The pitfalls of UK retirement plans
Structuring your investments offshore can result in considerable tax savings but did you know that British expats have more to gain than most from making use of offshore investing, regardless of tax savings!
The British pension trap
UK pension savings plans provide very little flexibility when it comes accessing your lifetime savings.
A person with a British pension plan will usually be able to take at most 25% of the value of their retirement fund as a tax free lump sum. UK pension law then forces the remainder to be used to provide a taxable income.
It is important to remember that these rules apply to everyone, regardless of your nationality.
It is currently possible to take the lump sum and retirement income from the age of 50. From April 6, 2010, the age at which benefits can be taken will rise to 55, regardless of your nationality or your country of residence.
The UK State Pension can only be drawn at aged 65 for men. For women the age is 60 and is being gradually raised to 65 over the next few years. Once complete, there is a further timetable for raising the State Pension Age to 68 for both men and women!
A mountain of paperwork
When you do eventually become eligible to draw your UK retirement benefits there is a mountain of paperwork that needs to be completed and to very precise requirements before getting your hands on some of your money.
Avoiding the pension trap
Depending on your circumstances, you can avoid some of the pitfalls of the UK pension trap by paying into an offshore savings plan whilst you are living overseas. Many British expats spend much of their working life overseas and so there is considerable gain to be had from structuring long term savings offshore.
These arrangements can also be set up so that they pass quickly and easily to your beneficiaries on your death.
They can also be structured so as to remain invested after your death, providing income and security to your loved ones for as long as you choose, thereby providing a very powerful succession planning tool.
Freedom of choice
If you want to stay fully in control of your retirement savings, offshore savings planning is worth taking a look at.
Financial advisers with Sterling Assets are part of a very small minority of offshore Independent Financial Advisers who are professionally exam qualified to at least the standard required to legally give financial advice in countries such as the UK, Australia, Canada and the US.
We have pensions specialists who can help you make the most of your hard earned savings whenever you choose to ‘retire’.
We believe that you deserve the same quality of financial advice and the same pedigree financial adviser that you would expect and enjoy back in your home country.
Are you taking full advantage of your situation as an expat?
It’s your money and your peace of mind.
Richard Colburn is a UK qualified financial adviser with Sterling Assets.
Questions to the author can be directed to 053 216 528 or email us