UK Pension Transfer Advice for Expatriates
UNDERSTAND YOUR PENSION OPTIONS!
Do you have a UK pension? Not sure even?
We specialise in helping people get the most from their pension assets, Maximum Income and Tax Efficiency.
UNLOCK 100% OF YOUR PENSION ASSETS
Accessing your UK pension assets!
It may well be the case that the level of your UK pension income in retirement is governed/limited by a capped level of drawdown, or access.
If you have a Defined Contribution pension plan – perhaps one that you commenced yourself, or from a previous or current employer, often the maximum levels of income that you are entitled to are restricted by either the Government Actuaries Department (GAD rates), or perhaps annuity rates. GAD rates have hovered around 4% as an annual income, whilst annuity rates may typically vary between 3% - 4% as an income per annum.
Flexible Drawdown was introduced in 2015, however in practise, many pension schemes are not able to/will not put this in to practise. If flexible drawdown is available to you within your current scheme/s, you may even incur additional taxation on the enhanced income.
The option to transfer your pension/s to either the likes of a SIPP or QROPS typically offer greater (possibly even full) access to income or capital.
If you have a Defined Benefit pension plan (sometimes referred to as a final salary pension), the level of your income will likely be governed by the specifics of that scheme. In our experience, few Defined Benefit schemes allow for flexible/enhance drawdown unless there are special circumstances, such as ill-health.
It should be remembered that Defined Benefit schemes are generally considered valuable since they essentially offer the guarantee of benefits / an ‘income for life’. In terms of best advice, the UK FCA adopts the standpoint (to begin with) that one should not transfer from a DB scheme. Often those who do, however, do so in perhaps seeking greater access to their pension funds, greater tax efficiency – freedom and control, and to pass on 100% of these assets to their loved ones.
Your adviser at Speciality Advice will assist you in weighing up the associated 'pro's and con's' of a potential transfer. This will help you to arrive at an informed decision about how best to proceed.
A pension transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme), or a SIPP (Self Invested Pension Plan) may well prove to be a beneficial solution in enabling more access (even un-limited access) to your pension assets, and/or greater tax efficiency, and passing on assets to your loved ones.
There are differences between QROPS and SIPP’s, and it’s important to understand which would be best for you. In order to understand these options the first step is to get in touch today!
Our expert advisers will firstly help you ascertain as to whether a transfer is right for you. And then we will help you understand the various options.
Already an Expat, or thinking of retiring abroad – Transfer your pension before it’s too late! UK legislation is constantly changing
Take your UK pension with you, and protect your pension assets.
The option to transfer a UK pension has not always been available. Since legislation being introduced in the UK – we have seen frequent changes to the rules and benefits that are associated with pension transfers.
That is to say, the freedoms which still exist today may not be there in the future.
It may well be that transferring your pension is advantageous to you given your objectives, and whether you are already living abroad, or plan to at some point in the near future, you may well benefit from at least exploring the options over your UK pension/s.
A transfer may not be right for everyone, we are here to help you understand some of your options, and help you make the right decisions about what to do. CLICK Below and get in touch today.
What is a QROPS and a SIPP?
QROPS stands for Qualifying Recognised Overseas Pension Scheme. These were first introduced, and gained their status in 2006.
Over the years we have seen some changes to QROPS, as well as to that of available jurisdictions. Currently, popular jurisdictions include the Isle of Man, Malta, and Gibraltar - among others. All QROPS schemes on offer have essentially gained UK approval thus achieving their 'recognised' status. The associated benefits across different jurisdictions may vary slightly, so it is important to select the most appropriate and advantageous QROPS jurisdiction which is applicable to you. In 2017, HMRC also introduced a 25% tax charge on transfer out of a UK pension to some QROPS, so once again, it's crucial to gain advice and to understand the various options which are available.
SIPP stands for Self-invested pension plan. As the name suggests, SIPP's allow for some freedom in choice on investments, however crucially they also offer key advantages over many UK other Defined Contribution plans, and Defined Benefit Schemes. Due to the introduction of the 25% tax charge applicable to certain QROPS transfers, SIPP's have become especially attractive as a flexible vehicle in which transfer one's pension assets.
The costs of a QROPS and SIPP will also vary slightly, though it's likely to be the benefits which one scheme offers over the other that is the deciding factor for most people.
Frequently asked questions:
At what age can I apply for a transfer of my pension?
Generally speaking, there is no minimum age at which one may transfer their UK pension. However, normally transfers have a minimum of c£40,000 in order to make it viable. Should you possess multiple schemes of smaller values then these can be consolidated in to one via a pension transfer. Ordinarily each individual scheme may need to have a minimum value of £10,000.
Once again, there is no maximum age that one could consider a pension transfer, however a transfer must be made prior to taking any benefits, or commencing drawdown from existing UK pensions.
I still work for my employer
Ordinarily, if you are currently employed by the company which is funding your pension then a transfer-out may not be possible. You may approach the Trustees of the scheme who will be able to advise you as to your options.
Having said that, there are sometimes circumstances where the Trustees may grant permission to transfer-out.
