When the Financial Conduct Authority (FCA) revealed that savers pulled a record £70.9 billion from their pensions in the last year — a 36% leap from the year before — it raised eyebrows in the UK. But this is more than a domestic curiosity. For the hundreds of thousands of British expats living in New Zealand and Australia, as well as those Kiwis and Australians with UK pensions these numbers should ring alarm bells.
A Rush for the Exit
Why the sudden dash for cash? Fear. With ministers eyeing up pension pots as a new inheritance tax target from 2027, and speculation swirling about possible limits on tax-free lump sums, many Brits are cashing out before the shutters come down. Add in a cost-of-living crunch and you get a rush for withdrawals not seen since the “pension freedoms” revolution of 2015.
Why UK Pension Holders Overseas Should Care
If you’re a British expat enjoying the Kiwi lifestyle or soaking up the Aussie sun, you might think this is all happening back home. But these shifts affect you too — and perhaps even more than those still in the UK.
– Tax traps: UK inheritance tax changes are throwing the cat amongst the pigeons. Neither New Zealand or Australia have inheritance taxes, a real advantage for asset location.
– Currency shocks: Every pound you withdraw eventually needs to become NZ dollars or Aussie dollars. A wave of withdrawals in the UK can stir exchange rate volatility, hitting the value of your pension assets.
– Future rule changes: The surge itself is a warning shot. If millions are pulling cash early, they’re not doing it for fun — they’re worried about the future. British pension holders overseas should be asking whether it’s wise to sit still while others are heading for the door. Particularly when protectionism and taxes are abound.
The Bigger Picture
The FCA’s data isn’t just a spreadsheet — it’s a mood barometer. People don’t yank nearly £71 billion out of long-term savings unless they’re worried. For expats, the stakes are higher. You’re navigating two tax systems, two sets of pension rules, and one volatile exchange rate.
A Wake-Up Call
The UK pension system is shifting under political pressure, and this latest withdrawal surge shows people are voting with their wallets. British pension holders in NZ and Australia need to pay attention. Because when Whitehall tinkers with pensions, it’s not just retirees in Surrey who feel the impact — it’s also the accountant in Auckland thinking about the legacy she will leave her children and the engineer in Melbourne weighing whether to transfer his UK pot.
