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Brexit puts a damper on Britons retirement plans
| Published: | 22 Jul at 6 PM |
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Brexit’s shock result has all but wrecked the retirement plans of many Brits due to freedom of movement insecurity and possible financial planning chaos.
The biggest question mark threatening the retirement plans of a fair proportion of older Brits is the ability to settle legally in one of the many European expat destinations. Although, just a month after the referendum took place, there seems to be a slight easing of doom and gloom as regards freedom of movement, the risk of losing everything is still there.
Even more of a risk may be the average retiree’s already undertaken financial planning for a move overseas to an EU member state. Even now, the fall in sterling is restricting purchasing power for expats relying on the UK state pension to survive. A huge number of present-day expat residents living in Spain are finding the 11 per cent loss due to the exchange rate tough to deal with.
For those planning on selling their house and moving overseas, the advice is to hold off for now, as currency fluctuations aren’t expected to stabilise until the Brexit negotiations are over and done with. Converting large amounts of sterling to euros could result in an expensive mistake. For those who’ve opted for a QROPS A part of their financial planning for a move, there’s even more uncertainty ahead.
For the past 10 years, Brits moving to countries within the EEA have been able to transfer their pension pots from a UK registered scheme to another in an FCA-approved jurisdiction. Experts predict the government may change the rules, allowing QROPS to be transferred only to the new country of residence, and new laws may then enforce compliance with the UK’s lifetime allowance.
A major cause for concern is whether the government will enforce frozen pensions across the board for retirees living overseas. Again, this will be a cause for negotiation with individual countries, but the UK’s record on this issue is less than reassuring. Healthcare is another milestone for the average Brit pensioner wishing to leave, as free or very cheap access to local medical services via the European Health Card is sure to end. Reciprocal arrangements are a possibility but, again, it’s up to EU member states’ preferences on the subject.
The biggest question mark threatening the retirement plans of a fair proportion of older Brits is the ability to settle legally in one of the many European expat destinations. Although, just a month after the referendum took place, there seems to be a slight easing of doom and gloom as regards freedom of movement, the risk of losing everything is still there.
Even more of a risk may be the average retiree’s already undertaken financial planning for a move overseas to an EU member state. Even now, the fall in sterling is restricting purchasing power for expats relying on the UK state pension to survive. A huge number of present-day expat residents living in Spain are finding the 11 per cent loss due to the exchange rate tough to deal with.
For those planning on selling their house and moving overseas, the advice is to hold off for now, as currency fluctuations aren’t expected to stabilise until the Brexit negotiations are over and done with. Converting large amounts of sterling to euros could result in an expensive mistake. For those who’ve opted for a QROPS A part of their financial planning for a move, there’s even more uncertainty ahead.
For the past 10 years, Brits moving to countries within the EEA have been able to transfer their pension pots from a UK registered scheme to another in an FCA-approved jurisdiction. Experts predict the government may change the rules, allowing QROPS to be transferred only to the new country of residence, and new laws may then enforce compliance with the UK’s lifetime allowance.
A major cause for concern is whether the government will enforce frozen pensions across the board for retirees living overseas. Again, this will be a cause for negotiation with individual countries, but the UK’s record on this issue is less than reassuring. Healthcare is another milestone for the average Brit pensioner wishing to leave, as free or very cheap access to local medical services via the European Health Card is sure to end. Reciprocal arrangements are a possibility but, again, it’s up to EU member states’ preferences on the subject.
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