Here is some good news for expats that haven’t moved their pension abroad or offshore yet, or they are looking at the options to move into an International SIPP, I have a number of articles about SIPPs to help you make the right choices and make sure your money is dealt with correctly!
Before 2017 many used to transfer their pensions into a QROPs and this being managed by an advisor that was put in a life company that was usually a bond such as RL360, FPI, OMI that would charge 7% on the bond upfront and 1.5% a year, add to this if it had a note add an extra 4% and on funds or structured notes (read my article on notes). Plus there is an advisor fee of 1% this could mean that just to keep up with inflation, it would be 5% a year just to keep up with the charges. So inflation adjusted it would have to be 7-8% just to get real growth above the CPI inflation level. With QROPs (Rops) incurring a 25% tax on many places outside the EEA an International SIPPs is a feasible and realistic option.
Now, the new offshore rules say that you are not allowed to put money in these bond platforms that are more of insurance policies. This is a positive sign for expats because it means that they can reduce the fees and actually start to make money from their SIPP or International SIPP.
These must now be put into Investment platforms, which I have written about before these cost around 0.5-1% (the 0.5% includes the dealing fees and spread, as they usually have $25-$45 a trade and an admin charge with this included), on top of this you have the fund fees that can be 0.1%-1.64%. This can save you a substantial amount of your pension.
What does this mean for expats, it means that you won’t be paying the entrance charge or fee (that is normally hidden) of 5% and the expensive fees that come along with the investment.
If you do have a pension in one of the old bond platforms, I would urge anyone to get their pension reviewed as I have come across countless that don’t know and are shocked about how much fees they are paying. I would urge you just to get a review so you know what fees you are paying as many advisors won’t tell you when they put you in the bond scheme.
So what do you pay with these platforms and SIPPs, first will go on to Defined Contribution schemes. These are based on real-life examples, you can see more on my blogs on Investments platforms
| Platforms | Cost per annum | Admin costs (varies on amount in platform) | Trade cost |
| Capital Platforms | 0.4% | 0.1% | 1% |
| Ardan | 0.4% | 0.1-0.2% | $25 |
The Trust Costs
| Trustee | Platform cost per year | One off set up fee | Pension drawdown | Flexi Pension Drawdown |
| Forth Plus | 450 GBP | 450 GBP | 150 GBP | 200 GBP |
Here at Investment for expats we have set some platforms for expats to keep costs low and created a set portfolio for investors using low-cost index funds. This means that expats can look for growth but also keep their costs well below the 5% of what you find in QROPs and bond structures.
Find out more on these portfolios I have set up specifically for expats that are designed for growth but are also low-cost.
If you are looking to move your pension offshore and want to know the options, feel free to get in touch on the link below.
