People working abroad need to be cautious about falling behind their pensions contributions, warned advisory firm Guardian Wealth Management.
Expatriates often take a short contract abroad and put their UK pension contributions on hold, said Gavin Pluck, European director for Guardian Wealth.
“Since they are on a contract, employees are unlikely to be eligible to enrol in any local company pension scheme. Even where they can enrol, many do not simply because they know they are on a short contract and they do not want the hassle of transferring the pension out further on down the line,” said Mr. Pluck.
“What then happens is that contracts are extended but the pensions are forgotten and people find ten years down the line they have failed to make adequate provision for their retirement,” he warned.
The impact of omission can be compounded if people choose to put contributions on hold during early years since the year-on-year accumulation actually helps in building up a pension pot.
“We find that contracted international workers can be the worst prepared for retirement, even where they have left their home country because it is financially beneficial to work abroad, as they tend to adopt a short-term outlook and, in consequence, omit to plan for their long-term needs,” observed Mr. Pluck.
“Accordingly we make retirement provision one of the first areas of financial planning we focus on when we talk to any new client because getting pension provision right and as early as possible can make a huge difference to that person’s retirement,” he added.
“Generally speaking you can continue to be a member of a UK scheme for five years while you are abroad. There is nothing to stop your contributions continuing,” said David Trenner, technical director of Intelligent Pensions.