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:

  • 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

from or in respect of individuals who are habitually resident in the UK.

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 employers and your employees

What’s the impact on employers?

You'll 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 others. This is because you take out the contract with the master trust and not the individual.

What’s the impact on existing employees?

Those who don’t live in the UK can no longer take out a new pension 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 are 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 on these changes please contact your adviser or servicing team to discuss.