Paul Burgin – Financial Journalist
This is not financial advice. My story is not the same as yours …..
Recently, I started asking a simple question: Can I Brexit-proof our family savings, investments and pensions? For millions of EU27 nationals in the UK and the British in the EU, this is about the freedom of movement: the freedom of movement of our money. Unfortunately, there is no simple answer. Personal finance unicorns do not exist. NATIONAL SAVINGS & INVESTMENTS 185,000 savers NS&I savers live in the EU27 – and that’s just those who have registered their non-UK addresses. Between us, we have £780 million in Premium Bonds, other bonds and various accounts. No problems if I want any payments made to an account in the EU or European Economic Area, says NS&I. It does not charge a cross-border fee, but does take a cut from the exchange rate. The bigger the overseas payment, the more NS&I deducts. How much? That changes day by day. NS&I said £1 was worth €1.1169 on 30th May. Transferwise’s exchange rate was £1/€1.140. So I’ll stick with my winnings paid out in the UK, then transfer them myself. On a £1 million Premium Bond win, that’s over €23,000 saved.
BREXIT PROOF: NS&I Register NS&I accounts online with your non-UK address and apply for the international payment service . NS&I helpline +44 1253 832007. Better exchange rates may be available.
BANK ACCOUNTS I still use my UK bank account, debit and credit cards for those cheap Amazon UK purchases. But can I still keep the account and cards while resident overseas? Yes say Bank of Scotland, Barclays, Cahoot, Cater Allen, Halifax, HSBC, Lloyds, Nationwide, NatWest, Royal Bank of Scotland, Santander and Ulster Bank. Changing my address to my EU permanent residence is a necessity, they say. Some even let customers make the change online. A bank may want to change the type of account held, however. ‘Packaged’ accounts with fancy benefits typically only apply to UK residents, for example. What’s less clear is whether any current account will still be as useful if I want to transfer money to the eurozone in future. 82 UK payment service providers may have to reapply to join the Single Euro Payment Area if there is no Brexit deal on financial services. Outside SEPA, bank-to-bank transfers to and from the UK may get more expensive.
BREXIT PROOF: BASIC BANK ACCOUNTS No UK account? UK Basic Bank Accounts are open to all EU resident (for now), from the age of 16. No fees, no overdrafts and only a debit card. The Money Advice Service lists the accounts available. Check if you can post or scan in ID documents!
BREXIT PROOF: LOST ACCOUNTS Lost track of an old bank, building society or NS&I account? No worries! The free My Lost Account service can help.
SHARES, EXCHANGE TRADED FUNDS (ETFs) AND INVESTMENT TRUSTS If they’re listed on the London Stock Exchange, shareholders still get their dividends wherever they are located, says the Association of Investment Companies. ETFs and investment trusts like F&C Investment Trust, the world’s oldest, might be trickier, depending how they were bought. F&C says I would need to notify them of my new address. But there is no issue with continuing to hold an Individual Savings Account or other tax-efficient plan, even though non-UK residents cannot contribute more to their tax-free savings. Other ETF providers, fund platforms and brokers may take a stricter approach. Vanguard, a big ETF and low-cost fund provider, would allow ISAs and Junior ISAs to continue. But non-ISA holdings brought direct from Vanguard may be closed if investors have moved overseas.
BREXIT PROOF: SHARES AND INVESTMENT TRUSTS Shares, ETFs and investment trusts are usually bought via a broker, financial adviser or platform. The Financial Conduct Authority has told these UK firms with EEA clients ‘to prepare for a range of scenarios’. So ask your provider about those preparations.
INVESTMENT FUNDS Investment funds like unit trusts are not the same as investment trusts. Asset managers are based and regulated in one country, but their funds and clients may be elsewhere. They rely on a EU ‘passport’ to care for those cross-border investors. The smart guys, like M&G or Franklin Templeton, are shifting non-UK customers to their operations in Dublin or Luxembourg. Funds domiciled in the UK have an ISIN code ‘GB’. Those from Ireland are ‘IE’ and from Luxembourg ‘LU’. I couldn’t find details on my last statements, so I looked up each fund on Morningstar for free. Every single fund is ‘GB’. My fund supermarket says I can transfer my funds, held in an ISA, to Irish or Luxembourg versions.
