UK Pensions

you are An International Self Invested Personal Pension (SIPP) is simply an offshore UK pension vehicle for allowing investors to control their investment strategy, and retirement, themselves. It offers more control to the individual and does not rely on trustees to make decisions for them.

The difference between a regular SIPP and International SIPP is where the money is held. An international one is usually outside of the UK for tax purposes and investment opportunities.

You would also normally look at an international SIPP if you are living outside of the UK because many platforms and SIPP providers don’t allow you to open an account without a UK address. This is the same when you are looking to top up, you might not be allowed to top up if you aren’t in the UK.

International SIPPs are ideal for those with larger UK pension pots who want increased investment flexibility including currencies, or for those who are temporarily, but not permanently non-resident expatriates (expats), or for those who think they are likely to return to the UK to live in the future (or their surviving beneficiaries will return to the UK after their death).

A common international SIPP request we get is to combine their pensions from previous employers and as a way expats can save if they are earning enough money that they don’t need to access it in the short term.

If your fund is likely to exceed £1,000,000 by retirement, then a QROPS should be considered. SIPPs are the main-stay of retirement planning and are also inheritance tax-free and good for IHT planning.

The current pension life time allowance https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance it might be best to review your options as in some cases it can be beneficial to look at a QROPs if you are living overseas in a certain location.

Why would a SIPP be better than a QNUPS or QROPS?

With the new rules brought in April 2015 then some benefits, such as income and flexibility to take capital have improved dramatically under a SIPP. Also, the fact is that QROPS or QNUPS are far more expensive than most SIPP products, if not initially then in terms of annual charges. Also, whilst a SIPP should never be utilised with investments held in an investment bond, and therefore be a fraction of the cost of QROPS, thus improving returns over QROPS.

In most cases, people up to the age of 74 are better off with a SIPP for retirement planning, rather than a QROPS, because of the Budget 2014 and new rule changes on 6 April 2015.

Here are a few of my top advised ones and the fees this is not an in-depth review, please read more on my blogs on U.K SIPPs international platforms with ratings or get in touch to see which is the best step for you.

If you are looking for a platform, make sure that you are getting one for 1% and under as an International SIPP. If you want to read more about platforms, please read my International SIPP Article

International SIPPs in nature are very similar to SIPPs in the UK, however, they are based outside of the UK and in places such as the Isle of Man. This helps with tax efficiency and within the SIPP any gains that are made are income and capital gains tax exempt. When you start to draw on your international SIPPs that’s when you should speak to a financial advisor to see how you can do so efficiently.

Trust Options for an International SIPPs:

Offshore bond and platforms

There are variety of good points to international SIPPs:

• The gains are tax free
• Wider investment choice
• Can have all pensions in one place
• List a beneficiary
• Variety of currencies

The downside can be the cost if you go into a bad platform and have a bad advisor. You can soon start to see your investment return diminished by fees. However, there are plenty of platforms out there that you can choose from.

If you want to speak to me or ask any questions regarding international SIPPs please email me and I will schedule a call or answer your questions.

QROPS are actually very similar to SIPPs, as they are defined contribution schemes, but they are based outside the UK.

They can be based in any country around the world, and qualify as a QROPS as long as the scheme meets specific requirements set by HMRC.

As mentioned, HMRC does not vet individual schemes – the scheme trustees notify HMRC of their existence and self-certify that the scheme meets the criteria.

After this, the scheme will normally become “recognised” by HMRC, and will often (but not necessarily) be included on a list published on the government website.

QROPS are intended for people who are planning to or have already left, the UK.

The main difference between SIPPs and a QROPS is the additional tax benefit a QROPS may bring to those living outside the UK.

One of the biggest benefits of QROPS is around something called the lifetime allowance (LTA).

Under current UK legislation, you can only accumulate a tax-privileged pension fund of up to £1.073 million, unless you apply for certain types of protection which can boost this to higher levels in some circumstances.

This means pension savings above the LTA may be taxed at up to 55%.

However, if you transfer into a QROPS, it is tested against the LTA at the point of transfer, and not again thereafter.

This means, if the value of your UK pension fund is close to the LTA, it may be worth considering a transfer into a QROPS to avoid being taxed on your pension savings above the LTA in the future.

Recently, there has been a 25% tax on ROPs / QROPs which has made the scheme less favourable to some. There are a few conditions that need to be met or not met before you face the charge, to find more you can visit the government website and read about when you might face the tax.

If you have any questions, please email me and I can give you more personal advice on whether a ROPs might be suitable for you if you will face the tax or there might be a better option that exists.

If you are an expat who wants to transfer their pension into a SIPP or ROPs, it can be a good idea if your circumstances are right. 

If you have a defined contribution pension (DC) then these are easier to transfer than Defined Benefit (DB). These are the newer type of pensions where your employer pays in a certain amount and so do you. If you are wanting to transfer a defined benefit (DB) pension, then this is much more time-consuming and complex. This is because of the regulations, which is a good thing, unless you have a high net worth and you just want to take the money out.

They were brought in to protect people from losing everything they had worked for.

As an expat, most go for an international SIPP because they can’t set up a SIPP in the UK. This isn’t a bad situation as at the same time you can mitigate tax and if you move in the future you can still continue to pay in to the SIPP.

Many transfer their frozen or redundant pensions into the SIPP so that they can consolidate all their pensions into one manageable space.

Due to the new transfer tax of 25% on ROPs it’s doesn’t make sense to transfer into one of these unless you are near the life time allowance (LTA) in which case there are some good benefits to having a ROPs.

However, a good point about ROP’s are, ROPS are in line with UK pension freedom rules which were introduced on 6th April 2015, permitting people to access their pension savings from Age 55.

Our Process For Transferring Expat Pensions

With the pension transfer, our process is simple, we will need to speak to you and ascertain amounts (LOA) and complete a risk profile. After that, we can create your investments and choose a platform with you. You will get several options in your report to choose from,

Once all the paperwork is complete we can then transfer the pensions over, this process usually takes a few months due to the paperwork but once done, you shouldn’t have to go through it all again!

If you are looking to transfer your pensions as an expat, then please email me at the bottom of this page and I can arrange a call!