London, 28 September 2020: PensionBee, a leading online pension provider, has expressed concern that once the UK officially leaves the European Union on 31 December 2020, pension savers living abroad could incur additional charges and significant delays when accessing their retirement savings.
Costs to withdraw savings abroad could increase significantly following Brexit, as making payments to overseas banks will present additional costs for pension providers which may be passed on to the customer, as well as charges imposed by the receiving bank. Savers may also face low exchange rates which could limit the amount of money they receive.
At present, UK pension providers generally only make pension payments into UK bank accounts, which are easier to validate technologically, and benefit from the new confirmation of payee security measures. It is likely that at the end of the transition period on 31 December, many British banks will close the accounts of overseas savers forcing them to access their pensions via European bank accounts.
In order for a saver to change their bank details with their pension provider, they will often need to post documentation which could cause significant delays during the coronavirus pandemic. It is a concern that in the short-term, pension providers may struggle to make payments abroad in a timely manner when expats are depending on access to their savings.
While transferring a pension abroad may seem like a quick fix, this is unlikely to be the case. Most pension providers are on high-alert with respect to overseas pension scams and may outright refuse to transfer a pension abroad, or take up to six months to complete the necessary due diligence to release the funds.
Romi Savova, Chief Executive of PensionBee, commented: “Pension providers must work quickly to adapt their systems and provide cost-effective solutions for their customers, in order to avoid leaving overseas pensioners in limbo without access to their retirement savings.
In the meantime, we urge pensioners living abroad to plan ahead and ensure they have sufficient funds in place to cover their living expenses for several months. Expats already withdrawing from their pensions should investigate whether receiving pension payments from the UK will have tax implications in their country of residence, and may wish to seek advice from a local tax adviser.”