Retirement in UK, OK or Not OK?

Should you risk your retirement by gambling on the British economy, or are there better options for you abroad and offshore?

With the news out today that the British economy shrank at its fastest rate in fifty years during the first quarter of this year, and the continuing feeling of economic gloom that pervades in the UK, should you consider retirement in the UK?  Would that be ok or not ok for you do you think?

Perhaps you’re a long way off retirement and you feel that by the time you reach 55, 60, 65 or even perhaps 70, the British economy will surely have rebounded.  Well, when exactly are you planning to retire?  Because according to the credit rating agency Standard and Poor’s, the British public sector debt could yet quadruple and reach levels only last experienced during the Second World War.

This will potentially happen over the next forty years – so if you’re planning on retiring at any point during that period, is UK really likely to be the best place for you?  In this report we examine the options and potential realities you will face whether you decide on retiring in the UK or elsewhere.

Standard and Poor’s have already placed Britain’s economy on “negative outlook” and have mentioned that they may have to downgrade the nation’s current AAA rating if future governments can’t turn the economic decline around, and this has massive potential repercussions for all of us.  Whilst you may be in a secure position in terms of employment and being able to afford your monthly outgoings, if the British outlook is so bad, the British currency will continue to flounder at pathetically weak levels against other leading currencies, investment into the UK will be low, the amount you can hope to raise on your savings and investments will be weak, and the long term prognosis for your economic health will be bad.

You may feel you’ll have the state to fall back on in retirement if your pension pot fails to mature sufficiently – but this is precisely the problem you see, as our nation faces the issues of an aging population, so the pressure being placed on the state is increasing to the point at which the state may well implode under the weight of the public debt it is trying to support.  So, to assume that you will be well looked after in retirement in the UK is a myth – and one you need to forget about as soon as possible!

When it comes to your retirement and sorting it out, you and only you are responsible and in control.  So what are your realistic options?

You can continue to reside in the UK, save into a British based pension, put off your planned and anticipated retirement date by 5 or 10 years, and keep your fingers crossed that everything will work out ok.  When you reach retirement you will be forced to buy an annuity with the majority of your pension pot – no matter what annuity rates are looking like at the time.  By being forced to buy an annuity, when you die anything you have left in that annuity pot will disappear and you will not be able to leave it to your heirs.  You will also be taxed on your retirement income from your pension.  And that’s looking on the bright side!  On the not so bright side, tax rates may well have increased by then, the stock market may well have been fairing badly for the duration of your savings period meaning what you can get out of your pension at the end of the savings period will be eroded.  What’s more, annuity rates could be bad and the state may not be in a position to help you.

So, what are the very real alternatives?  You could plan on retiring abroad – and you have your pick of nations, some such as Belize and Malaysia will welcome you as a retiree from as young as 50 for example…and you can live therein tax free if you choose to retire there.  Other countries such as Cyprus will ‘only’ tax you 5% on your pension income – which is far better than up to 50% in the UK.  But wherever you choose to retire abroad, you have one incredibly significant potential advantage over your peers back in the UK, and that’s that you can enjoy far more flexible and potentially better pension returns by taking your pension offshore with you.

The British government has come up with a solution for Brits who move to live and work abroad and for those who want to retire overseas too.  The solution is called QROPS which is an acronym for qualifying recognised overseas pension scheme, and this is a way for Britons who either want to save into their pension pot outside of the UK or who want to enjoy the benefits of it outside the UK to do so, and to do so far more flexibly than if they remained onshore in Britain.  If you’re living and working abroad and saving into a pension, a QROPS scheme could be far better for you, and what’s more, you can transfer anything you’ve already saved into it from the UK.  Additionally, if you know you’ll be retiring overseas or you’re planning your retirement abroad, now’s the time to start looking at the features and benefits of QROPS to see if they suit you.

The main features and benefits for retirees are the fact you can take your pension income whenever you want, what’s more, you do NOT have to buy an annuity with your pension pot.  This means any excess left in the pot when you shuffle off this mortal coil can be willed to your heirs.  Also, if you retire to a nation where you’re not taxed as a non-working resident, you can of course potentially earn all your pension tax-free!  QROPS are also very flexible savings vehicles – you can save and invest into an array of different underlying funds for example, and so you can diversify your risk and exposure to suit your needs and requirements.

QROPS have to be explored if you’re thinking about living, working or retiring abroad – because they could actually be the only real and decent answer to your pension problem.  And the very good news is that they are an exceptional answer to your pension problem, an enviable answer.  To find out more, speak to an expatriate financial adviser who can tell you whether you’re eligible, how you can benefit, who can advise you on the range of QROPS funds available and suitable for you, and ultimately, who can assist you in setting up your overseas retirement solution.