Why do anything?
Imagine this: You and your partner work all of your lives together, get a mortgage and buy a house. Years later you have paid off the mortgage.
Eventually one of you leaves this mortal coil and the other one gets to keep only half of the value of the house and the mortgage company gets the other half.
When the surviving partner passes away the house does not go to the kids, it goes to the mortgage company.
Well, that pretty much sums up how a UK pension works.
It does not have to be this way, but this is what we have become accustomed to from the UK pension companies, because that is the way it is – that is what we expect.
The rule that decrees that only half of a pension goes to a spouse etc. is a pension company rule and not a rule of the UK Government and the rules vary depending on the pension company.
Sometimes the spouse receives nothing; sometimes half, but only for 5 years, and many other variables to which we have become accustomed.
I repeat, this is a pension company rule and not a rule of the UK Government (HMRC). It does not have to be this way.
Since 2006 Expats have had the option to transfer their pension into an international pension which not only means you will get tax-efficient growth, but ALL of the pension will go to your spouse/partner/kids/anyone else that you choose.
Any ‘frozen’ Pensions in the UK can be transferred and even if you are already receiving your pension, there is a possibility that you can protect it.
There are many variables with your own pension and the only way to find out if you can protect it is to find out what these variables are.
We help you to find out what the conditions of your Pension are and what you can do to protect it. If it is an annuity, then you have already given your money away in return for an income for life. As you only get circa 5%, you will have to live for another 20 years just to get your money back, and many pensions automatically become an annuity when you reach 65.
There are more issues to consider.
If your final salary scheme is being ‘topped up’ by the company, it means that there is insufficient money in their pension fund to pay you what they promised.
There is a danger that they might register the liability with the Pension Protection Fund and you may receive a lot less than you were expecting.
If you have a NHS pension then this is the best year to get your transfer valuations as the interest on gilts is just 1.75%, the lowest growth since the second world war.
The bottom line is that you need to determine the transfer value and what the conditions of your pension are.
Do the maths:
For every £1,000 per year that your Pension will/does pay there is £20,000 in the pension pot.
So, if you have a pension that pays £6,000 a year then the pot is £120,000.
Instead of your spouse/partner receiving just £3,000 a year, after the inevitable, they would receive the lump sum of £120,000.
What is more, you choose to whom it goes. It can go to a spouse, straight to kids or to anyone else that you specify – anyone except the pension company that is!
Find out – contact us to discover the first steps to protecting your Pension.