You have worked every day of your life, paying into your pension scheme religiously, saving those hard earned pennies to make you comfortable and allow you to enjoy life in the twilight years, you may have decided to get away to warmer climates in order to enjoy every day to the full, ditching the dull weather of the British isles for a Mediterranean retirement, your money safely invested in a retirement fund, what could possibly go wrong?
Many people do not realise the pitfalls they will meet when trying to draw their UK pension from abroad, the trouble they will incur trying to draw from it. It is staggering to find that people who leave their pension in the UK will be limited to only being able to access 25 percent of their pension at the age of 50 or above in one tax free lump sum.
The rest of the funds, a grand 75 percent of your pension is then expected to be withdrawn as an income, and is not accessible as a pension lump sum.
These funds will be subject to further taxation, processing delays, exchange rate fluctuations which combined mean that a person who lives abroad but draws a UK pension is required to live at least 20 years in order to reclaim all of the pension lump sum capital they paid in.
All is not lost, there are ways in which a UK pension can be transferred to another country in order to make the most of your savings and enjoy life as intended. This involves changing your pension to a Qualifying Recognised Overseas Pension Scheme, whereby with the right advice from financial and pension advisors the perfect pension fund can be found to suit your needs whether overseas pensions or pension lump sum schemes.
Opting to change your pension scheme for the afore mentioned qualifying recognised overseas pension scheme (QROPS) can only be done successfully if your pensions is officially recognised by HMRC.
The whole process of registering your existing pension in an alternative country takes about 7 months. For those individuals wishing to access their pension benefits, qualifying recognised overseas pension schemes will be of particular interest especially in countries where pension lump sum regimes form the basis of pensions.
However in the long term there is a five year period whereby your pension is still subject to the rules of your UK scheme. This is known as the transition period whereby at the end of the period the rules pertaining to your chosen overseas pension scheme apply.
With this in mind it is essential to monitor your pension if you are thinking of retiring abroad, with legislation coming into affect in April 2006 which affects all UK based pensions, seeking the appropriate advice regarding pension lump sum or overseas pensions is essential to enjoying your money.
Author Resource:-
Anna Stenning looks into avoiding the pitfalls of pension lump sum schemes when retiring abroad.
![[Valid RSS feed]](http://www.home-business-source.com/articles/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites