Pensions, Pensioners, Brexit and pensions’ portability throughout Europe
British expats living in European Union countries, especially popular ones such as France and Spain, are still trying to come to terms with how Brexit will affect their finances and living plans.
One big area of concern are pensions and Brexit could be a trigger for more people to move their British pensions out of the UK, according to finance experts.
The issue revolves around whether or not the UK tax authority, HMRC, will continue to recognise Qualifying Recognised Overseas Pension Scheme, or QROPS, which have been popular for expats worried about currency fluctuations.
Brexit will be a trigger for even more people to move their British pensions out of the UK, according to Nigel Green, chief executive of independent financial advisory firm, deVere Group.
‘As the reality of what a Leave result in the EU referendum means for personal finances sinks in, people will now be reassessing their retirement planning strategy. We can fully expect demand for HMRC-recognised overseas pension transfers to be further boosted thanks to the UK’s decision to leave the European Union,’ he said.
‘Due to the huge amount of uncertainty that’s created, more and more people who are eligible to do so, that’s to say expats and those who are considering retiring outside Britain, will be seeking to safeguard their retirement funds by transferring them into a secure, regulated, English speaking jurisdiction outside the UK,’ he added.
The main concern for finances has been the significant fall in the pound following the referendum decision. For those living in the EU and in receipt of a UK pension, a plummeting pound has serious consequences as the cost of living becomes more expensive.
An established way to help mitigate these problems of currency fluctuations, which can seriously erode retirement income, is to transfer a UK pension into a QROPS. However, there have been some questions raised over the legalities of QROPS due to the Brexit decision.
‘QROPS started under EU law, but now there are separate agreements in place between the UK and individual jurisdictions, such as Malta, regarding pensions transfers. This means that when the UK leaves the EU, these agreements will remain intact.
Therefore, the pension funds established in these jurisdictions will still meet the criteria to be recognised as Overseas Pensions Schemes under UK legislation,’ Green pointed out.
‘Considering the wider post-Brexit vote scenario we are facing, we can assume that the wider international financial advisory sector is about to enter a phase of enormous activity and growth,’ he added.
Pensioners are the biggest group of British expats in Europe, and they can use the years they have worked in one member state to qualify for pensions in another. For example, in Germany EU citizens can count years worked elsewhere to meet the minimum requirements for a pension.
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