No more private pension options for non-UK residents?

MG_money

I have had a long-standing pension plan with one of the large UK providers that has been dormant for many years. All communication regarding the investment in recent years gave the impression that all the options for annuity or draw down would be available to me. 

However, as it gets closer to my intended retirement I have realized and been told that because I live now in Germany that none of these options are in fact available to me any more and that all I can do is "cash in" the full amount (or make eg a QROPS transfer out).

A quick phone around several of the other UK big names confirmed that none of them either would accept a transfer of my pension into any of their UK funds.

This situation leaves me with several questions:

• Is this now a general situation for everyone in my situation living outside the UK or have I just not called the right provider willing to offer something?
  
• Has this been caused by Brexit or was it always so?
• How was my provider able to unilaterally withdraw these options from an existing contract? - Presumably I gather by saying that all such options involve a transfer into another product and that these products are only available to UK residents, and that therefore nothing about my investment product itself has changed (sophistry?)
  

In fact the fund involved is relatively small and the German tax implications of taking it all out at once probably not too bad. However, it is my guess that many others are in the same situation and may not yet realise it untl they come to actually crystallise their pension fund and find that their options as non-UK residents are extremely limited.

xylophone

https://myexpatsipp.elementor.cloud/4-things-to-know-about-drawing-your-uk-pension-from-overseas/

A possibility for transfer?

dunstonh

I have had a long-standing pension plan with one of the large UK providers that has been dormant for many years.

Pensions cannot go dormant.  That only applies to bank accounts.

 All communication regarding the investment in recent years gave the impression that all the options for annuity or draw down would be available to me. 

All options are available to you from a legislation point of view.

However, as it gets closer to my intended retirement I have realized and been told that because I live now in Germany that none of these options are in fact available to me any more and that all I can do is "cash in" the full amount (or make eg a QROPS transfer out).

Not strictly true.   The options are available to you.  However, the EU forbids the UK from retailing new financial products to residents of the EU unless the firm has a physical branch and regulatory permissions within an EU country.   Most do not.  But a small number do.

• Is this now a general situation for everyone in my situation living outside the UK or have I just not called the right provider willing to offer something?
• Has this been caused by Brexit or was it always so?

Just the EU.   Its punishment to the UK for leaving the EU.   (other non-EU countries get permissions before anyone chimes in and says its a consequence of not being a member).    Many firms will retail products to expats in non-EU countries.

• How was my provider able to unilaterally withdraw these options from an existing contract? - Presumably I gather by saying that all such options involve a transfer into another product and that these products are only available to UK residents, and that therefore nothing about my investment product itself has changed (sophistry?)

They haven't withdrawn them.   Your reference to dormant suggests it is a legacy pension (an old one and not a modern one).  Most legacy pensions do not support drawdown.  You have to transfer them to a modern plan.    Annuities are also purchased via annuity providers (which means a new provider).       The EU allows servicing of an existing contract but doesnt allow the selling of a new contract.

There are providers that cater for ex-pats.  However, they tend to be expensive, limited and not ideal for small fund values.

Bostonerimus1

Can you just do drawdown from your existing accounts? I have pensions in the US and they are fine with me doing drawdown and having the money deposited into either a US or foreign bank account where ever I'm living. The tax situation is annoying as they have a policy of withholding tax because the US taxes on residency and citizenship. However, if I was living in the UK I would not be able to set up new back accounts or investment accounts in the US as they are not allowed to sell to non-US residents. Therefore, I have set up accounts and made plans to allow me to access my US pension money easily if/when I leave the US. It might be easiest just to cash out, but if you do that make sure you have the tax situation set up correctly.

The selling of financial products across borders is not a trivial or usual procedure so your situation is not out of the ordinary and might have been helped if you were given information that was a little more realistic than "cake and eat it" so that you could have taken action before Brexit. If all else fails can you return to the UK, become resident and set up the accounts that will make drawdown possible and then return to Germany? I know that sounds a bit extreme and is really only possible with dual citizenship, but I have a British friend in France who has taken French citizenship post Brexit to make the practicalities fo their finances and movement easier, but mostly as a "middle finger" to the whole Brexit enterprise.

Malthusian

MG_money said:

However, it is my guess that many others are in the same situation and may not yet realise it untl they come to actually crystallise their pension fund and find that their options as non-UK residents are extremely limited.

If they left the UK relatively early in their career, there's a good chance they will be in a similar position to you, where the tax on cashing in the pension isn't too bad. If their UK pension fund is substantial and the tax bill likewise, they will be more inclined to go through the expense and hassle of opening a product with the relatively small number of firms that can cater to EU residents.
For people who spend most of their working lives in the UK, whose migration is driven by retirement rather than work, it would be sensible to set up any new pension products needed and "get their ducks in a row" while they are still UK resident. Another reason to do so is that the 25% "tax free lump sum" often becomes taxable once you become tax-resident in other country.

AltaNate

Did you look at AJ Bell?

https://www.ajbell.co.uk/faq/am-i-eligible-sipp

“You can have a SIPP if you're resident in the UK. You can also set up a SIPP if you're resident overseas but want to transfer a UK pension to the SIPP (though keep in mind you may not be able to make further contributions to it).”

AltaNate

AltaNate said:

Did you look at AJ Bell?

https://www.ajbell.co.uk/faq/am-i-eligible-sipp

“You can have a SIPP if you're resident in the UK. You can also set up a SIPP if you're resident overseas but want to transfer a UK pension to the SIPP (though keep in mind you may not be able to make further contributions to it).”

They’ve changed their terms so no longer possible:

”You can have a SIPP with us if you're resident in the UK.”