UK Pension Annuity for Expats and Foreign Nationals
Published / Last Updated on 29/06/2022
For some years now, expats and foreign nationals living outside the UK have struggled with ‘at retirement’ decisions as to securing an annuity or accessing flexible drawdown.
Buying an open market annuity with your investment linked, defined contribution company pension or private pension has been a virtual ‘no go zone’ if you do not live in the UK.
Even with flexible access drawdown, most pension providers will not accept expats and foreign nationals living overseas for fear of breaching local regulatory rules where you are based. The reality is that a UK pension is protected under UK law, UK financial services regulations and UK compensation schemes. They have nothing to do with overseas regulators at all and most regulators acknowledge this. Therefore, there are still some UK pension providers that will offer terms even when you do not live in UK.
This is even more difficult if you live in France, where French Brexit Laws prevent French residents with UK pensions from doing anything at all with their pensions save making adjustments if it was already written into the contract. A contract that cannot be changed. If you try to do something that is legal for your pension in the UK e.g., transfer to another annuity company or flexible drawdown company, French law blocks this. We intend, next week to publish a mini-video series on the position with France. The rest if the World, Europe the UK Financial Conduct Authority are happy for you to take care of your UK pensions as if you were resident in the UK provided you check that your local regulations do not require any additional measures other than UK regulations protecting you and your UK pension.
Every month, we check all annuity providers, and it has been the same answer “No”. We continually try to find a solution.
Glimmer of Hope for Expat and Non-Resident Annuities
Not all pension providers offer annuities anyway and contractually outsource these to an annuity provider.
For example, we know that Aegon, Aon, Pension Bee, Prudential, Reassure and Sun Life Financial of Canada outsource all their annuities to Legal and General. It is contractual, so if you have an existing pension with these companies and you live overseas, even in France, L&G will offer you an annuity. This is because it is contractual. L&G will not however offer flexible drawdown as this is not contractual. It’s a good job that others do.
Existing pension with the above companies: Yes, you can secure an annuity.
Can you transfer pensions from other companies into one of the above to access the annuity? This is not possible as most companies will not accept transfers in from non-UK residents.
Act before you leave UK. We have said this before and we say this again, you need to plan. If you believe you are likely to want an annuity in retirement, then you should transfer your pension to a pension provider that has access to annuities.
We already have solutions for expats and non-residents to access flexible drawdown and now we have a solution for some lucky people to also have an annuity choice. We will keep searching for an annuity solution for non-UK residents.
