If you worked in the UK civil service, armed forces, teacher or NHS and are not yet taking your pension then your options for securing your future pension will no longer exist. From April 2015 the UK Government will no longer allow any transfers into offshore pension schemes (QROPS) as your schemes are classed as unfunded. This means that today’s pensioners are being funded by the current workforce, and your future pension will be funded by the future workforce. This, according to the UK is “to protect current and future tax payers”.

Workers in the NHS and the armed forces who are looking to move their pension overseas at retirement have very little time left to make the change after the government announced a ban on pension transfers for unfunded defined benefit (DB) schemes. By shutting the door on offshore pension transfers they are ensuring that they do not have to borrow money today, to pay out future pension holders and they can take future payments from future income. This is not the way the pension system was designed, it should be that an investment pot of capital sits behind each pension, but the way they have been managed, and the recent recession ensures that this is no longer the case.

We have been able since 2006 to take advantage of government policies of allowing pension holders who live abroad, to take ownership and control of their pensions through QROPS (Qualified Recognised Overseas Pension Scheme). Many of our clients in Thailand and around the world have taken advantage of this policy, which means that their pension is 100% owned by them, to give their family the FULL benefit of their UK pension, as well as increased income during their retirement. This window of opportunity is about to close, and we believe that any requests for valuations which are not made before the end of 2014 may become locked in the system when the transfers stop in April 2015. When the window closes that means that the scheme WILL HAVE TO REMAIN with the UK Government system. There are risks of pension incomes falling further, and retirement ages increasing, and the pension holders will no longer have control over this. It is vital that people are informed about the changes, as the government will not be notifying individuals personally, and it is important that you know your rights, and ensure you can take necessary steps to control your pensions.

If you have one of these schemes, then you must first request a transfer value for the scheme, which will give us a better idea what your pension would give you if moved into an offshore scheme. Then we are able to evaluate if a transfer would be beneficial to you, compared with leaving the pension in the UK. An offshore scheme would give you 100% ownership of the pension, but not 100% access to the funds during your lifetime. This is to protect both HMRC, and yourself to ensure that you have an income for life. Upon your death you are able to pass 100% of the remaining funds to your next of kin with in most cases a zero inheritance tax liability.

The key change from your perspective is that unfunded schemes (this includes the Armed Forces Pension Scheme, the Principal Civil Service Pension Scheme, the NHS Pension Scheme and the Teachers’ Pensions Scheme) will no longer allow members to transfer their pension. If you have any questions on how this will affect you, or what options may be open to you please get in touch with us.