How will Brexit affect my UK pensions, savings, and investments?

What has happened to my savings and investment accounts?

UK financial institutions as well as UK-based advisory firms may not legally be able to continue to service these clients once a no-deal Brexit has come into effect. We are seeing many companies take a commercial view that they can continue to hold investments, however, the account holder can't make switches etc.

 

What options do I have with my Investment Account?

If you are living in Europe and you hold an investment account based in the UK, it may be advisable to look at alternative options as well as an advisory Firm which has the appropriate regulatory licenses to cater for all eventualities, which would then give you give continuity over the servicing of your investments and indeed greater reassurance.

There are international investment platforms that have similar offerings to their UK counterparts. Transferring funds to one of these platforms would allow British Expatriates in Europe to continue to invest in line with their long-term financial goals regardless of what happens due to Brexit.

International investment accounts offer investors multi-currency functionality too, enabling investors to gain access to other currencies such as the US Dollar and Euro as well as Sterling, should they indeed wish to have some currency diversification to reduce currency risk in the future.  It would be prudent to seek financial advice when deciding on what international investment platform and investment strategy would best suit your needs and only consider those that are properly regulated and who have a good reputation and who will genuinely act in your best interests. There may also be opportunities to capitalise on your expatriate status.

Currency Diversification

 Currency diversification is often as important as diversification of assets within an investment portfolio itself, but is sometimes overlooked. Should you not have any plans to return to the United Kingdom, it may make sense to start to moving funds out of Sterling into the currency which you will most likely be utilising in the future.

 

Can my UK Financial Advisor still look after me?

Many clients seek to keep the relationship in place with their UK financial advisor as they are familiar with them and an element of trust has been built up over the years, but sometimes local knowledge is crucial and needs to be discussed before any investment planning is put into place. A local advisor will have knowledge of the tax system and how your UK holdings will be treated in your country of residence.  It should also be noted that clients residing outside of the United Kingdom may not be covered by the same UK regulatory protection that serves to protect UK resident clients, just because advice was given from the UK.

Investors in this predicament should look to source an advisor who is regulated in the EU and whom has close ties with the UK.  Opes Financial Planning works hand in hand with UK advisors in order to achieve best outcomes for clients.

 

What will happen to my UK bank account?

Many banks have already decided that this is not cost-effective for them and have begun informing their overseas clients that they will be closing their accounts and canceling their credit cards.

This is a commercial decision rather than a necessity and not all UK banks will be taking this approach. ‘Prevention is often the best cure’ so clients should speak to their bank to see what their intentions are in order to plan accordingly to avoid any potential issues in the New Year.

 

What will happen to my private or occupational pension?

Most institutions allow clients to continue to maintain their pension accounts in the UK, however, they cannot actively manage these or service them as a non-resident. The accounts are essentially frozen. This varies from institute to institute.

 

Can I transfer my UK pension to another country?

As things stand, one can transfer a UK pension to another country and there may be many benefits in doing so. Under current legislation, there is no tax applied on transfers to pension schemes within the EU once the receiving scheme meets the HMRC rules.

However, the UK currently applies a 25% ‘overseas transfer charge' (effectively an exit tax) on pension transfers outside the EU/ EEA.

 

What will happen to my UK State Pension entitlement?

One of the biggest benefits of the UK state pension is the fact that it increases each year in line with the highest price of inflation, average wage growth or 2.5%. Similar protection was also extended to those living in the EU but not those further afield, for example, Australia.

There had been fears that this benefit could be under threat due to Brexit but the British Government has now confirmed that this benefit will remain in place.

Other countries such as Ireland have gone one step further and put an agreement in place with Britain to ensure all existing arrangements will be maintained between the two states. This includes the ability to transfer social insurance contributions between the two states if it is needed to bolster the individual’s social insurance record to be eligible for a state pension.

 

Contact us

Should you have any queries in relation to the article above, please do not hesitate to contact the team at Opes Financial Planning Ltd to see how we can assist you with your cross-border financial planning requirements.