British expats ‘locked out of pensions by Brexit rules' as UK banks close accounts
Most pension providers can only pay into a UK bank account
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British expats are at risk of being locked out of their pensions due to UK bank account closures linked to Brexit, financial experts have warned.
Most pension providers can only pay into a UK bank account, however some lenders have stopped serving many overseas customers.
UK retirees living overseas are also struggling to move pensions into drawdown, buy annuities and make changes to their contributions, The Telegraph reports, due to post-Brexit rules meaning pension providers are less likely to offer cross-border services.
HM Revenue and Customs (HMRC) rules say customers must be resident in the UK in order to transfer to a pension to a new British provider.
Very few providers are able to offer cross-border pensions business, a Royal London spokesperson said
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This means expats cannot move their pensions to a new company, and many face expensive and complicated overseas pension transfers.
Furthermore, to access the money, they could lose up to 25 per cent of their pot to tax.
Paul Beard, founder and chief executive of Alexander Beard Group, told The Telegraph that dozens of retirees have contacted him about pension providers who refused to pay out.
A Royal London spokesman said: “Very few providers are able to offer cross-border pensions business due to the risks and complexity involved for customers in doing so.”
Sources at pension funds told the publication that the problem primarily stems from bank account changes.
A number of banks have reviewed which accounts non-UK residents can open and retain since the UK left the European Union.
Nationwide Building Society states it can no longer provide current accounts for people living in certain EU or European Economic Area (EEA) countries.
Under its Brexit and Santander UK plc page of the website, Santander said only people resident in the UK can apply for a new Santander UK plc product.
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Lloyds Bank said it would not provide some UK banking and insurance products and services to customers living in some EU countries after December 31, 2020.
Meanwhile, Barclays is no longer offering personal current or savings accounts to retail customers with addresses registered with Barclays UK outside of the UK, subject to limited exceptions.
A Barclays spokesperson previously said: "We are contacting impacted customers to give them advance notice of this decision and explain the next steps they need to take.”
A spokesman for The Pensions Regulator directed concerned customers to follow complaint procedures.