UK pension crisis report - British Expats can escape
Those who retire in the coming decades will do so on significantly reduced pensions, according to a recent report by Lord McFall, the former chairman of the Treasury select committee.
Millions of UK pension holders face a "bleak old age" because they are falling through the cracks of private sector pension provision, the report suggests. "Too many people are stuck in a complex, costly and inefficient system that relegates the consumer's interest to second place. On top of that, they simply are not saving enough to secure a decent retirement." said Lord McFall.
However, British Expatriates that hold UK pensions have the ability to transfer their existing funds out of the UK into a QROPS, more and more expats are making use of this opportunity as faith in the UK pension system, the Pound and the broader UK economy continues to wane.
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Pensions Minister Steve Webb described the report as "a wake-up call for all UK Pension holders".
The report, from the independent Workplace Retirement Income Commission, of which Lord McFall is chairman, comes as both the private and public sectors are grappling with the cost of pensions amid rising life expectancy. The pensions landscape has been changing as people in the UK are living longer, many occupational pension schemes have become less generous and in some cases simply insufficient.
The report lists a raft of grievances about pension provision. It points out that the value of pensions has been hit by the global recession, low investment returns, increases in household debt, drops in real incomes and low interest rates. It suggests that there is a lack of trust in the system and says that private company pensions are often opaque and confusing for workers.
"Einstein wouldn't understand today's pensions" said Lord McFall.
He goes on to state that 14 million people are not saving into a workplace pension scheme at all. And those who are in a scheme often get charged too much for a service that is complicated and inefficient. Almost three quarters of private sector staff will be unable to “adequately exist” when they retire due to a low level of savings and the complex, costly and inefficient pensions system, the report claims. Many workers retiring after 2020 are told to expect a “bleak old age”, even taking into account pension reforms that will force employees to save for their retirement.
The grim financial outlook contrasts sharply with conditions enjoyed by the recently retired. Figures show that the net income of pensioners has grown by 47 per cent in real terms since 1999. The report states: “The shape of workplace pensions is changing and there seems to be little to suggest that trend will be reversed.”
Advice on QROPS
For British Expatriates now living outside of the UK, this latest report simply provides further justification for considering transferring any existing UK private or occupational pensions into an overseas scheme. If you have existing pension benefits with a current value of at least £50,000 then you should certainly consider transferring these benefits into a QROPS (Qualified Recognised Overseas Pension Scheme).
As a leading adviser on QROPS, Forth Capital can give you the best possible advice in terms of not just telling you about the benefits, but also any potential pitfalls that should come into consideration. Our free pension review service will be invaluable to you in helping you to decide whether a QROPS is the right thing for you.
If you would like to undergo a free pension analysis with one of our advisers, then please send us an email directly to: qrops@forthcapital.com.
To contact us by telephone please call +41 22 311 1443.