The most asked question I receive from my articles is: What is the process of transferring my U.K pension as an expat? Although I may have touched on this in a number of articles, I haven’t written about the full process as an expat of transferring your U.K private pension(s).
1st you will need to know the following information, and don’t worry to much if you don’t know all of it as will explain later how to find out lost information later on as well.
Things you need to know for step one:
- National Insurance Number
- Policy Scheme
- Policy Number
- Policy scheme address
Step 2: Submitting a Letter of Authority to The Pension Scheme
A letter of authority document will get an up to date valuation from the pension(s), this will not allow it to be moved and no one can touch it at this stage. One will need to be submitted for each pension that you are currently holding. The pension provider will then give you an up-to-date valuation which then means the advisor can see what there is in each pension, type of pension, and advise accordingly later down the line.
Step 3: Speak to an Advisor
This will go through the options you have in regards to your pension(s). I will detail this further down below. However, the main options for most expats of keeping it in the pension scheme that they are presently holding are low and many look to move it into a SIPPs, International Sipps. Other options, SASS, QROPs and QNUPs do apply but they are niche and if you do need more information please see the link below where I talk more about QROPs and SIPPs. In order to help you find the best advisor I recommend that you speak to several advisors ask them what their fees are for the platform and management and compare them against each other. You should then also look at what they have recommended for your investments and then research them in something like Morningstar, in the offshore market a lot of expats get taken advantage of by bad advisors who want the highest commission and funds that perform averagely.
In this the advisor should go though a risk profile discuss the platforms options, the portfolio and fees. A risk profile is where they assess your attitude to risk, many don’t like to see their investments go down, this can happen, however it doesn’t mean it’s a loss until you take your money. This will then decide the type of investments you have, the more risk you can tolerate the volatile and potential returns you can go for, the less risk you can tolerate, the more stable investments will be fore you, for example, fixed bonds.
For a guide on this please read my article I have done a number of analysis on platforms in the U.K and offshore with the fees.
Step 4: Deciding Your Options
If you are going to keep it in the scheme then you will not need to do anything. If you opt for going to SIPPs or into an international SIPPs you will need to sign the platform paperwork. This will be a documentation of the platforms that will need your information. This is heavily regulated and you will need supporting documents such as proof of address, I.D, tax I.D, and income statements if applicable.
If you want to fill out a letter of authority for us to look at what pensions you have, you can fill in the Letter of Authority and send it back to us and we will be in contact with you.
Step 5: Wrap Your Pension in a Trust – If Applicable
If you decide to put your expat pension into an International SIPPs you will have to wrap into a trust and complete the relevant documentation for this. We have done a separate article on International SIPPs because they are slightly different from ordinary SIPPs for UK expats and their pensions.
Step 6: Set Out Funds and Portfolio Structure That You Have Agreed on With The Advisor.
In here once you are happy with the fund and portfolio structure of your pension then you will need to sign the paperwork and agree for it to be implemented by the advisor.
At this stage you should have checked their investment recommendations and be happy with the fund, platform and advisor fee. If you are not then you will need to negotiate this.
Sometimes dealing with pensions can be difficult and long because of the regulation, this is because in earlier years many advisors were ‘cashing in’ by transferring pensions in to average funds that paid high commissions and leaving you the investor short of cash when it came to your retirement. This is why there is now a lot of regulation surrounding pensions.
If you have a defined benefit pension – This can be hard to move and transfer and will take longer than transferring and consolidating the defined contributions pensions.
How to Find Your Lost Details
National Insurance number – You will need to know your National Insurance number like I imagine the majority of people I can’t find the card that came to me but this will appear on employment slips, tax returns, or benefits claims. If you still can’t find it, the U.K Government does have a link where you can submit your details and will get back to you. The form CA5403 will need filling out and submitting. An important note, it only uses the government website below as others may not be credible.
https://www.gov.uk/lost-national-insurance-number
Policy scheme – this will normally be the company itself or a company holding the pension such as Scottish Widows and Legal and General. You should usually receive yearly valuations from them in regards to updated values and predicted valuation at different retirement ages. This is normally sent by post but has now most opted to go by email. So, if you do have a valuation this will have all the information for you. Alternatively, you should be able to ring them and request it after a few identity checks.
If have completely forgot the pension scheme that you go into you might be worth looking at different routes
If you want to trace a workplace pension – a scheme run by an employer – then your first point of contact should be the employer, usually HR will be able to help.
However, if your employer provided access to a personal or stakeholder scheme, then you should contact the pension provider if you know their details.
If you don’t the pension provider’s details, ask your former employer – they should be able to provide the details.
Again, you’ll find a link below to a template letter you can use for this purpose, but the key information you’ll need to provide to the employer is:
- Your National Insurance number
- The date you stopped working there
- The date you started work with the employer
- The dates you joined and left the pension scheme
If you’re still struggling to make progress – perhaps because you can’t find the contact details of an old employer, or you don’t know the provider of an old personal pension – you can contact the Pension Tracing Service.
Submit a tracing request form on the Pension Service website
Policy Number – This will usually be on the policy scheme plan letter that you get.
The address can be found by doing an internet search or will say on the statement.
Define Benefit Salary Process
The process above is for both the defined contribution pension and defined benefit pension but I will go in to more detail about the defined benefit process as it requires slightly more attention. Defined contribution pensions are the ones that you and your employer pay in a monthly proportion of your salary.
If you are looking to transfer a defined benefit or final salary the process is a bit more complicated, you will still need the same information. But CETV (Cash Equivalent Transfer Value) will need to obtained to give you the information about the current transfer value. You are required by law to be able to request one free viewing a year. The rest you will have to pay for yourself unless stated differently in the pension scheme documentation that you are allowed so much a year.
When you get this valuation, you will need to pay for an independent report documenting the pros and cons of transferring you pension out of the scheme.
This has become a regulated process since many have been transferred out and unable to fund a remitment so you will need to see an IFA to go through the figures and options.
The report will cost around 500-2000 GBP for a full report.
The process of how to transfer out of a final salary pension scheme is detailed below:
- Find out all the details of your final salary pension, including who runs the fund, what your pension will be when you retire and any other benefits you may receive.
- Speak to a pension advisor.
- Ask your chosen pension advisor as many questions as you have about your possible final salary pension transfer.
- Take advice and consider all your transfer options.
- Once you’ve found a personal pension type and fund you like, gain permission from your expert that a final salary pension transfer is in your best interest.
- Instruct your pension advisor to go ahead with the transfer.
- Provide and sign and relevant paperwork.
- Wait for the transfer to go through and store the confirmation details and anything relating to your new pension scheme, safely.
With every final salary pension, you have pros and cons of transferring and will link a few articles about this that have written a number of articles so won’t elaborate to much but will need to consider it thoroughly although, it may seem a good time with low interest and high transfer value. And have seen key figures transfer out, please remember it is called gold plated for a reason, you won’t get them again.
The time frame – Due to regulation and the financial services sector in the U.K it does differ how long it takes to transfer out of the U.K but for the defined contribution I would say the average is 6 months and defined benefit schemes are around 9 months.
If you do require more information on pension options please feel free to get in touch on the link below.
