With the Department for Work and Pensions announcing numerous reforms to the UK’s pensions legislation, the question to pose is what impact this might have on the expat community in future generations. The changes made include plans to increase the state pension age to 66 by 2016, abolish the default retirement age and review the concept of auto-enrolment.
Longevity is a key driver in these reforms and the simple fact is that as a nation, residents in the UK are living longer than ever before. As a result, in order to be financially stable in retirement and prevent an extremely heavy burden being placed on the state, the majority will need to work till they're older. The good thing is that through abolishing the default retirement age employees will now have much more flexibility in “phasing down” their working life and be able to continue on a part time basis thus making them financially better off. But what does this mean for expats?
One might argue that in having to work longer, people will be less inclined to move after their retirement and the expat community may be expected to shrink slightly. On the other hand if the proposed changes mean people are now more financially stable and better off in their latter years, perhaps they will have more economic capacity to move overseas and enjoy a life in the sun. In this case we could actually begin to see a demographic shift and an ageing expat population.
Whatever the impact, these changes are likely to make a fundamental difference to people’s lives and its important especially for expats, whose financial situation can often be more complex than those living at home to understand exactly where their money is and what they are entitled to. Tax efficiency of savings will be more important than ever and making sure you receive specific expat tailored advice will be paramount. As always we welcome your thoughts and look forward to hearing your views.