Brexit and probable changes to Irish pension regulations make a strong case for taking action on your UK pension now.
Under current regulations, if you have a pension plan in the UK which you are no longer paying into, you are allowed to transfer it to Ireland to your employer’s pension scheme or into a Personal Retirement Bond (QROPS). If you choose a Personal Retirement Bond and you have been resident outside the UK for at least 10 years you are allowed access your fund from the age of 55.
The uncertainties that Brexit brings
With Brexit now a reality, there may be some uncertainty about the value of Sterling in the future and this has prompted many ex-UK pension holders to transfer their funds back to Ireland. A further cause for concern is the fact that the rules will change once the UK leaves the EU at the end of the transition period making it more difficult to transfer your pension fund from the UK.
Your options should you leave your UK pension in the UK
If your pension is left in the UK, you will have two options at maturity; take a tax-free lump sum and then either take a fixed annual payment from an annuity or take the remainder of your fund as a taxable lump sum. An annuity at the moment is unattractive as the rates have never been lower; and if you take a taxable lump-sum a large proportion of your fund will be lost in taxation.
Another cause for urgent action is the strong likelihood that Personal Retirement Bonds are to be abolished in the next couple of years as part of the Irish Government’s ‘roadmap’ to pensions simplification.
This may mean that your only option is to transfer your UK pension to your Irish employer’s pension fund, if you have one. In so doing you restrict your option to be able to mature your pension early as you will have to wait until you are retiring to be able to access your fund.
If this suits your circumstances, then you may be happy to leave things as they are.
If, however, you would like to be able to access your money from the age of 55, then you really need to seek advice.
Contact us today so we can answer any queries you may have.
Craig Middleton is a Senior Financial Advisor at Clear Financial. He holds the QFA and LIAP(Dip) designations. He started his career in Financial Services in the UK Banking industry in the 1980s and made the move to Ireland in 1993 where he worked with market leaders such as Irish Life and Zurich Life until 2007 when he set up his own brokerage firm, Steadfast Financial Consulting Ltd, which he ran, with a co-director, until joining Clear Financial last year. Contact him at 086 2534110 or craig@clearfinancial.ie.
