Britain’s civil servants and military personnel should expect to see their retirement planning options restricted from next April, according to the UK division of one of the world’s largest independent financial advisory organisations.
deVere United Kingdom is responding to a proposal to ban public sector workers from transferring their civil service pension schemes outside the UK.
The idea was first mooted in Chancellor George Osborne’s Budget in March and has undergone a consultation period that ended on 11th June. The ban, says deVere, is likely to become law in April next year.
Kevin White, deVere United Kingdom’s Head of Financial Planning, comments: “Unlike those in the private sector, NHS nurses and doctors, paramedics, teachers, fire fighters, police officers and members of our Armed Forces, amongst others, are likely to be denied the right to transfer their pensions out of the UK from next spring. Therefore, those who wish to and who qualify to do so would not be able to take advantage of the associated benefits of a pension transfer.
“Restricting the retirement planning options for these individuals would represent, in my view, a disservice for those who have served and continue to serve their country.”
He adds: “For instance, I work closely with clients from the Armed Forces and many of these individuals move to the Middle East and Africa, amongst other places, and should this ban come into effect, they could lose out on taxation benefits, larger Pension Commencement Lump Sums (PCLS) and control.”
The Treasury’s reasoning behind this proposal, says Mr White, is that “civil service pensions are unfunded and the Government will be left with mountainous debts should civil servants continue to move their pensions out of the UK.”
He continues: “Clearly, a solution has to be found, but penalising the people who have served their country and/or their local or national government is not the answer.”
Kevin White concludes: “For public sector workers who will move abroad during retirement – that’s to say those who qualify to transfer their pensions – and who want to be able to consider the widest possible range of options, the time to act is now.
“Their options include transferring their pension out of the UK into an HMRC-recognised QROPS (Qualifying Recognised Overseas Pension Scheme) based in a safe, tax-efficient jurisdiction in order to protect and maximise their retirement funds.”
In April this year, deVere Group, which has 80,000 clients globally and more than $10bn under advice, reported a 20 per cent increase in enquiries from civil servants on this issue in the latter half of March, compared to the same period in the previous month. The surge was, deVere Group said, in response to George Osborne confirming in the Budget that civil service pensions might not be able to be moved to another jurisdiction, other than in “exceptional circumstances.”