Should you be contract-based, then a transfer of a pension from a prior employment with the same company may be an option, since you may be employed with the same company yet not be an active member of the pension scheme currently.
Whether I am UK resident, or not, can I still apply to transfer?
Yes you may. Residency in the UK may impose some limitations on options to transfer to QROPS, though SIPP's are fine.
The majority of those who transfer their UK pensions to either a QROPS or a SIPP are already non-resident in the UK.
Should you transfer your pension/s to a QROPS or SIPP, but move back to the UK at some point in the future then this is also perfectly ok. Some criteria might alter, yet there are no penalties for returning to the UK having transferred.
I have multiple pensions in the UK
A key advantage in transferring multiple UK pensions to a QROPS or SIPP is via consolidation of these schemes into one. Advantages of consolidation may include lower overall costs, ease of administration and clarity.
In addition, a number of the general overall advantages of transferring to a SIPP or QROPS may also apply. Please visit our country pages for more information.
I'm not sure if I have a UK pension, but I have worked in the UK or for a British company
We can assist you in finding any UK pension assets that you may have. Surprisingly, people do not always know the full details of their UK pensions - the values of which, or the sometimes the existence of such pensions even.
Can I pay in to my pension if I transfer it?
Should you transfer your UK pension/s to either a SIPP or QROPS then you are entitled to make contributions. There may be certain rules surrounding this, your expert adviser at Speciality Advice will be able to assist you in fully understanding how as to go about making additional contributions, and the most advantageous ways of doing so according to your specific circumstances and future goals.
Which overseas QROPS jurisdiction is best for me?
Certain condidtions will govern which QROPS jursidiction is most appropriate for your specific needs. Important considerations that your adviser will discuss with you will include your current residency, past few years residency, as well as your future residency plans. Other important factors will involve your financial objectives, and what it is that you seek from your pension transfer. We will also be able to discuss SIPP's with you, and help you ascertain the very best way forward for your circumstances.
Who will manage my pension fund if I transfer?
There are a number of options avialble to you for the ongoing mangement of your pension portfolio within a QROPS or SIPP. These include the choice to mangage your own funds, assistance from us which will also involve a number of leading fund managers, or the choice of a designated discretionary fund manager. Please also visit our asset management page for more information on investing.
What happens if I die, get divorced, or re-marry after my pension transfer?
Upon application of your UK pension/s to a QROPS or SIPP you will have the choice for the nomination of benefciaries for the remiander of your pension assets when you are deceased. As the member of the pension scheme, you will have the choice as to whom you wish to leave your assets, and you may change this during the term of your pension. Your adviser will be able to assist you so that you keep your nomination of beneficiaries up to date with any changing future circumstances.
I already have transferred my UK pension, but I am not happy with the way in which it’s being managed. What are my options?
Should you have already transferred your UK pension assets to the likes of a QROPS or SIPP but feel unhappy about the ways in which your fund is managed you may, in most cases, be able to simply transfer the agency/management from one advisory firm to another. This is usually a fairly straightforward process. Should you be considering this, ensure that you receive relevant information as to how the new advisory firm will manage your fund, and the associated costs.
CASE STUDY: The process of a UK Pension Transfer - Case Study, Mr Arden (resident of Spain, 52 years of age)
- Having come across Speciality Advice online, Mr Arden takes the opportunity to contact us for a no-obligation friendly and informal chat.
- Mr Arden explains that he has a UK pension fund from a former employer, but isn’t too sure of the details. He agrees to contacting the UK scheme to find out exactly what he has with them, and is happy to sign a letter of authority simply enabling us to obtain the information on his behalf. He has the choice of this being sent either directly to him, or us.
- Having received this information a few weeks later, Mr Arden sets up a face-to-face meeting/or skype call to go through the info with a qualified and experienced pension adviser from Sepcilaity Advice. The adviser then helps Mr Arden you to assess his pension, and the options available together with the pros and cons of leaving it where it is, or transferring out to a SIPP or QROPS.
- Having discussed things in detail, Mr Arden is interested in transferring his pension since he wants to have full flexible access from age 55, and then wants the proceeds to be passed on to his wife and their son. He, and his adviser have discovered that his current UK scheme cannot offer this.
- The adviser explains why a SIPP is the best option, given Mr Arden’s current and likely future circumstances, combined with his financial objectives.
- Mr Arden’s transfer value from his UK scheme (CETV) is valued at £253,000. He plans to take his 25% PLCS (tax-free pension commencement lump sum) immediately on his 55th Birthday, and then a further lump sum later that year to finance an additional property purchase in Spain. The remainder he thinks he will leave in order to draw an income.
- The application for the SIPP involves the UK pension Trustees verifying the government approved status of the SIPP scheme, and then they liquidate the invested fund and the cash value is transferred over to the SIPP Trust. The SIPP Trustees are then able to pay Mr Arden directly his relevant monies when the time arises.
- Mr Arden has decided to let his adviser help him make sure that his new pension fund within the SIPP is invested safely and securely, according to his risk profile, and via some leading and well-known fund managers. He has also expressed an interest in diversifying across Euro and GBP in order to safeguard from any future currency risks.