Best advice to anyone with a company pension scheme was to lock in and retain the guarantees and benefits as they generally far exceeded those of most personal pensions.
Now billions of pounds is being sucked in to the pensions black hole of most major UK employers, now is a good time to review whether that best advice still stands good if you are retiring abroad or an international worker.
A quick look around some of the major UK companies shows that some of their pension deficits are bigger than their market value – take British Airways as an example.
The company’s market value is £2.2 billion but the pension shortfall is £3.7 billion.
If British Airways crashes, then the government’s Pension Protection Fund takes on the liability, but the risk is benefits may not be maintained at the same rate.
Company pensions have been sandbagged by holes in the rules. In times when the economy was doing well, employers were allowed to suspend contributions, but when the economy worsened, the missed contributions could not be made up because of lack of cash and reduced contributions from working members who lost their jobs.
Just as there is no guarantee of a job for life any more, there is no guarantee that an occupational pension will pay out at the level expected.
For scheme members in the UK, they look forward to crossing their fingers and hoping all goes well. Those overseas or international workers returning home have another option – taking control of their own retirement funds with a QROPS.
Comparing company pension benefits and performance with switching the fund in to a QROPS can show some surprising advantages.
The company scheme may have enhanced guarantees, but when these are weighed against tax savings and other QROPS flexibilities like having no need to buy an annuity, the plus and minus sides of ledger are pretty much equal.
QROPS.net can compare your occupational benefits with those from a QROPS tailored to your needs. Considering a switch could remove a lot of stress over funding retirement and put you in control of your finances.
