The public sector pension fund is severely depleted, threatening to shatter the retirement dreams of those who have worked at the forefront of British society for much of their lives. With the promise of further austerity measures being introduces with increased regularity over the next ten years, now is widely seen as the perfect time to consider all of the options available.
Things are not looking as rosy as they were in the nineties, when many people started to contribute to their retirement funds. Promises have been broken, contributions have increased, and benefits continue to be reduced. In addition, the age at which individuals are able to access their personal pension funds is getting further and further away. All of this combined, means that it’s little wonder that expat teachers are choosing now to get their funds out of the UK system for good.
All public sector pensions, including NHS, TPS, Armed Forces and Civil Service pensions rely on an un-funded defined benefit scheme. Over the last few years as a result of mis-investment and Government borrowing, there is a gulf that has been created between what people expect to receive at pension age and what they actually will receive, a gulf that shows no signs of closing.
In seven months, the option to move a public sector pension away from the troubled UK will be closed forever, leaving those pensions that are left behind subject to uncertainty and a constantly shifting environment. For now, expats do have the option of transferring their funds into a more beneficial offshore plan using a Qualifying Recognised Overseas Pension Scheme (QROPS) which was first introduced by HMRC in 2006.
QROPS offers an array of highly attractive benefits to those who chose to use it, including more choice, investment flexibility, earlier retirement, tax-free growth and death benefits that cannot be matched in the UK.
Naturally, to QROPS or not to QROPS is a very personal decision and requires professional advice from a financial advisor. However, if you have a public sector pension sat in the UK and you are an expat, I urge you to at least explore what might be available to you before the opportunity is taken away.