Brexit woes: But British expats can take steps to safeguard their pensions

‘Brexit means Brexit’ was the defiant cry of British Cabinet ministers back in March 2017 when the UK handed its resignation to the European Union.

Now, almost two years later, nobody seems to have the slightest idea what Brexit means to a deeply divided country with a Government in crisis and a Prime Minister fighting for survival.

But one thing is certain, for British expats in Cyprus, Brexit means trouble. They are facing into the alarming prospect of Britain leaving without a deal of any sort.

Nobody knows what Brexit means, but of this you can be sure: no-deal really does mean no-deal. The withdrawal treaty comes as a package, so if it is not agreed, everything falls.

The carefully negotiated agreement, which would have kept trade flowing between the UK and Cyprus, and guaranteed the rights of British expats here, will be meaningless.

That is a worry for everyone but particularly for pensioners or those British citizens expecting to retire in Cyprus.

Holders of British state pensions can relax. A deal struck by the British government last year should safeguard their payments even if there is a no-deal Brexit.

If you are receiving a British state pension in Cyprus it will continue to be paid. If you are soon to qualify for one, arrangements for payment will be made regardless of the UK’s wider relationship with the EU.

For holders of private pensions, it is a different matter. The immediate danger for them is that some UK pensions may simply not be paid from next March in the event of a ‘no-deal’.

Under current rules, many UK financial providers may lose the right to operate within the EU and will be unable, therefore, to pay benefits to Britons living in Cyprus.

Another problem is that UK pensions are usually paid only in sterling. If you are living in Cyprus and your spending is mostly in euros, you could find that conversion fees and the variable exchange rate reduces the value of your pension income.

The value of the British pound has been unpredictable during these times of Brexit uncertainty and will be just as unstable if Britain goes it alone. Fortunately, it is possible to hedge against this uncertainty.

It may be possible to transfer your pension pot to a fund that is not endangered by Brexit. Another possibility is to take portions of your UK pension as cash.

The UK-Cyprus double tax treaty gives Cyprus sole taxing rights on most UK pensions. As there are no Cyprus taxes on lump sums, you can take cash from your pension without being taxed at all. Beware, however, that if you take the entire fund as a lump sum, 75% will be taxable in the UK.

It may be more beneficial to reinvest your UK pension funds into an alternative tax-efficient structure that is compliant in Cyprus, so make sure you explore all your options. The route you take will depend on your personal circumstances - what you are putting into your pension and what you hope to get out of it.

Your future is at stake, so it is important to get advice. The Woodbrook Group will be happy to help. We are an international firm of financial advisers. We are not owned by any financial institution or life insurance company. This makes us different from the majority of financial advisory companies and means we can offer you unbiased and impartial advice.

Our qualified professional advisers will be pleased to discuss your pension options, to carefully consider how much you plan to invest and what you hope to achieve.

We can’t solve all the problems of Brexit, but we can ease your pension concerns and give you more peace of mind. Michael Doherty is CEO of the Woodbrook Group in Limassol, Tel: +357 25272820 www.woodbrookgroup.com contact@woodbrookgroup.com