A Labour government policy means annual State Pension increases for retirees in centrain countires are prevented, experts have warned. However, there are ways that advantages and flexibility can be obtained, a firm has advised. The triple lock means payments go up by the rate of inflation, average wages or 2.5% – whichever is highest. However, nearly 500,000 British expats will miss out on the rate rise when it increases by 4.1% in April.
“The pension can be paid to you regardless of where you live, but it’s crucial to understand how living abroad may affect the amount and any potential increases,” William Cooper, Marketing Director at health insurance firm William Russell, said. “If you reside in certain countries, typically those with a reciprocal social security agreement with the UK, your State Pension may still increase each year as it would if you were in the UK. However, in other countries, the pension may be ‘frozen’ at the rate it was first paid. For those considering transferring their pension abroad, it’s essential to explore options like a Qualifying Recognised Overseas Pension Scheme (QROPS), which may offer tax advantages or more flexibility.”
He added: “Always seek guidance from a financial advisor with international expertise to navigate currency fluctuations, tax implications, and local pension regulations.”
The firm has issued advice as to how to go about applying for a QROPS.
Firstly, pensioners have been urged to research QROPS Providers.
“Look for reputable financial institutions that offer QROPS in your country of residence. Make sure the scheme is recognised by HM Revenue and Customs (HMRC),” the company said.
It added: “It’s advisable to speak with a financial advisor experienced in expat pensions and international retirement planning.
“They can guide you on the tax implications, costs, and benefits associated with transferring your pension.”
Next, experts suggest contacting your current pension provider to get a transfer value quote. This will be the amount you can transfer to the QROPS.
Afterwards, it is required that you complete the necessary paperwork to apply for the transfer, including forms from your existing pension scheme and the QROPS provider.
Finally, your funds will be transferred from your current pension scheme to the QROPS.
“Keep in mind that transfer fees and tax charges may apply, especially if the transfer exceeds the lifetime allowance,” William Russell said.
Mr Cooper added: “Proper planning ensures your pension works for you, wherever you choose to retire. With these steps, you can optimise your pension’s value and ensure a smooth transition to living abroad.”
