Increasing numbers of UK final salary pension schemes are being transferred into overseas schemes, in anticipation of the triggering of Article 50.

Enquiries about overseas transfers have increased by 21 per cent at deVere Group, which pinpoints Brexit as the main catalyst for the change.

Nigel Green, deVere CEO, said: "Since the Brexit vote last June, there has been a groundswell of interest in overseas pension transfers.

"This has intensified in recent weeks as we begin the final countdown to the triggering of Article 50 by the end of March, when Britain will start negotiating with the EU over its exit."

Green added that he expects the momentum to develop further, as 'trigger day' gets closer.

"It's understandable that so many are considering transferring their UK pensions into an HMRC-recognised overseas pension scheme at the moment - they recognise the golden opportunity," he said.

DeVere says there are three factors contributing to the increase in transfers; gilt yields, final salary pension deficits, and the unkown.

Gilt yields have reduced considerably since the Brexit vote, driving up transfer values to record highs.

"It is perhaps unlikely that transfer values will remain at this level post-Brexit, and people seeking to transfer are looking to take advantage of these possibly once in a lifetime values," Green said.

Final salary pension deficits continue to come under pressure and are being exacerbated by the Brexit-induced falling gilt yields.

DeVere says Britain's pension funding gap almost doubled during 2016 and could soon reach a trillion.

"The size of the gap brings into question the survival of many company pension schemes," Green said, "Many will need to make significant changes to the terms of employees' pension schemes.'

Uncertainty about what a post-Brexit Britain will look like and how the economy will be affected, is the final contributing factor.

If there is an economic downturn, it will become increasingly difficult to fund pension schemes, and the value of the assets that schemes invest in are likely to depreciate.

"All in all, so-called 'gold-plated' final salary schemes are, in many cases, looking considerably less golden than they once did," said Green.

"An overseas pension transfer is not suitable for everyone, but, for those who do qualify, now might just be the ideal time to do so."

First published 12.01.2017

Lindsay.sharman@wilmingtonplc.com