# Pensions (if you're originally from UK)



## crazymazy1980 (Aug 2, 2008)

Pensions (if you're originally from UK)

I don't know if this has already been discussed in the forum previously as I've been lazy and not looked but I went to try and sort out a UK-based stakeholder pension whilst I was back in God's country and found out that once you are non-resident for tax purposes you CAN'T start one. I also found out that if you already have one in the UK then you can only make contributions for a further five years after you become non-resident. Had I set it up before I left I could have carried on making contributions as long as I returned from Dubai before the 5 years is up.

The reason why I wanted a UK based one is that the government will protect it up to 90% of its value and to me that was more important than any tax implication (I don't mind paying tax). I used to have a non-contributory pension but since leaving the company it is now frozen and can only be commutable to certain other schemes - or so they tell me!

I was also told that you can put up to 100% salary in as a lump sum in any year

So that's the advice I was given but the people I talked to didn't really know very much about Expat finance (it would seem Bolton is such a good town that noone really leaves ) which left one of my questions unanswered, what options does a UK expat have with regards to a protected pension and can it be commuted into a UK pension scheme when they return to England?

Thanks for any advice


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## Elphaba (Jan 24, 2008)

Correct. You cannot set up a Stakeholder pension once you have left the UK. The rules regarding 100% of salary as contribution only applies to UK residents. Non-residents can pay up to £3,600 per annum into an existing personal or Stakeholder pension plan for up to 5 years. Note different rules apply for people still on UK contracts and employer contributions

There are no expat pension scheme in the UAE, no matter what insurance company literature might say. The end of service gratuity scheme is designed to go some way towards replacing pension funds but is not enough. The main option is a regular premium savings plan, which should only be arranged with an offshore provider.

Most of the plans however, have punitive charges in the first 18 months, so that no fund builds up. This is a charging structure that has been banned in the UK, but is still prevantent in the offshore market. There is however, a provider that has a different structre, but they have a higher minimum premium. The plans are largely set up as platforms, so that the provider provides the administrative shell but within it you would have access to up to 300 funds from a range of international providers covering all asset classes.

Plans can be set up with a minimum term of five years, although too many so-called advisers will push people into much longer terms, and largely unsuitable terms, as they receive significantly more commission.

Offshore savings schemes cannot be commuted into UK pensions as such, but if they are encashed funds can be paid into a UK plan once a person is again UK resident with a maximum of 100% of salary. Tax relief would apply at the indivuidual's marginal rate. Potential tax liabilit must also be considered if encashing an offshore plan, but individual advice would be needed. This is also a good reason to have shorter term plans

Take care when dealing with advisers in the UAE as regulation and compliance is minimal. You should ONLY deal with someone who has proper qualifications (usually Chartered Insurance Institute) and preferably advanced ones at that, as well as plenty of experience. Most UK based IFAs (Independent Financial Advisers) have little or no knowledge of the offshore market, but many IFAs in the UAE have never worked in the UK so do not understand that either.

UK nationals can also continue with their National Insurance contributions to build up entitlement to UK State pension.

(Posted by a UK and UAE authorised IFA).


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