British expats locked out of pensions by Brexit rules

British expats face being locked out of their pensions because of UK bank account closures linked to Brexit.

Most pension providers can only pay into a UK bank account. However, lenders have stopped serving many overseas customers, leaving them scrambling to access their savings.

Retirees are also struggling to move pensions into drawdown, buy annuities and make changes to their contributions as post-Brexit rules mean pension providers are less likely to offer cross-border services.

Under HM Revenue and Customs rules, in order to transfer to a new British provider, customers need to be resident in the UK. This means many pensioners face expensive and complicated overseas pension transfers, which can see them lose up to 25pc of their pot to tax, to get their money.

Paul Beard, the founder of Alexander Beard Group, which advises people moving overseas, said he had been contacted by dozens of retirees about pension providers who refused point blank to pay out. He said it was a dereliction of duty and contravened rules introduced by the Financial Conduct Authority in July.

Philip Teague, at Cross Borders Financial Planning, said a worryingly large number of pension providers were creating barriers for expats.

“We’re starting to uncover some big problems for our clients who have got these very vanilla regular pensions,” he said, warning complaints will end up with the Financial Ombudsman.

Sources at pension funds said the problems were primarily caused by banks reviewing which accounts they allowed non-residents to have after the UK left the EU. Barclays offers expats a global account, but they need to maintain a balance of £100,000 to avoid a monthly charge of £40. At HSBC, customers must save at least £50,000, have a salary of more than £ 100,000 or already be a “premier” customer.

Providers also cannot open new pensions for expats because HMRC requires that anyone starting a scheme ordinarily resides in Britain.

Telegraph Money understands that many expats are having to transfer older policies. Some pension funds also require that a customer receives accredited advice in the country they have moved to before a transfer can be made, which can incur a high commission fee.

A spokesman for the Pensions Regulator said that concerned customers should follow complaint procedures.