A growing number of Britain’s civil servants are now urgently seeking advice on transferring their pensions out of the UK, ahead of a proposed ban announced in this year’s Budget that may stop them from doing so in the future. The proposals are subject to consultation until 11 June 2014.
deVere Group, one of the world’s largest independent financial advisory organisations, reports 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 comes after George Osborne confirmed that civil service pensions may not be able to be moved to another jurisdiction, except in exceptional circumstances.
Nigel Green, the founder and chief executive of deVere Group, comments: “Public sector workers will no longer be able to transfer their civil service pension schemes. The reason for this, it can be reasonably assumed, is that these schemes are alarmingly underfunded and the Treasury is concerned that it will burden with the debts.
“Whilst it is, in many respects, understandable that the government has taken this decision it is, of course, extremely worrying for the pension savers within schemes that are so enormously underfunded through no fault of their own.
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“As such, it is also understandable that there’s been a significant uptick in the number of public sector workers who are now actively considering their options. These options include transferring their pension out of the UK into an HMRC-recognised QROPS (Qualifying Recognised Overseas Pension Scheme) based in a secure, tax-efficient jurisdiction in order to safeguard and maximise the retirement funds that they’ve worked hard for throughout their careers.”
He continues: “Since the Budget, our advisers report a 20 per cent jump in enquiries regarding overseas pension transfers from officials in governmental departments, agencies and non-departmental public bodies.
“Interestingly, there is a good deal of enquiries coming from not only current civil servants but former public sector workers who have pensions they’re now seeking to protect.
“I directly attribute the spike in advice being sought on QROPS from public officials to the forthcoming ban on civil service pensions being transferred, announced by George Osborne in the 2014 Budget.”
The primary advantages of a QROPS, a pension scheme outside of the UK that conforms to HMRC rules, include greater tax efficiency both when the income is accessed as well as on the death of the individual, greater opportunities and more flexibility on pension investments, and a choice of currency in which the retirement income is paid.