What is a Pension Review and why should you do it?

A pension review is where your current pension schemes are analysed by regulated financial advisors to determine their performance.

Here you will learn everything you need to know about pension reviews, including:

What is a pension review?

A pension review analyses your pension schemes to check they perform as well as possible. At AHR, we will check everything, including:

  • How much your pension funds have grown.
  • How do your pensions compare to similar schemes?
  • What markets your pensions are invested in, and are there any financial risks to you.
  • Whether you can claim tax-free cash early instead of at retirement age.
  • Whether you can drawdown the pension fund or transfer it to loved ones when you die.
  • Whether you can transfer your pension to a tax-efficient vehicle allowing you to access your funds at a lower cost and in a currency of your choice.
  • Whether your spouse and/or family will receive your pension, and if so, how much of it.
  • For Final Salary pensions, you will learn whether your pension will inflate with CPI or RPI.
  • How much will your current pension(s) pay you vs. alternative options for your specific scenario?

Why should I review my pensions?

Reviewing your pensions lets you see if you are still on course to retire the way you want. However, your pension and retirement plans can be more complex for UK citizens living and working abroad.

Therefore, you must be aware of rules that could affect you when drawing a UK pension as a non-UK resident. However, suppose you are outside the UK but intend on retiring within the UK. In that case, there may be advantages to your offshore status that you can take advantage of now that will benefit you in retirement.

It is always worth reviewing your pension with an adviser because they can find products and services that meet your financial goals. This saves you time, hassle and expense.

Trying to do it all yourself is time-consuming. Moreover, you could miss an essential product or scheme that a specialist adviser will know about.

After an adviser has made a full assessment, you can make an informed decision about your pension funds, including staying with what you have and making no changes.

Your pension will be a primary source of income when you retire. Therefore, you need your pension to work as hard as possible now, to enjoy a comfortable lifestyle, whether at home or abroad, once you retire.

Remember, your pension will be a primary source of income when you retire. You need it to work as hard as possible now, so you and your loved ones can enjoy a comfortable lifestyle, at home or abroad.

What pension types can be reviewed?

This depends on where your pensions are invested and the terms and conditions applied to each scheme. UK pensions are likely to fall into one of two types.

Type 1: Defined benefit pension review

A defined pension provides a structured guaranteed income for life when you retire. It is typically based on how much you’ve earned and how many years you’ve worked. Final salary schemes usually fall into this category. This review examines the pension in detail and will:

  • Check where the funds have been invested.
  • Analyse your entire financial portfolio, including whether you can access the benefits of the 2015 UK Pension reforms.
  • Reviewing the funding level of the company pension, and if there are any red flags, the possible outcome in the event of insolvency.
  • Outline the benefits of transferring your defined benefit pension to a personal pension.
  • Make recommendations designed to maximise your pension fund, including transferring it.

Type 2: Defined contribution pension review

With this pension, you and your employer contribute a percentage of your salary into a defined scheme. This is where the fund value is held. What you get depends on your earnings history and the value of contributions you and your employer have made. This review will:

  • Check all contributions and where the funds have been invested.
  • Analyse your entire financial portfolio, including whether you can access the benefits of the 2015 UK Pension reforms.
  • Check any overseas pension schemes that could maximise your income at retirement (e.g. Qualifying recognised overseas pension scheme (QROPS), Qualifying non-UK pension scheme (QNUPS), or Self-Invested Personal Pension (SIPP)).

Suppose you have a defined benefit pension scheme or safeguarded rights worth more than £30,000. In that case, the law requires you to seek financial advice from a qualified adviser before making a transfer using a Qualifying Recognised Overseas Pension Scheme (QROPS).

Can I combine my UK pensions into one?

Both defined benefit pensions and defined contribution pensions can be transferred and consolidated into a single Self-Invested Personal Pension (SIPP).

Benefits of combining your UK pensions into a SIPP

The benefits of combing your UK pension into one are:

  • Easier to manage: Keeping track of and managing your pension savings is more manageable with one scheme.
  • More investment potential: Gain access to a greater choice of investments if you’re consolidating your pension pots into a SIPP.
  • Save on fees: Potentially pay less overall charges than if you put your money into a pension with competitive fees compared to an older plan with high charges.
  • Access to your money: Older pension schemes are unlikely to offer flexible ways to gain access to your money at retirement. Combining your pensions might give you greater freedom.

Benefits of combining your defined benefit pension

There are several benefits to combining a defined benefit pension with your other pension schemes:

  • Guarantee your family receive 100% of your pension.
  • Get the best protection against pension fund insolvency.
  • Receive the same pension fund, but remove the risk of your employer going bust.
  • Consolidate & simplify your pension management.
  • Protect your life earnings from tax.
  • Access to your money from the age of 55.

We recommend that you seek independent financial advice before deciding whether to consolidate your pensions into one pot.

How often should I review my pension?

Checking your pension fund at least once a year is recommended, but everyone’s circumstances are different. Regularly reviewing your pension is essential to maximise your income. You should review your pension in the following circumstances:

  • Moving abroad to live.
  • You are going through a divorce or are recently divorced.
  • Planning on moving back to the UK.
  • You have a new job with a higher disposable income for investing.
  • You have financial goals such as:
    • Children’s education.
    • Property investment.
    • Wedding planning.

What is the pension transfer review process?

AHR provides a free pension transfer assessment report. This process is broken into three stages and tailored around your financial situation and goals:

  • Stage 1: Pension Investigation.
  • Stage 2: Your financial situation and retirement goals.
  • Stage 3: Pension Transfer Assessment Report.

Stage 1: Pension Investigation

This is where we contact the trustees of your UK pension schemes. We ask them to provide up-to-date information about your pension schemes, including any final salary scheme you may be on. Here you will learn:

This is the amount your current pension scheme offers you if you want to transfer your pension fund to another scheme.

Stage 2: Your financial situation and retirement goals

After we gather the necessary information, we will arrange a time to discuss your financial situation and goals. To get the most out of this review, we will:

  • Help you answer a questionnaire that will allow us to understand your financial situation clearly.
  • Ask what your plans are for the future?

Before you speak with us, it can be helpful to think about the following:

  • What does financial security look like for you?
  • Where do you plan on living, now and in the future?
  • How much do you think you’ll want to spend, now and in the future?

Stage 3: Pension Transfer Assessment Report

The free pension transfer assessment report provides you with all the information you need about your pensions and your current financial situation. This will help you make decisions that align with your retirement goals.

The report will include:

  • Explanations of how your UK pension schemes work.
  • A future projection of your financial assets including:
  • Any property you own.
  • Any stocks and shares you have.
  • Any superannuation programs you are enrolled in.
  • Your state pension.
  • Age pensions.
  • All other relevant assets.
  • Comparisons between your current pension arrangements and what you could get with alternative options.
  • Our expert advice on whether you should transfer or not. If we recommend a transfer, we will tell you how much it will cost in the report.

How to arrange a pension review as an expat?

Some rules could affect you when drawing a UK pension as a non-UK resident. Therefore, you should always consult with a qualified financial adviser with specific knowledge of expat pension planning before making any decisions.

Services like ours can provide expat pension advice tailored to your financial situation and retirement goals.

You can arrange a free consultation with one of our specialist advisers here. Don’t worry if you are already living overseas. We regularly conduct reviews via video call (Zoom) at times that work for you.

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