Why Aussie rules could be a winner for UK pensions, with a “pot for life”

The idea of a “pot for life” was at the heart of the UK pension reforms outlined by Jeremy Hunt in his Autumn Statement.

I believe that the principle of a single portable pension is eminently sensible.

Indeed, as international pension specialists of twenty years standing, the concept of a "pot for life", providing each client with a single pension that offers them greater investment choice, continuity and control, lies at the heart of what we facilitate for our clients worldwide on an ongoing basis.

The UK chancellor’s proposal has met with similar unequivocal support from other industry commentators, such as Claer Barrett, Consumer Editor at the FT:

“The average worker in the UK is expected to end up with 11 separate pensions over the course of their working life [and] the performance of ‘default funds’ that giant UK pension providers shoehorn the vast majority of our money into varies widely.”

“In Australia, the different superannuation providers shout about the returns they’ve been able to achieve for their investors. Talking about how well your “Super” is doing is a topic of national conversation (plus, this term has more positive overtones than “pension” which makes one think of pensioners, adding to the deception that saving for such a faraway event needn’t be a priority).

In the UK, by contrast, very few savers make an active choice about where their money is invested.”

“I would jump at the chance to have my pension contributions paid into a Sipp (self-invested private pension). This would give me access to a greater range of investment choices, as well as greater ease of executing them.”

Claer Barrett [Consumer Editor, Financial Times]

Indeed, our findings from Forth Capital research conducted last year¹ absolutely corroborate the points made in the FT by Claer, highlighting fundamental gaps in people’s understanding of their pension funds and their readiness for retirement;

• Almost half the respondents (47%) had lost track of how many pensions they’d accumulated over the course of their career and were unsure of their cumulative value.
• Nearly two thirds (62%) did not know what their pensions were invested in, and more than half (57%) didn’t know what they’re being charged.
• Tellingly, 71% of the respondents hadn’t reviewed their pension assets within the last 12 months.

If you are living outside of the UK and have accumulated one or more UK workplace pensions, you may be in the fortunate position of being able to transfer these legacy pensions into a single pot, to not only benefit from the simplified administration and control this provides, but also the potential for greater investment choice and improved returns, mitigated currency risk, greater flexibility of access to the funds, and enhanced death benefits.

So, whilst Jeremy Hunt is consulting on the viability of implementing his proposed pension reforms in the coming weeks and months, and potentially making them a reality for UK savers at some point in the future, you can act immediately, by reviewing your options such as transferring all of your UK legacy pension funds into a single International SIPP, or potentially a Recognised Overseas Pension Scheme (ROPS) in countries [such as Australia and EU states] where this option exists, to create your own international “pot for life”.

At Forth Capital, we've been helping our clients, in more than 50 countries worldwide, with their cross-border financial planning, wealth management and UK pension transfers for two decades, making the complex simple to provide them with clarity and peace of mind. So, we would be delighted to answer any questions you have and discuss how consolidating and transferring your UK pensions could potentially benefit you.

Download our Guide to UK Pension Transfers and book a free initial consultation with one of our dual-qualified international pension experts today.

¹ 358 Online responses between 24 Oct 2022 and December 10 Dec 2022