Expat Frozen Pensions
Do you hold one or more Expat Frozen pensions? Have you built up numerous pension pots with previous employers? Are you wanting to access your frozen pension or consolidate it into one? The majority of people who have worked in the UK will have contributed to their company pension scheme. Often, when that person moves jobs they then contribute to another scheme and this continues with every job move. The result is lots of different pots, all incurring individual costs and with no overall investment strategy.
Within this article, we will discuss the options and processes involved in accessing or consolidating your Expat frozen British pensions.
Expat UK Frozen Pensions
A UK Frozen pension, also known as a dormant pension or preserved pension usually refers to any workplace pensions you have contributed to from your previous employment, which neither yourself or your employers are making any further contributions.
What is my Frozen pension currently doing?
Rather than be sat in cash, your frozen pension will be invested into the markets in line with the pension schemes objective and go up and down in line with the markets / underlying investments. You should still be receiving statements from the pension administrators showing the performance and value. Often the schemes will have an old address and for this reason you may have lost the details.
How do I find out where my Frozen pensions are and the current value?
Locating your old dormant UK pensions as an expat is easier than you think. As long as you know the employer, have your NI number and previous address we can 9/10 locate the pension on your behalf.
To trace your pension for free you can complete our Letter of Authority here. Please note this does not allow us to alter or change any policy information but simply locate and confirm value and policy details.
What are my options once I have located my frozen pension?
When assessing the options available to you there are some key factors to consider:
- The existing pension scheme – usually there is no exit penalty or cost for leaving your scheme however in older schemes such as with-profits funds this may not be the case.
- Current Value/number of policies held – As long as the total value of the schemes is over £25,000 then the option to transfer out or consolidate is available
- Age – If you are over the age of 55 you may be able to access the monies immediately without the need to transfer (if this if your objective)
- Country of residence – Many schemes will not allow access if you no longer reside in the UK. Furthermore, they often state you can internally transfer for flexible access but this is again not available for non-UK residents.
Once the above has been clarified the options to consider are:
Consolidate all frozen pensions into one low-cost solution
By consolidating your pension pots into one solution you can:
- Significantly reduce the overall cost
- Allow a strategy (via your financial adviser) to be put in place to align your pension portfolio with your ongoing requirements
- Gain greater fund choice
- Invest and hold monies in multiple currencies, thus negating any ongoing currency risk of being invested in GBP and
Cash in/With your pension monies
If you are over the age of 55 and want to access the capital held within your dormant pension, you may have the option to cash it in. Under the Pension Freedoms act 2015 you can access 25% of your total pension pot tax-free (in the UK only – applicable tax rates apply for the country you live in). Any withdrawals over this amount will fall in line with income tax in your resident country. Note you can avoid paying double tax by applying for an NT code. For further information on how to obtain your NT code click here. As mentioned above some schemes will allow this whilst others may not. If you are not allowed then you will need to transfer for access.
Leave your frozen pension pots where they are
You can of course leave the frozen pension funds in the different schemes and are not obligated to transfer, consolidate or encash.
What are the next steps?
For further information on Expat frozen pensions the first step should be to speak to an expert regulated adviser which you can do here.
Harrison Brook was born out of a desire for greater transparency in the offshore world of Financial Advice. For years, a lack of rules and regulations has allowed for commission-based
investments, confusing fees, and poor client servicing. Our mission is simple – to bring the highest standard of regulated UK advice to Expatriates. No commission payments, no lock-in periods, no ties to products or providers. We are proud of our independence. Our goal is to create strong, long-lasting relationships with our clients.
How much does it cost to locate my frozen?
There is no cost for locating your frozen pension.
If I do want to consolidate my existing frozen pensions, how much does it cost?
The cost for the transfer is related to the value of your pension/pensions as well as the existing scheme. Harrison Brook works solely on a fee basis with full transparency throughout the entire process. Visit our website here for a full breakdown. You can find further information including a case study in my article here.
What happens if I do not consolidate and I die?
This is dependant on the scheme and their particulars. Some schemes will only pay out your own personal contributions whilst others may pay the full amount. Your pension pots would be included in your estate and paid out in line with your Will. Any monies paid out are still taxable.
Is a frozen pension scheme the same as a closed pension scheme?
In short no. A frozen pension as stated is an active pension however no further contributions can be made into the scheme. A closed pension plan is no longer in operation.