Leaving Pensions in the UK
If you leave your pension in the UK when you are abroad you are leaving the pension open to the following risks:
- New Pensions legislation changing the taxation or flexibility of current schemes.
- When you take benefits from your pension, UK tax will be deducted immediately.
- Death benefits – In the UK, pensions can be completely lost or severely reduced upon death. Money Purchase schemes will be taxed at a flat rate of 55%. Defined Benefit schemes can, depending on the scheme rules, be lost completely in the event of your death.
- Your pension will remain in £ and as sterling weakens this may impact heavily on your ability to remain abroad.
- Poor investment choice and below average growth is prevalent in more than half of UK pension funds.
- Little or no transparency on costs.
- Reliance on the ability of the company to meet its pension obligations: many UK pension schemes have huge shortfalls, BA being a major example. In recent years we have seen huge British institutions having to deal with major crises. For varying reasons RBS, Northern Rock and BP are just three high profile examples of companies that may have difficulties in honouring their pension schemes.
There are more than 7,300 defined benefit schemes in the UK , including final salary pensions, collectively facing a shortfall of £41.5 billion, according to pensions safety net the Pension Protection Fund.