An "offshore pension" can be as simple as a savings scheme that someone living abroad can put money into, perhaps a lump sum, to provide an income at retirement age. In some cases, these lump sums can be turned into cash at any time.
When there is an unfavourable exchange rate, such as those living in Europe but with their money in the UK have experienced in recent years, some expats can find themselves struggling for cash, although they may have significant assets in pensions, investments or savings.
If you have a UK pension and simply leave it there, you may not be making the best use of what is one of your most important assets. Pension funds tied up in the UK are subject to UK legislation and benefits and are covered by UK regulations.
This means you can only take a maximum of 25% tax free cash over 50 years of age (rising to 55 in April 2010) and an annuity or a regulated income. On your death, your family could lose as much as 35% to 100% of your pension fund, under UK regulations.
BUT - there is a way of providing you with flexibility of income and protecting this income from exchange rate fluctuations. By taking action now, you COULD escape from the UK requirement to purchase an Annuity and you COULD pass on all the money that remains in your fund to your loved ones on your death.
Expat Pensions is Europe's leading authority on QROPS - click here for full details.
