Whether or not you can transfer out of a UK defined benefit pension to a defined contribution pension (like a personal pension) either in the UK or abroad will first depend upon whether it is an unfunded public sector defined benefit scheme or not.
With the introduction of the new UK pension flexibilities in April 2015, the UK Government banned any transfer of unfunded public sector defined benefit schemes to defined contribution pensions (like personal pensions) to take advantage of the increased flexibility. Examples of unfunded public sector schemes include the NHS Pension and Teachers Pension.
Transfers from funded public sector schemes (like the Local Government Pension Scheme ) and private sector defined benefit schemes to defined contribution pensions are, however, still permitted providing you receive the required financial advice from a UK regulated pension transfer specialist. The requirement for specialist UK financial advice is irrespective of the fact that you are an expatriate living outside of the UK. The only exception to the advice requirement is where your defined benefit pension has a CETV (also known as a ‘cash-equivalent transfer value’) of £30,000 or less.
Deciding whether to transfer your benefits out of a defined benefit pension to a defined contribution pension is a very important decision which will affect the rest of your life. The required specialist UK financial advice will, amongst other things, compare the benefits being given up from your defined benefit pension with those that could be offered by the new proposed pension plan. While transferring benefits from a defined benefit scheme to a defined contribution plan can be the best outcome for some people, it is not appropriate for everyone. Don’t only look at the size of your transfer value, you must weigh up your options and reach the decision that is right for you. This includes considering how you will afford retirement and achieve your retirement income goals.
In order to assist our clients to meet the UK requirement for specialist UK financial advice, Florin Pensions works with an appropriately qualified UK independent financial adviser to prepare Suitability Reports for you taking into consideration your specific circumstances as an expatriate residing in the US.