Case Studies

Lionel lives in the UK, has worked for 20 years with his employer and coming up to retirement. He has one main final salary scheme, and a second smaller final salary pension scheme. He does not wish to lock himself into an annuity as he wants flexibility on how he wishes to use his funds and does not want to see his fund lost on death. He would also like his family to benefit from the residue of his fund on death.

Lionel approaches Prism Xpat to advise him what to do.

Prism Xpat undertakes a full analysis of Lionel’s pension scheme benefits. One provides an excellent level of benefits, whereas the other has a high transfer value which should be taken. Prism Xpat recommends he retain one pension where it is and transfer the second scheme to a more favourable arrangement, hence optimising Lionel’s position bearing in mind Lionel’s own risk profile, aims and objectives.

Robert has a UK pension fund worth £700,000 and has a dilemma. If he stops contributing and his pension fund continues to grow, he will exceed the UK’s £1m lifetime pension allowance (from April 2016) and potentially be subject to taxation at up to 55% on the excess.

Prism Xpat designs a pension strategy for Robert which will enable Robert to continue to contribute to a UK pension fund and also ensure that he will no longer need to pay tax on exceeding his lifetime pension allowance.

Michaela has a UK pension fund worth £200,000 and wants to cash it in. She approaches Prism Xpat to assist. Prism Xpat reviews Michaela’s fund and advises her whether this is in her best interests and the most appropriate course of action.

George has 4 pension schemes. He wishes to make life easier for himself and not have to look after 4 schemes ongoing. He approaches Prism Xpat to help him find the most optimal fund for him to hold his pensions in.

Prism Xpat undertakes a full review of the market to find the most appropriate and lowest cost fund for George, saving him a substantial amount in fees and charges, making this life easier and setting up his pension to maximise growth in future.

John is from the UK and over age 55. He resides in Australia and has a UK pension scheme worth £350,000. He would like to have his fund transferred from the UK to Australia for his retirement. Due to limitations on how much can be transferred into Australia at any time and his scheme’s inability to split the pension, John is unsure how to have his fund transferred.

John has a marginal Australian tax rate close to 40% and ignoring any growth on his UK pension, is set to lose up to £140,000 in taxation if he can’t transfer his fund across. John approaches Prism Xpat to assist.

Prism Xpat, through the use of available pension products in the UK and abroad designs a strategy where John’s fund is split in preparation for a transfer to Australia and then works with our international team to transfer John’s pension fund to Australia.

Prism Xpat saves John the £140,000 he would otherwise have to pay.

Paula lives abroad. She has a UK pension fund worth £50,000 and wants to cash out of her UK pension scheme to obtain her benefits and help fund some shorter term financial needs. She knows she can cash out following the UK’s 2015 pension reforms. However, by cashing out, Paula’s pension payment is set to be regarded as a payment of income and taxed her highest marginal tax rate.

Paula is set to lose over £12,500. Paula approaches Prism Xpat to assist.

Prism Xpat designs a strategy for Paula’s pension so she can still obtain the cash to meet her short term requirements, but so that Paula does not have to pay any tax on her pension fund drawings either now or in the future.

Prism Xpat saves Paula the £12,500 taxation she would otherwise have to pay.

Peter is 40 and has moved to live overseas. He has three UK defined benefit pension schemes. Peter is unsure whether it is in his best interests to retain these, noting that some of his pension schemes have funding issues. Further, if Peter dies pre or post retirement a large part of his scheme benefits would be lost – he would like to protect these for his family.

Peter contacts Prism Xpat to see what he should do.

Prism Xpat undertakes an analysis of Peter’s pension benefits and recommends that Peter should transfer two of his pension funds into a more favourable scheme, and retain one where it is. These protect the value of Peter’s future pensions for himself and his family. Prism Xpat then re-invests these for Peter to more closely match his risk profile so that Peter does not lose out of the longer term.

Lydia has decided to emigrate abroad. She is aged 45 and has a UK pension fund worth £650,000. She asks Prism Xpat what she should do when moving countries.

Prism Xpat analyses Lydia’s risk profile and determines that Lydia’s UK pension fund is projected to exceed the UK’s lifetime pension allowance of £1m (from April 2016), which could create a significant tax liability for her of up to 55% on the excess. Prism Xpat hence designs and implements an international pension strategy for Lydia, which will enable Lydia to crystallise the value of her benefits for Lifetime Allowance purposes, hence saving Lydia the excess taxation she would otherwise have to pay.

Joe has moved countries for work purposes and has a sizeable UK pension. Joe is unsure whether or not he will retire in the UK. He knows that if he was to retire abroad, or in the UK, most of his pension fund would be taxed at his marginal tax rate – which is over 40%.

Joe approaches Prism Xpat to see what can be done. Prism Xpat recommends and implements an international pension strategy for Joe which will save him most, if not all, the taxation he would otherwise have to pay on emigrating abroad.

Frank has finally got his visa to move abroad and is soon to head off. However, he is not sure if he will be able to remain in his new country long term and is not sure what to do with his UK pension on the move.

Prism Xpat assists Frank to maximise the value of his UK pension prior to emigrating (saving Frank over £10,000), as well as putting a strategy in place which will allow Frank to gain extra benefits from his pensions over time as opposed to retaining these in his current fund in the UK.