New expats lose out if they don’t take financial advice before moving

by Ray Clancy on May 30, 2013

New expats lose out if they don’t take financial advice before moving

New expats lose out if they don’t take financial advice before moving

More than three quarters of British people moving abroad are at risk of losing money unnecessarily if they neglect to take professional financial advice or fail to research the cheapest way to transfer income into their new local currency, it is claimed. A survey by the Overseas Guides Company (OGC) showed that 82.4% of British people planning to move abroad will rely on income that is not from paid employment.

It also found that 19.6% will rely on a UK pension, 50.5% a combination of pensions and investments and 12.3% on investments in the UK or abroad. The firm says that given that moving to a new country typically means a change of tax residency, there are often measures soon to be expats can take before leaving the UK that will reduce their tax liability and minimise their exposure to exchange rates.

‘We’re talking big numbers here. Recent figures from the Office for National Statistics show that of the 352,000 citizens who emigrated from the UK last year, 239,000 left the UK for non work related reasons. It’s fair to assume many of these were retirees, which adds up to a lot of pensions and personal assets,’ said Richard Way, editor of the Overseas Guides Company. ‘Anyone with assets or pensions in the UK, or even abroad, which will be a source of income when they move overseas would be foolish not to talk to two types of financial specialists; an independent financial advisor, who specialises in helping expats, and a currency exchange specialist, who sends money between two countries more cheaply and efficiently than banks,’ he explained.

Quote from ExpatForum.com : “Are there any decent financial advisers in Italy or Rome. I need to sort out my pension and do more intellectual things with my money, but have not got the time and can’t be bothered quite frankly.”

He also pointed out that for expats, today’s volatile exchange rates make having income in a currency, for example sterling, different to their new local currency, for example euros, increasingly less attractive. While a sterling based state pension cannot be moved, of which monthly payments are best transferred abroad using a currency exchange specialist, personal pensions offer more flexibility.

‘It might make financial sense and bring peace of mind to transfer your pension into a qualifying recognised overseas pension scheme (QROPS), which would mean income could be paid in your local currency,’ said Way. ‘If your financial advisor deems a QROPS is suitable for you, they should be able to tell you if there is a suitable scheme in the country you are moving to, or whether you need to choose one in an offshore jurisdiction,’ he explained.

‘Other benefits can include lower income tax levels, a higher tax free lump sum and lower tax liabilities if the fund is passed on. A self invested personal pension (SIPP), which offers greater flexibility, might be another option. As always, though, take professional advice to find out which options best suit your individual situation,’ he added.

He believes that these days there is little excuse for expats not keeping on top of financial affairs and tax obligations thanks to the internet and mobile technology.

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