The Expatriate Pension Scandal – Finding Lost Pensions

You’ve probably heard of the great pension mis-selling scandal that rocked the UK back in the 1980s when many people were incorrectly advised to commit to a personal pension and forego their right to a company scheme, (to outline the issue simply); well the expatriate pension scandal is only just coming to light…

The expatriate pension scandal is all about lost pensions – throughout our lifetime we tend to opt in and out of company pensions here and the odd personal pension there.  It’s to do with the fact that there’s really no such thing as a job for life nowadays and many of us have varied lives and life experiences that lead us down different paths at different points in our life.

What this can mean to an expatriate who lives abroad for a period of time is the loss of the tax-free right to contribute to an onshore pension, the loss of access to various pension rights and benefits simply through losing touch with pension providers, and ultimately, the loss of pension income if you can’t find your lost pensions.  Okay, so this is more of a tragedy than a scandal – but it is scandalous that not enough is being done to help expats in this position.  Which is where we step in to help…

Defining Pension Problems that Expats Face

If you’re retiring abroad, have retired abroad or are just at the point in life where you’re wondering what you’re going to live on when you finally do come to retire abroad, now could be a very good time to get your pension provision and plans in order.  When you move abroad and become tax resident somewhere other than the UK, the British taxman will no longer give you tax relief on any onshore pension contributions you make.  What this means is that most expats stop paying in to their British personal pension.  Another issue that can occur is that when you move abroad you probably change job/employer, and so you lose your right to your old employer’s pension scheme.

Fewer and fewer international companies and firms abroad are inviting new employees to join company pension schemes, and some are even failing to make any sort of provision even for existing employees.  The final issue to touch upon here is that when we move we often find that a few people we had correspondence with fall by the wayside – from an old bank account provider to perhaps a pension company.  It can be even harder for you to track them back down or for them to find you when it comes time to pay out your pension if you have moved abroad.

So, the situation presents itself as follows: -

Many expatriates are living abroad with lost pensions in the UK, with lost rights to pension tax relief, and with no access to a corporate pension abroad.  And this is what we are terming the expatriate pension scandal…

Have you been affected?  If so, here’s what you can do to help yourself and get everything back in order so you will be well on the road to untold wealth in retirement – well, perhaps just well on the road to getting your financial due in retirement according to what you have contributed so far!

The State Pension

If you’ve ever paid National Insurance Contributions (NICs) in the UK as a result of being an employee and/or a tax resident in Britain, you could very well have the right to the British State Pension when you retire.  The amount you will be entitled to will be based on how many years’ contributions you have made amongst other criteria such as, believe it or not, the country you’re retiring to abroad!  (Many expatriate pensioners living in Commonwealth nations such as Canada and Australia for example find that their pension entitlement is frozen and not index linked).

To find out your state pension forecast you can visit The Pension Service website.  This site also explains how you can top up your NICs to potentially get more in terms of state pension entitlement when you do finally come to retire.

Finding Lost Personal and Company Pensions

That’s the easy bit out of the way – and now for the slightly harder part.  Can you remember when you paid a pension and to whom?  Can you recall whether you paid into a personal pension or a corporate one?  You need to do some brainstorming and with the help of a chronological timeline when you detail who you worked for and where, you may hopefully be able to remember when you were paying a pension – even if you can’t remember to whom you were paying it.

If you have old paperwork about pensions you held, so much the better.  Get on the phone or internet or write a letter to the last address you had for the company.  You will likely be able to track down the company, and with their help they will help you find your pension.  Alternatively, if you paid into a company scheme and you can remember which company you were working for when you did, get on to their personnel department for similar assistance.  Remember to keep copies of all correspondence sent so that if needs be you can prove who you have been in communication with and when.

If you’re struggling, the government has a service that may be able to assist – it’s called the Pension Tracing Service.  You can fill in all the details you have online, you can call them or you can write to the Pension Tracing Service to get more help.

Sorting Out an Expatriate Pension Solution

Finally, in order to sort out your pension once and for all you can and probably should speak to an expatriate financial adviser.  They may also be able to help you track down any lost pensions, advise you about making up for lost NICs with additional contributions towards your state pension entitlement, and show you all your options and alternatives for the most tax efficient and convenient, prosperous and effective way to save for a pension now that you’re living abroad.

One solution for you may be rounding up all your onshore pensions and taking them all offshore with you under one very efficient and effective, British government backed solution called QROPS.  The acronym stands for Qualified Recognised Overseas Pension Scheme, and if you have onshore pensions worth in the region of £50,000 or more, it can make sense for you to collate them all under the QROPS umbrella for tax effective growth now that you’re living outside the UK.

These schemes are not the only potential solutions available to you – and as the pension mis-selling scandal of the 1980s taught us, you have to have personalised and qualified financial advice specific to your circumstances to determine what is right for you.  And if QROPS is right for you, you can benefit from not having to buy an annuity with your final pension lump sum – or if QROPS is not the right solution for you there are plenty of on and offshore savings and investment alternatives that an expatriate financial adviser can make you aware of.

Getting all this in order need not be too difficult or time consuming, but it is well worth getting on to it sooner rather than later so that you can make sure everything is in the correct place for maximum growth potential towards your final pension income.  Feel free to get in touch if you need personal financial advice.