Saving Your UK Pension from Brexit and Corbyn

Those who have made Aliya from the UK have experienced first-hand the effect of the sterling’s decline over the past decade. From a peak of 8.7 shekel to the pound in the summer of 2007, the rate fell by almost half to its low point in the winter of 2016 and has recovered only slightly to trade at 4.8 this February.

Whilst the Brexit vote has undoubtedly been a factor in this development, the fall in the pound predates the 2016 referendum and is more a factor of the global financial crisis and the remarkable strength of the Israeli economy since then. Whilst this latter point is a source of pride for all Zionists, it creates significant challenges for those who moved to Israel or those thinking of Aliya. A disruptive Brexit or a hard-left new government could cause a collapse in the pound, which would have a significant impact on pension values.

Trying to match your income with your liabilities is a key principle of financial planning. That’s usually a straightforward issue if you retire in the same country in which you’ve worked. But if your pensions are in sterling and you are spending in shekel, how can you deal with this dilemma?

For retirees who are already drawing their British pensions - from the State, company schemes or annuities from personal plans - the options are limited as these incomes are fixed in pounds and can only be converted into shekel as they are received. The best strategy is to ensure that as much of your other assets as possible are invested in US dollars (which is much more closely linked to Israel’s currency) or in shekel assets. This way you can reduce the impact of any future sterling weakness in the event of Brexit turmoil or a change in government.

However, there are considerable opportunities available for investors who have not yet drawn their benefits or who are receiving a pension from an Income Drawdown arrangement. It can be straightforward to rearrange your pensions so that the investments are either in US dollars, shekels or a combination of the two. This can be achieved whilst retaining your pension in the UK with all the regulatory and consumer safeguards that its pension system affords.

As an alternative, it may be possible to move your pension outside the UK, utilizing a solution knows as QROPS. A QROPS must adhere to UK pension rules for the UK tax authorities permit a transfer into it. This scheme also offers other benefits which are suitable for certain investors.

With Britain currently convulsed by Brexit uncertainty and the possibility of it shifting radically to the Left if there is a change of government, it is vital that British Olim and would-be Olim urgently review their retirement plans.

 The aforementioned information is not a substitute for personal Investment marketing, which takes into account the particular circumstances and special needs of each person. The views expressed in this article should be considered as market comment for the short term for information purposes only. As such the views herein may be subject to frequent change, are indicative only and no reliance should be placed thereon. This article does not constitute legal, tax or accounting advice, or any investment recommendation, or any offer to buy or sell financial instruments of any kind, and does not take into account the investment objectives or needs of specific investors. Although this article has been produced with all reasonable care, based on sources believed to be reliable, reflecting opinions at the time of its writing and subject to change at any time without prior notice, neither Pioneer Wealth Management nor any other entity or segment within the Pioneer International Group makes any representations or warranties as to the accuracy or completeness hereof and accepts no liability for any loss or damage which may arise from its use. The writer and the company are unaware of any conflict of interest at the time of publishing the above commentary.