Leaving UK Tip 7 Expat Pensions and Investments

Published / Last Updated on 08/09/2023

When leaving the UK for work or to retire overseas, you should plan early for pensions and investments given tax risks, jurisdictional restrictions, offshore investments and possibly, commission hungry rogue advisers.

Beware Jurisdictions

UK financial advisers, pensions and investment firms and products are not usually authorised outside the United Kingdom and as such, new products and services are usually only available for UK residents.  If you plan to invest new money or start a new pension, you will need to talk with a local adviser.  That said, there are many British Expats and Foreign Nationals living all over the world that have existing pensions, investments, financial or tax interests in the UK.  A financial adviser in the country where you live (or plan to live) is unlikely to be authorised in the UK meaning they cannot advise on your existing UK interests and likewise, UK advisers are not authorised to give advice on existing or new pensions and investments where you live.  Brexit has complicated this matter even further with UK advisers no longer authorised in Europe, so before you may have been able to seek advise from UK but that may now be restricted by local regulations. 

If you have existing UK interests, we already have permissions from as far away as USA, Australia, Canada, NZ, Japan, etc., even the Ascension Islands would you believe and within the EEA from Ireland, Germany, Spain, and Switzerland to advise on your UK interests and with UK laws and regulations.  France and Finland are something of a joke as they block virtually all interaction at present (unless the contract was in force before January 2022, particularly given the number of expats living in France and we are still awaiting replies from Greece, Holland, Italy, Norway, Poland, and Sweden’s regulators after Brexit.  That said, we will still require you to take local advice where you live on top of anything we do in the UK (if anything).

Beware Investment Compensation Schemes

Most developed nations have financial compensation schemes but there are many that do not, and care should be taken if your adviser is looking to move your money to other territories.  Always check what the investment compensation rules are to protect your money.

Beware Offshore Jurisdictions

Be that the Channel Islands, the Caribbean, the Isle of Man or similar.  Offshore investment can be a brilliant option given you usually get tax free growth and income (in the tax haven) and they are usually fully regulated.  Some countries may surprise you to know they are offshore tax havens i.e., non-residents can get tax free income and growth but pay no tax as you are non-resident where the investment is domiciled e.g., Ireland, Luxembourg and even Belgium.

That said, our three key points to note:

  • Smaller territories may not have as robust or as big investor compensation schemes, so it may take longer to get money back if an investment fails.
  • Some offshore jurisdictions may have been blacklisted by the country that you live in and require taxes to be paid immediately on investment growth even if you have not physically take the growth and it is still inside your investment.
  • Be careful as some funds may allow you to invest in certain areas that are available in your investment but may raise a tax charge where you live if that investment area e.g.  property funds are not permitted in Spain, so if you have this in an offshore investment, you may face a tax charge.

Beware Hidden Commissions and Fees

In the UK, financial advisers fees for pensions and investments must be disclosed, whereas where you live, this may not be the case.  Whilst investment charges and penalties will be disclosed by your investment provider, it may be that fees and commissions paid to the financial adviser do not need to be disclosed unlike the UK where they must be agreed before any advice is given.  Make sure you find our what commissions or fees are being paid to your local financial adviser.  If they will not tell you or if they tell you the investment company is paying them, then walk away.

Beware Rogue Financial Advisers

There are some very good and capable financial advisers all over the world.  That said, following the point above about no financial adviser fees or commissions disclosure, there are also many rogue advisers.  We have too frequently come across expat investors who have taken out new offshore and ‘in country’ pensions and investments to then find they have early exit penalties running into the 10s of £000s.  Why would this be?  The adviser got paid a huge stealth commission that when you wish to cash in or transfer away, you end up paying a huge penalty to cover the commission that the investment company paid to the adviser.

In addition, there are also rogue advisers that may try and persuade you to move your UK pensions and investments overseas or use a ‘back door’ route to the same by offering ‘offshore investments’ inside your UK registered pension scheme.  Ask yourself, why move your UK assets?  There may be some valid reasons but there may not be.  Always get some guidance from a UK based expat adviser like us before you leave or if you are already living overseas just to double check any pitfalls.

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