UK Penssion Info
You Pension Fund is generally one of your most important assets and deciding to transfer should not be taken lightly.
The main reasons to consider a UK Pension Transfer include:
Concerns Over Final Salary Schemes: Will you fund be able to pay your pension at retirement?
Flexibility as to how and when you access your pension.
Potential for Earlier Access: Potential to access your pension from 55.
Consolidation: Move several pensions in one scheme to save costs and make it easier to manage.
Lifetime Allowance (LTA) Concerns: If you are worried about exceeding your LTA a transfer may help.
Current Transfer Value: Transfer values were never higher due to low Gilt rates and incentives from employers.
Control: Over when and how much you invest in your pension and which investment vehicles to choose.
Range of Investments: SIPPs are versatile investment vehicles as they can hold a range of defined assets including commercial property.
WHAT IS A SIPP
A SIPP (Self-Invested Personal Pension) pension is a personal pension that also gives you the benefits of great flexibility and control over your investments. It’s a tax-efficient and convenient way to save for your later years. Your contributions can benefit from tax relief from the UK Government. You can access your SIPP from age 55 or aged 57 from 2028.
How does a SIPP work?
SIPPs are becoming increasingly popular as it gives you control of your pension as you can select the investment strategy and drawdown options.
Key Features of SIPPs:
- You can start drawing retirement benefits from 55 even if you are still in employment.
- Your benefits are flexible. You may draw as much or as little income as you like.
- 25% of your total funds can be withdrawn as a tax-free cash lump sum.
- SIPPs are excellent for those who plan to retire in the UK. They are equally beneficial for those in a nation with a preferential double-taxation agreement with the UK.
- SIPPs abide by UK pension rules and as such are affected by any UK changes to pension rules.
- SIPP investments grow free of capital gains tax or income taxes.
- You are not required to live in the UK to be able to invest into one.
- Even though a SIPP is held in the UK, it is possible to have a multi-currency SIPP.
With many of the UK’s largest companies closing their final salary schemes to all members, individuals are now having to look at taking their pensions into their own hands.
WHAT IS A QROPS
A QROPS (Qualifying Recognised Overseas Pension Scheme) is an overseas pension scheme that meets certain requirements set by HMRC. It is essentially a trust or a contract based offshore pension.
A QROPS can be of benefit for expats with UK pensions who have left the UK permanently and intend to retire abroad.
A QROPS does not have to be established in the country where the expat resides or decides to retire to.
For Expats who plan to retire back to the UK a QROPS should still consider a QROPS if they are approaching or have exceeded their lifetime allowance.
Advantages:
- You can access the funds from age 55.
- You can decide on the amount if any of the funds you wish to access (called Flexi Access Drawdown).
- You may be entitled to higher enhanced tax-free lump sum of up to 30%.
- Reduce the impact that the UK Lifetime Allowance (LTA).
- On death, you can leave your pension fund to any chosen beneficiary.
- You can consolidate multiple pension sources into the one QROPS.
- You have a wider range of investment options to choose from.
- QROPS can be held in multiple currencies to help minimise future foreign exchange risk.
Members who have concerns about the Funding Levels and the Strength of their employers to meet their pension obligations may decide that they wish to control their own investments and eliminate this risk. Although a safety net is provided by the Pension Protection Fund (PPF) this can result in greatly reduced pensions income on retirement.
