The UK government is completely overhauling the system so that those with British private and employer pensions can access them in a much more flexible way. This will impact the British expat population in Malta and equally anyone who has spent time in the UK and accrued private or employer pensions.

As from April, you can take out as much as you want from your pension after retirement, rather than be restricted to smaller annual withdrawals as was previously the case.

For the vast majority of people, accessing their full pension fund in one go would be an extremely bad idea and leave them short in later years.

As from April, you can take out as much as you want from your pension after retirement

However, retaining the option, at least, to access more from their pensions in the event of an emergency would be comforting for many.

For example, those who need long-term care often struggle to meet the costs, and at this point, being able to draw more from your pension could be a huge help.

For a number of reasons, many expats have looked to transfer their UK pensions to Malta Qualifying Recognised Overseas Pension Schemes (QROPS) since their introduction in 2006. Initially it appeared that these transfers would now be far less attractive, as by moving your pensions abroad, pensioners would not be afforded the flexibility of withdrawals now permitted in the UK.

However, the government recently stated that Malta QROPS will now be granted the same flexibility as UK pensions, making the option to transfer extremely attractive for many expats once more.

What is a Malta QROPS?

A Malta QROPS is an overseas pension scheme that meets certain requirements set by the HM Revenue and Customs (HMRC). It can receive the trans­fer of UK Pension Benefits without incurring an unauthorised pay­ment charges from the revenue.

Moving UK pensions to a Malta QROPs can have several advantages:

• Zero death tax;

• Protect spouses’ pension after death;

• Avoid exchange rate risk;

• Simplified and possibly lower tax on monthly pension income;

• Consolidation of various pensions into one easily maintained plan.

Which pensions are eligible?

• British nationals who live abroad, or Maltese or other nationals have spent time in the UK, who have the following UK personal or corporate pensions:

• Personal pensions;

• Final salary pensions;

• Money purchase schemes;

• Civil service and armed forces pensions;

• Have total pension funds in excess of £20,000 for this type of arrangement to be cost-effective. An individual can top-up their fund if they wish in order to meet this requirement.

Which pensions are not eligible?

• UK state pensions;

• Any pension which has previously been used to purchase an annuity. However, if you have already taken a lump-sum payment from your pension pot, but not purchased a lifetime annuity, you may still qualify for a QROPS;

• Any pension that has already taken payment from a ‘final salary scheme’.

If you have a pension that may be eligible it is important to receive specialist advice from an adviser with UK pension qualifications. Although a Malta QROPs offers many advantages, some UK pensions offer valuable guarantees which may be lost by transferring.

Independent advice is a vital step to ensure that you make the best decisions for you and your family.

michael@expatwealthadvice.com

Michael Lavin is a financial adviser with Hollingsworth International Financial Services Ltd.