I thought it would be helpful to share some info, as I have spoken with quite a few of you recently coming across the same issues.
The world of UK pensions has changed a lot in recent years, especially for people who now live abroad. One of the most noticeable shifts is that retirement options are becoming more limited. Most of the UK pension providers in the UK will not offer annuities to clients outside of the UK. Since many older UK pension schemes are still set up to default automatically into an annuity at retirement, this leaves clients overseas with far fewer options. In some cases people are forced to transfer their pensions simply to access flexible income.
If your current pension scheme does not allow flexi access drawdown then your choices become very restricted. In many situations the only option left is to take the pension as a full lump sum, which often results in a very large income tax bill in the same tax year. This is rarely the best outcome.
Tax is a big area that catches many people out. The 25 percent tax free cash from a UK pension is only tax free inside the UK. Most expats in France do not realise that they usually need to declare this amount as overseas income in their country of residence. In many cases this leads to a tax charge.
Another useful point is that some non UK residents can adjust their UK tax code to avoid being taxed at source. This prevents the need to reclaim tax each time income is taken which can save a lot of time and frustration.
There is a lot here to think about, especially if your UK pension has not been reviewed recently. If you have questions about your own situation or you want help understanding any of these points, feel free to reach out to me via email George.symes@sjb-global.com