BREXIT PROOF: INDIVIDUAL SAVINGS ACCOUNTS (ISAs) Never close an ISA, because you lose your tax-free benefits. But you can switch investments within the ISA or transfer to a new ISA provider. The new provider will do the work for you.
STATE PENSIONS State pensions and benefits were included in the Withdrawal Agreement. That should provide some comfort that the ‘Triple Lock’ pension increases should continue for today’s retirees and those who retire in the future. But I’m not counting on that. The Withdrawal Agreement has not been signed yet. In the meantime, I’m getting my National Insurance and State pension details updated.
BREXIT PROOF: STATE PENSIONS Registering on the Government Gateway unlocks online access to tax, National Insurance and pension records. If you previously worked in the UK, the Future Pension Centre calculates what your future State pension might be–online or by phone +44 191 218 3600.
OCCUPATIONAL PENSIONS Big trustee-based schemes like the Civil Service Pension, NHS Pension and certain company pensions come under domestic law, not EU law. So no problem on overseas payments, confirms the team manager at Civil Service Pensions. That’s a relief for my mum. She relies on her Home Office pension and the survivors’ benefits from the Army and MOD Police pensions of her much-missed husband. There are no specific Brexit issues for other workplace schemes, says the Pension Regulator. That’s true, providing the trustees fulfil their fiduciary duties to communicate with scheme members and ensure payments get through, no matter what.
BREXIT PROOF: OCCUPATIONAL PENSIONS Pensions are complicated stuff. It’s best to ask your scheme directly – telephone numbers on their websites or your recent statements. The Pensions Advisory Service is a good place to start for general questions +44 207 932 5780.
PRIVATE PENSIONS Some private, Stakeholder, auto-enrolment and company pensions are different again. They’re a contract between you (or me) and an insurance company. When the scheme is in one country and the member in another, then passporting issues arise–just like for investment funds. 38 million EEA-based policyholders could be affected by the loss of passporting rights, says the Bank of England. It won’t tell me how many of those are pensions. The Association of British Insurers is really worried about this. Its Brexit chief Jonathan Beer says insurers face the “the unacceptable choice between breaking their promise to customers or risk breaking the law”. But what are Mr Beer’s members doing about it? My pension provider has taken the sensible route by using existing EU laws. Aviva, the UK’s largest insurer, will shift all its non-UK policyholders to its base in Ireland. That’s good, yet complex and long-winded. Aviva needs to apply for High Court approval and demonstrate that no customer will be ‘materially affected’. Explanatory letters should be in the post soon, so I have absolutely made sure that Aviva has the right address for me. And I’ll be keeping hold of all the paperwork. I don’t want the Spanish authorities hitting me with a capital gains tax bill for Brexit-proofing my pension.
BREXIT-PROOF: PRIVATE PENSIONS Check with your provider or administrator, hotline numbers are on your last statement. Lost your pension? Try the pension tracing service. +44 191 215 4491
INVESTOR PROTECTION SCHEMES Protection schemes are there for when financial services providers go bust. The UK Financial Services Compensation Scheme has different levels of compensation for bank and savings accounts, and for investments. Most insurance, including some insurance-based pensions, are covered 100%, but not all. That depends on where you live now, when the policy was issued and how. If in doubt, ask your product provider. Defined Benefit pension schemes that have already been rescued by the Pension Protection Fund should be safe, however. A FINAL WORD I repeat: your circumstances will be different from mine. As a minimum, get paperwork up to date and track down lost investments. Ensure your current address is registered, even for the smallest investment or account. If things change, your provider will tell you, but only if it knows where you live. If in doubt, take advice. Check the adviser is authorised to deal with your situation. UK advisers are registered here, but British compensation schemes may not cover you if you are not a UK-resident. Advisers in Spain should be here and Spanish insurance brokers here. I’m deeply suspicious of schemes that promise to unlock or move pensions from one country to another, like Qualifying Recognised Overseas Pension Schemes (QROPs). Benefits may be lost and charges can be high. Tax authorities may not like them much either. HM Revenue and Customs already slaps a 25% tax on certain QROP transfers. And finally, finally…. everything above may apply in reverse too. EU/EEA residents in the UK may want to check on the savings, investments and pensions they hold outside the UK.
