Teachers from the UK are taking up their option to transfer their public sector pensions before the door is permanently closed from April 2015. The public sector retirement fund is severely depleted, and with the threat of further austerity measures being introduced with regularity over the next 10 years, now is widely seen as being the perfect time to consider all the options available.
Many teachers started to contribute to their pension in the nineties, but as has been well-documented, things aren’t looking so rosy anymore. Promises have been broken, contributions have increased, and benefits are set to be further reduced. Add to this the certainty that the age at which savers will be able to draw their pension looks set to be increased sooner rather than later, and it’s little wonder that expat teachers are choosing now to get their funds out of the UK for good.
Chasm
The entire public sector relies on an un-funded defined benefit scheme. On the face of it, this means that whatever is contributed, goes straight out. But with mis-investment, hugely over-inflated gold-plated pensions for those with high-tier jobs, and Government plundering – or “borrowing” as they might call it – a chasm has been created which looks impossible to circumnavigate.
In seven months, the door entitled “alternative options” gets slammed shut for those in the public sector, meaning that savings are left to the uncertainty and constantly shifting environment represented by the UK. For now, expats do have the option of transferring their funds into a more beneficial overseas plan, and Qualifying Recognised Overseas Pension Schemes (QROPS) providers are reporting their busiest few months since the schemes were introduced by HMRC in 2006 to help the growing number of expats be closer to their money.
Options & Choices
QROPS offer a whole host of very attractive benefits, namely choice, investment flexibility, currency options, 42 jurisdictions, the possibility for early retirement, savings placed in a fund which is not in deficit, tax breaks, a larger lump sum currently (with 100% access sure to be granted soon enough), and death benefits which just can’t be matched by any scheme in the UK.
When QROPS were first introduced, expats with Public Sector schemes were slow on the uptake, many citing the loss of the great benefits that went hand in hand with their UK-based scheme as the reason for not transferring. However, as more of these are gradually eroded away over time, as well as the other inescapable issues surrounding the entire UK pension market, many are choosing to reconsider before it’s too late to do so.