British expatriates pensions and investments, How will Brexit affect my UK pensions, savings, and investments?

What will happen to my savings and investment accounts?

Some British nationals living in Europe have started to receive notifications from their UK investment providers that their accounts will be closed by the end of 2020. UK financial institutions as well as UK-based advisory firms may not legally be able to continue to service these clients once a no-deal Brexit has come into effect. Even if there is a deal, it still might mean that within financial services regulation, or lack of cross border regulation, a UK firm may not be able to continue servicing EU based clients.

Current EU rules allow these businesses to use passporting rights to conduct cross border transactions in member states as there is shared regulation in operation. This will cease in its current format, or possibly entirely once the United Kingdom leaves the trade bloc which presents problems for UK financial institutions.

 

What options do I have with my Investment Account?

If you are living in Europe and you hold an investment account based in the UK, it may be advisable to look at alternative options as well as an advisory Firm which has the appropriate regulatory licenses to cater for all eventualities, which would then give you give continuity over the servicing of your investments and indeed greater reassurance.

There are international investment platforms that have similar offerings to their UK counterparts. Transferring funds to one of these platforms would allow British Expatriates in Europe to continue to invest in line with their long-term financial goals regardless of what happens due to Brexit.

International investment accounts offer investors multi-currency functionality too, enabling investors to gain access to other currencies such as the US Dollar and Euro as well as Sterling, should they indeed wish to have some currency diversification to reduce currency risk in the future.  It would be prudent to seek financial advice when deciding on what international investment platform and investment strategy would best suit your needs and only consider those that are properly regulated and who have a good reputation and who will genuinely act in your best interests. There may also be opportunities to capitalise on your expatriate status.

Weakening Pound

A no-deal Brexit may further weaken the pound (Sterling). There are many expatriates who rely on income from their investment and pension accounts held in the UK. The purchasing power of their income would have decreased ever since the 2016 Brexit referendum and this may continue to decline in the event of a no deal Brexit. Currency diversification is often as important as diversification of assets within an investment portfolio itself, but is sometimes overlooked.

 

British expatriates pensions and investments, How will Brexit affect my UK pensions, savings, and investments?

Can my UK Financial Advisor still look after me?

Many British expatriates continue to utilise the services of their UK financial advisor.  Again, this may not be possible from January 2021 as UK advisors will lose their passporting rights which may leave many clients in an unenviable ‘orphan client’ status. This should be discussed with the UK advisor in order to put a plan in place to avoid such a situation.

Many clients seek to keep the relationship in place with their UK financial advisor as they are familiar with them and an element of trust has been built up over the years, but sometimes local knowledge is crucial and needs to be discussed before any investment planning is put into place. A local advisor will have knowledge of the tax system and how your UK holdings will be treated in your country of residence.  It should also be noted that clients residing outside of the United Kingdom may not be covered by the same UK regulatory protection that serves to protect UK resident clients, just because advice was given from the UK.

Investors in this predicament should look to source an advisor who is regulated in the EU and whom has close ties with the UK.  OpesFidelio is uniquely positioned in this regard as we are members of an international network with advisors across Europe. Within the ‘OpesFidelio Ireland’ arm of the network, there are international advisors who look after clients across the world, as well as domestic advisors who have local knowledge of the Irish investment and pension landscape.  The network also includes UK regulated advisors should you ever need to return to the United Kingdom. This gives clients the reassurance that they are covered in any eventuality, to include ‘inpatriates.’

British expatriates pensions and investments, How will Brexit affect my UK pensions, savings, and investments?

What will happen to my UK bank account?

UK Banking institutions will need to apply for new banking licences to provide services in each of the 27 EU countries. Many banks have already decided that this is not cost-effective for them and have begun informing their overseas clients that they will be closing their accounts and canceling their credit cards.  Lloyds, Barclays, and Coutts banking are the most recent examples of this.

This is a commercial decision rather than a necessity and not all UK banks will be taking this approach. ‘Prevention is often the best cure’ so clients should speak to their bank to see what their intentions are in order to plan accordingly to avoid any potential issues in the New Year.

 

What will happen to my private or occupational pension?

It is not clear exactly how this will play out. Some UK annuity providers have advised recipients to open UK bank accounts to avoid the loss of payments. As previously advised, this may be difficult due to new restrictions being imposed by many UK banks.

 

Can I transfer my UK pension to another country?

As things stand, Brexit should not affect one’s ability to transfer a UK pension to another country and there may be many benefits in doing so. Under current legislation, there is no tax applied on transfers to pension schemes within the EU once the receiving scheme meets the HMRC rules.

However, the UK currently applies a 25% ‘overseas transfer charge' (effectively an exit tax) on pension transfers outside the EU/ EEA.  Once the UK leaves the EU this could easily be extended to all transfers out of the UK. Consideration should be given to transferring pensions without delay before any possible penalties are introduced.

 

What will happen to my UK State Pension entitlement?

One of the biggest benefits of the UK state pension is the fact that it increases each year in line with the highest price of inflation, average wage growth or 2.5%. Similar protection was also extended to those living in the EU but not those further afield, for example, Australia.

There had been fears that this benefit could be under threat due to Brexit but the British Government has now confirmed that this benefit will remain in place.

Other countries such as Ireland have gone one step further and put an agreement in place with Britain to ensure all existing arrangements will be maintained between the two states. This includes the ability to transfer social insurance contributions between the two states if it is needed to bolster the individual’s social insurance record to be eligible for a state pension.

 

Contact us

Should you have any queries in relation to the article above, please do not hesitate to contact the team at OpesFidelio Ireland to see how we can assist you with your cross border financial planning requirements.

CONTACT INFO

OpesFidelio Ireland Ltd
12, Parklands Office Park
Southern Cross Road
Bray, County Wicklow
Ireland

Tel: +353 (0)1 272 4130
Email: adminireland@opesfidelio.ie

We are conveniently located on the Southern Cross Road between Bray and Greystones which can be accessed via junction 7 of the N11.

This is ideal for servicing clients from the surrounding South Dublin, Wicklow and greater Leinster areas.

 

Directions:

Our office is situated 20kms south of Dublin, just beyond Bray in Co. Wicklow. Take the M50 southbound onto the N11 then take Exit 7, the Bray/Greystones exit and follow signs to Greystones. We are on the right near the end of the Southern Cross road leading from the N11 to the Greystones Rd.

OPESFIDELIO FINANCIAL PLANNING LTD

OpesFidelio Financial Planning Ltd is regulated by the Central Bank of Ireland.

OpesFidelio Financial Planning Ltd (Company No 456044) is a wholly owned subsidiary of OpesFidelio Ireland Ltd (Company No 158916).

OpesFidelio is a trademark used under licence.