Frozen Pensions in the UK

If you are a member of a UK Occupational Pension Plan, it is entirely possible that your pension funds are only growing at a rate that is the lesser of 5% or the UK retail price index (RPI), in recent years the RPI has only rarely exceeded 5%, and was recently negative. Despite well publicised recent equity and property market value reductions, well managed pension funds have historically grown at a rate of 8%-12% per annum. Your former employer can legally keep any additional increase and use this to fund other employees. Put simply: you can be quite legally short changed.

Personal Pension Plans are typically with a life insurance company and invested in one or more of the life company’s investment funds or with profits funds. With profits funds have recently been subject to much criticism and investigation by the regulator. A significant number of life insurance companies are closed to new business or have been taken over or merged with other companies. It is important to assess how your pension savings has performed against ‘peers’ within this landscape.
 

Recent Legislation

Whatever the type of pension plan you have in the UK, it is important to investigate whether your provider has embraced all of the recent legislation passed by the UK government for your benefit. There are now many more options available to you, for example:

• Even if you have not yet retired, pension benefits can, in most cases, now be taken from the age of fifty (to be age 55 from 6 April 2010)
• For many, 25% of the value of their pension can be taken as a cash lump sum, free of UK tax, with the balance left invested, or taken as income 
• You are no longer obliged to take an annuity (which could be to your disadvantage), but choose what is known as income drawdown or phased retirement income or defer taking an income to a later date
• Qualifying Recognised Overseas Pension Scheme (QROPS) have recently been designated by the UK government, offering yet another option for UK expatriates

If this sounds complicated - you are right, it is complex.

What you can do

Before advising on potential options for your current pension plan(s), Kestrel International provides a no obligation review of your existing UK pension(s), establishing exactly what pension plan(s) you currently have, how much they are worth and how they are being managed. This is completed at absolutely no cost to you.

Should we find assets in your existing UK pension plan(s), we will recommend what we feel would be the best approach to managing these assets. In particular, we will consider whether a Self Invested Personal Pension Plan (SIPP) specially developed for UK and other expatriates, or a Qualifying Recognised Overseas Pension Scheme (QROPS) or perhaps a staged approach would be most suitable for you, depending on your retirement plan. We can then support you in making a pension transfer, should you wish to.

The value of your pension can go down in value as well as up. It is, therefore, important that you can understand the risks and commitments associated with any pension asset investment. We aim to provide you with the necessary information to enable you to make an informed investment choice and will offer ongoing advice on your pension plan in the continuously evolving landscape of pension legislation. We believe that we offer a a best in class service.

For further details of how our process works, click here for a summary, or feel free to contact us.