[New Zealand ex-pat in UAE, UK pension fund]

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newbie2021
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[New Zealand ex-pat in UAE, UK pension fund]

Post by newbie2021 »

[Moved into a new thread from: UK/Aussie Living in UAE - Beginner Advice --admin LadyGeek]

Hello there - I am a Kiwi married to an Aussie who has spent over a decade in the UK before coming to the UAE. I've ended up with a small pension pot in the UK which I'd like to transfer to ETFs - do you know if it's possible to do this from a UK Pension fund and if so, who would you recommend? Do I have to transfer that pension fund to the UAE somehow or is it OK to leave it in a UK ETF? We will probably end up settling down in Australia in another 5 years. Many thanks in advance!
Last edited by newbie2021 on Wed Oct 13, 2021 6:24 am, edited 1 time in total.
TedSwippet
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Re: UK/Aussie Living in UAE - Beginner Advice

Post by TedSwippet »

newbie2021 wrote: Wed Oct 13, 2021 6:21 am Hello there - I am a Kiwi married to an Aussie who has spent over a decade in the UK before coming to the UAE. I've ended up with a small pension pot in the UK which I'd like to transfer to ETFs - do you know if it's possible to do this from a UK Pension fund and if so, who would you recommend? Do I have to transfer that pension fund to the UAE somehow or is it OK to leave it in a UK ETF? We will probably end up settling down in Australia in another 5 years. Many thanks in advance!
Welcome. It seems like this is really a separate question, and so deserves a thread of its own rather than being tacked on to an existing thread.

To (partly) address your question, can you say what UK pension you currently hold, and with whom? In general -- aside from QROPS(*), which is really a rather specialist and perhaps perilous area -- UK personal pensions are somewhat captive(**). You cannot easily move them between countries, and you cannot take early withdrawals except under some really specific circumstances that I suspect don't apply to you. Also, UK pension providers are often reluctant to open new accounts for non-UK residents, so even a transfer from your existing provider to another UK provider could be sticky.

Can you say what motivates you to want to "transfer to ETFs", rather than stay with whatever investments you currently hold in this pension? It's possible that what you currently have could be entirely fine. Or perhaps, your current provider offers better options that you could use without trying to move the entire pension.


(*) There are no QROPS-suitable UAE pensions. There may be some for Australia, but aside from hassle, it's unclear what QROPS would get you either way.
(**) UK defined benefits (final salary) pensions are I think entirely captive within the UK. Some can perhaps be transferred to a personal pension, but for all but the smallest pensions, perhaps only after taking (government mandated) advice from an IFA.
Last edited by TedSwippet on Wed Oct 13, 2021 2:08 pm, edited 3 times in total.
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Re: [New Zealand ex-pat in UAE, UK pension fund]

Post by LadyGeek »

newbie2021, Welcome! As TedSwippet suggests, I have moved your question into a new thread.
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Re: UK/Aussie Living in UAE - Beginner Advice

Post by Valuethinker »

TedSwippet wrote: Wed Oct 13, 2021 11:20 am
newbie2021 wrote: Wed Oct 13, 2021 6:21 am Hello there - I am a Kiwi married to an Aussie who has spent over a decade in the UK before coming to the UAE. I've ended up with a small pension pot in the UK which I'd like to transfer to ETFs - do you know if it's possible to do this from a UK Pension fund and if so, who would you recommend? Do I have to transfer that pension fund to the UAE somehow or is it OK to leave it in a UK ETF? We will probably end up settling down in Australia in another 5 years. Many thanks in advance!
Welcome. It seems like this is really a separate question, and so deserves a thread of its own rather than being tacked on to an existing thread.

To (partly) address your question, can you say what UK pension you currently hold, and with whom? In general -- aside from QROPS(*), which is really a rather specialist and perhaps perilous area -- UK personal pensions are somewhat captive(**). You cannot easily move them between countries, and you cannot take early withdrawals except under some really specific circumstances that I suspect don't apply to you. Also, UK pension providers are often reluctant to open new accounts for non-UK residents, so even a transfer from your existing provider to another UK provider could be sticky.

Can you say what motivates you to want to "transfer to ETFs", rather than stay with whatever investments you currently hold in this pension? It's possible that what you currently have could be entirely fine. Or perhaps, your current provider offers better options that you could use without trying to move the entire pension.


(*) There are no QROPS-suitable UAE pensions. There may be some for Australia, but aside from hassle, it's unclear what QROPS would get you either way.
(**) UK defined benefits (final salary) pensions are I think entirely captive within the UK. Some can perhaps be transferred to a personal pension, but for all but the smallest pensions, perhaps only after taking (government mandated) advice from an IFA.
1. If it is Defined Benefit, then OP should just leave it. It's possible to get a UK State Pension paid into a Canadian bank account so I see no reason why a private sector pension should not be payable into an Australian bank account. Failing that, perhaps OP kept a UK bank account open?

The pension is RPI indexed up to 5%, normally (which will be CPI after 2030). And the surviving spouse gets a minimum 50% benefit. Both of those are legal requirements. I had a cunning plan to marry someone 25 years younger than I was, she would live to be 100, and the pension provider (a bank in the City) would pay out more in benefits than I ever received as salary when I worked there in the early 1990s ...

2. If it is a pot and there is no possibility to move to another provider (as per Ted S, they usually won't if your address is offshore, I believe-- or rather no one will accept the transfer in), it's usually best to toss it into something likely looking (either the standard pension fund default which will be multi asset, or often there is a choice of index funds so something like UK index or global index) and then forget about it. Fees will average around 1% pa most likely (0.5% to 1.0%).

It can be worth continuing to pay into UK Social Security, to increase one's Basic State Pension, which is inflation indexed.

PROBLEM. Canada and Australia are 2 countries that do not have pension equalisation treaties with the UK. Thus, if you retire to either of those countries, your state pension is frozen (at the level of your departure date, I believe). No inflation indexation. Ted S has noted this in other threads.

If one were to relocate back to the UK for some reason, one's state pension is magically restored to the level of any Resident who paid into the system for (?) 35 years (or whatever the lesser number of years is as a fraction of that).

Of course, and entirely irrationally, if one retires to the USA or EU (currently) that is not the case, one's pension rises with whatever increases the UK government gives to its own residents on their Basic State Pension.

Given OP's likely future destination of Australia and that UK is not a "home" country for them, it probably doesn't pay to pay into the UK system, post departure from the UK.

(I don't know what the position is vis-a-vis pensioners in New Zealand).

3. re transfer into a Defined Contribution scheme from a DB/ Final Salary or Career Average Salary pension scheme. There are exemptions for smaller values (as Ted S notes). It's very difficult now to find an adviser who will advise on the transfers - the costs of past malpractice settlements have been so large, that I gather it's very hard or impossible for a Financial Adviser to get insurance?
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