. 

For example a physical trainer may be qualified in nutrition and able to build a business around that skill.  A gardener or tradesperson may still be able to take on small jobs and/or to teach.

Option 3 is to start saving more now.  If your current lifestyle does not make this possible, then you need to decide what changes, if any, you are able and willing to make to improve your retirement finances. 

In very simple terms this means increasing your disposable income either by increasing your income in general or by reducing your expenses (or both).

What should you do if you are saving enough for retirement?

This may seem a surprising question, but it is a very important one.  If you think that you are saving enough for retirement, you may wish to have someone else double-check your figures for extra reassurance.  If you are still happy, congratulations. 

It is a good idea to continue to carry out regular spot-checks on your retirement plans to ensure that they stay on track.

For more information please do not hesitate to contact the team at Ward Williams Financial Services Ltd on 01932 830664 or by email on