Cashing your pensions when you emigrate

Hey – how are you today?

I am still racing around London showing off my ‘home town’ to my South African friend! The highlight of this week is going to be the Spitfire and Hurricane fly-past over Whitehall at 4pm, Friday 20th August 2010, commemorating the 70th anniversary of the Battle of Britain. The flyover is preceded by a reading of Winston Churchill's speech outside the Churchill War Rooms at 3.52pm.” Never in the field of human conflict...” and all that! I am really looking forward to it.

Many people today are becoming more and more concerned about their pensions. I am often asked if it is advisable to cash in a pension on leaving the UK. To this I reply that your best recourse is to speak to a fully conversant IFA (Independent Financial Advisor) – I don’t pretend to be an expert on these matters. The OGC Resource team may be able to help you here – give them a call on 0207 898 0549 and they may able to give you a name of a recommended professional.

What I would say however is this. You need to check whether the country you are moving to has a social security agreement in place. If they have then you can actually have your UK pension paid directly into an account in your new country without any charge at all.

If you leave your pension in your UK account, you’ll need to declare this and pay tax on any increases on your pension scheme on your UK tax return.

You may on the other hand want to think about transferring your UK pension into a Qualifying Registered Overseas Pension Scheme or QROPS. This means that if you put your cash here it no longer falls under HMRC rules, but you must leave it untouched for five years. After this time, you can take the entire amount as cash, without the significant tax deductions you’d face taking it as cash when or before you move.

If you do take it as cash when you move, only 25% is tax free and the rest will be highly taxed, so you need to really think this through. If you want to take up this option you will need to contact the International Pension Centre and let them know:

- The date you are due to leave the UK
- Details of any dependents moving with you
- Whether you receive a pension from any other country
- Your residency type – permanent or temporary
- Where you will be living abroad
- Your new banking details

You can contact the International Pension centre for further advice between 8am and 8pm Monday to Friday on phone number +44 191 218 7777

If there is any chance that at some time in the future you may want to return to the UK, frankly you would be better off leaving it here. It can be complicated to transfer it back on your return to the country so again you would be wise to consider taking the advice of a financial advisor before you decide on this.

I hope you find this helpful; there is so much t think about when you consider emigrating and my hope is that perhaps from time to time I am able to draw your attention to something that may have slipped your mind or that proves helpful!

‘Til next week, have a happy time!

Carol.
http://www.emigrationguide.com