Pensions are confusing for expats because of the unbelievable tinkering over the years that has thrown up so many new names for old schemes.
To have a good understanding of pensions, you need to know your PPPs from your Qs – the QROPS and QNUPS.
A PPP is the personal pension plan, while the Qs are QROPS – Qualifying Recognised Overseas Pension Schemes and QNUPS – Qualifying Non-UK Pension Schemes.
However, it’s your independent financial adviser’s – or IFA’s – job to understand just what goes on under the bonnet of all these different pension types and there a lot of them. Probably 30 or more at the last count.
Pensions for expats
Like cars, you don’t need to know how they work, but when making a buying decision you do need to understand why you want one and what you are going to do with it.
Flitting around in a sporty two-seater offers different options from a reliable family four-seater. UK and offshore pension schemes have similar differences.
If you are an expat, you are probably aware that several pension options are available, depending on your tax residency and financial goals.
For instance, an expat can be someone working abroad for a couple of years or someone who has made a clean break with the UK and moved permanently abroad.
Pension opportunities are different for both, because some pensions are not available to UK tax payers and most.
The big difference for UK based expats is pension contribution relief – the extra money the taxman adds to your pension pot as an incentive for saving for your retirement.
Expert offshore pension advice
Expats who have made the big move overseas do not pick up pension contribution relief, so the focus moves from free money from the taxman to flexible investment options to grow the fund and retirement benefits further down the line.
The bonus is any contributions topped up by the tax man are fully transportable from the UK to an offshore pension.
The point is the technical jargon does not matter to a retirement saver. What matters is getting the right advice from someone who can put together a short list of the right schemes that suit your expat status, tax residence and financial objectives.
So what if it’s a QROPS, PPP, QNUPS or any other piece of alphabet soup.
Going to a professional, experienced pension adviser who can tailor an offshore pension to suit your personal needs is the priority for an expat.
If you would like to be put in touch with a qualified financial adviser, please contact us via the contact form here for a referral.
I am an expat, and I get pension relief.
Don’t forget that there are local pension arrangements in some jurisdictions that offer tax relief on the local schemes. These should always be investigated as part of retirement planning for the long term expat.
For those on high salaries, there are all sorts of tax reliefs on Section 615 schemes.https://www.hmrc.gov.uk/manuals/eimanual/eim15084.htm