People around the world work hard every day to ensure a peaceful life. Things are not different at all when we talk about the United Kingdom. People work hard for 40 years ( or more) to ensure an excellent private pension. That is one thing that motivates them to do even more challenging when the tough moments come. More precisely, it is a good inspiration when your job becomes monotonous to you.
Yet, when people retire, they finally got the freedom to make some other decisions. The lack of time is no longer a problem, and if they had a good job, a lack of cash flow is also not going to be an issue. Because of that, many older people decide on moving aboard when they retire.
Let’s imagine that you are tired of rainy days in the UK. You would want to spend more time in parts of the world where the weather is warmer. Because of that, you decide on moving somewhere in Africa or the south part of Europe. The question is – what happens to your private pension if you move aboard?
Before everything, we need to say that you don’t have to worry. Your pension will not disappear, and your hard work will remain rewarded. However, you do not need to go through specific steps and ensure everything remains correct. There are two options that you can do. The first option you have is to leave the pot in your country and take the money from aboard. On the other hand, people can also decide to move their private pension abroad. The third option is to use the mix of these two options. However, we are sure that people would want to find out more about our just mentioned choices. Because of that, let’s analyze them a bit more together.
1. Taking Your Private Pension from Aboard
We need to say this is one of the options that people more often use. They would not want to go through the process of moving their private pension aboard. Instead of that, they will get the necessary amount of money thanks to different bank transactions.
Keep in mind that each transaction will take you additional money for different bank fees. In most cases, the UK pension providers avoid sending the money directly to the overseas bank accounts. Even if they decide to allow you that option, you will need to pay the additional fees. That is the reason why we recommend you consult with your provider before deciding on that move. In that way, you will be sure if this solution is going to pay off in the end or not.
On the other hand, there is one more effective way that will help you save more money. Your pension provider can also send you money directly to your UK bank account. If you are a debit card owner, you can withdraw your money from the country you plan to live in. Despite that, you can also transfer money from your UK bank account to the bank account you have in another country. Yet, we once again recommend you check all the bank charges as well as exchange rates.
2. Moving Your Pension Aboard
Another option you have is to move your private pension to the place where you plan to stay. However, there is one thing that you need to know here. We believe your goal is to take the whole amount of money you deserved after years of hard work. Because of that, you need to transfer money in a more specific way. More precisely, you need to share it into a qualifying recognized overseas pensions scheme. That is the only way to avoid taxes you would have to pay when moving your pension pot aboard. Fortunately for you, these schemes are not different from those that you have in the UK.
Still, that doesn’t mean you will not have additional costs in that case. That especially counts when we talk about exchange rates. In most cases, you won’t manage to get the full amount of money. Yet, there are some exceptions where you can manage to do even that. That is the reason why we suggest you talk with your provider and find the best possible solution.
3. More about Taxes
There are many taxes people have to pay during their lifetime. Because of that, we suggest you read this part carefully.
First of all, it may happen that you will have to pay UK tax on your private pension. However, you can once again deliver the taxes of the country where you plan to stay. Still, that rule does not always count. Some states have a double taxation agreement with the United Kingdom. In that case, you will avoid being taxed twice, which will allow you to get more money.
However, there are two more things that we would like to say here. When a person plans to retire aboard, he needs to notify HM Revenue and Customs about that decision. In that way, they will tell you which taxes you exactly need to pay. On the other hand, some people decide on moving abroad even before they start taking their private pension. In that case, you need to be careful. There are many overseas tax laws that we recommend you research. It may happen that some tax-free options will not be available to you.
4. Bonus Tips People Should Know
Before we say goodbye to each other, there is something more we would like to say. We do not know exactly where you plan to move. However, whichever country you choose, keep in mind it will have a different local tax system compared to the one we have in the UK. That is the reason why we recommend you get familiar with those laws while you are still at home. For instance, many countries will require different national and local taxes. Despite that, there are also other types of taxes that may be unfamiliar to you.
Let’s use EU countries as an example. Did you know that all countries across the EU have a so-called wealth tax? It is the type of tax that can account for all the assets and wealth that you have. Despite that, the wealth tax also requires regular reporting. That is only one example of the differences that other countries have compared to the UK.
We know that people are not quite sure if making this decision is right for them. The precise answer to that question does not exist. It depends on how you prepare for the process of moving your private pension aboard. Our recommendation is to check reviewmypensions.com. There you will manage to get many tips for retirement aboard. Hearing the pieces of advice from the experts will help you make the final decision.