Changes to pensions business we'll accept

24 September 2021
We’re making some changes affecting overseas residents.

From Monday 11 October 2021, we’ll only accept the following from or in respect of individuals who are habitually resident in the UK:

  • new individual pension plan and annuity applications,
  • new entrants into our workplace pension schemes, and 
  • new or additional regular contribution, single contribution, or transfer payment applications to existing pension plans or workplace pension schemes.

Any pipeline business submitted on or before Friday 8 October 2021 can be completed but no new applications will be accepted after that date.

We’ve taken this decision to reduce the risks advisers, employers, individuals and Royal London may be exposed to through conducting what may be considered cross-border business.  Even if business is carried out in the UK, it may still be classed as overseas business if the individual who it’s related to is a resident outside the UK. 

We currently don’t accept applications from or in respect of EU/EEA residents – this change extends that to all overseas residents.  It also brings our position in line with many of our competitors who only accept business from UK residents.

What do we mean by 'habitually resident in the UK'?

We mean the person normally lives in the UK. This generally means:

  • They’ve lived in the UK all their life or for a number of years, 
  • They’ve moved to live in the UK permanently, possibly through employment in the UK, or
  • They’re working abroad for a short period of time (e.g. on secondment) but they fully expect to return to live in the UK at the end of that time period.  Generally short periods abroad should be okay but ultimately it depends on the individual circumstances.

The person is not habitually resident in the UK if they normally live outside of the UK, even if they’re employed in the UK.

We require all individuals to have their main residential address in the UK when they take out their plan, or when they’re enrolled into their employer’s workplace pension scheme.

Impact on advisers, employers and customers

What’s the impact on advisers?

It’s likely to have little or no impact on most advisers who now only conduct business with clients living in the UK.

The biggest impact will be on international advisers, who are authorised to conduct business in both the UK and some overseas countries.  While they can continue to advise their overseas resident clients, we’ll be unable to accept new business applications from those clients.

What’s the impact on employers?

Employers will need to find an alternative workplace pension scheme for any employees who are not habitually resident in the UK but need to be automatically enrolled.   

We believe some master trusts still accept non-UK residents into their scheme, but there may be other schemes that can also accept these individuals. This is because the employer takes out the contract with the master trust and not the individual.

What’s the impact on existing customers?

Those who don’t live in the UK can no longer take out a new plan, or make additional or new regular contributions, single contributions, or transfer payments to their plan. Regular contributions can continue to be paid at their current rate, including any automatic increases to them.

The retirement options available to those affected are limited to what’s available under their current plan. This means the available options are:

  • Cash sum,
  • Annuity, if they're using the Guaranteed Annuity Rates (GARs) or have a Guaranteed Minimum Pension (GMP) under their plan, or
  • Drawdown, but only if it’s already allowed under their plan.

We’ll explain the options available to them when they come to take their pension savings.

Alternatively, they may be able to transfer to another pension plan or a Qualifying Recognised Overseas Pension Scheme (QROPS) which may offer more ways of taking their pension savings.

What’s the impact on the Automatic Enrolment Dashboard?

We’re updating the Automatic Enrolment Dashboard to detail our new position.  By continuing to use the system, users confirm that all employees enrolled are habitually resident in the UK.

Further information

If you have any questions or would like more information speak to your usual Royal London contact. If your clients have any questions they should contact their Servicing Team to discuss.

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.