Your pension is your security blanket for your retirement. Its sole purpose is to provide a steady stream of income for you well past your working years. You will spend the bulk of your working life adding to that investment in the hopes that when the time comes, it will have accumulated enough wealth to keep you living at the same level to which you have become accustomed. When your pension is secure, stable and profitable it can be a tough decision to move it into a different style of investment. Even more daunting is considering moving it outside of your home country's available pension fund firms.
One of the first concerns when moving any financial account overseas is taxes. For many, transferring funds from one jurisdiction to another may prove to eliminate or at a minimum reduce the taxes being levied on the fund and the fund income. In the United Kingdom, for example, a large amount of your pension fund is claimed by the state in the event of your death. You might be able to avoid inheritance tax or penalties associated with early cash withdrawals.
Another great opportunity that arises when considering the option to move your pension fund abroad is investment diversity. Moving your fund overseas opens you up to commodities that may not be available in your home country. You will find greater flexibility with regards to investment choices and risks. You may also be able to take advantage of favorable currency exchange rates, opening up your fund to a new layer of growth potential.
Thanks to bank secrecy laws, account holders of offshore accounts are often protected from business partners, creditors and ex-spouses. Depending on the location of your new fund, you may find protection from future creditors. Some financial institutions offer anonymous accounts that add to the level of privacy already afforded offshore account holders.
When considering whether or not to move what could potentially be a rather large sum of money, one must also consider the risks involved. Is the new offshore financial institution required to have insurance in the event of economic crash (e.g. FDIC)? Is the jurisdiction where the new account would be established stable or is there the potential for future political and economical strife? What are the regulations regarding withdrawal of your funds prior to retirement age or are there any fees or penalties for transferring it back to one of your home country's establishments?
Moving your pension account abroad could prove to be an extremely profitable and tax advantageous decision. Making this decision should not be taken lightly and should not be made without thoughtful consideration and without seeking advice from a qualified, licensed and regulated pension fund strategist. Often is easier to move your pension offshore than it is to return it to your home country so take caution before making such a leap with the funds that are intended to support you once full time work is not longer feasible.
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Moving Your Pension Abroad
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