Expat Pension Transfers,
International SIPPs &
QROPS
With pensions now offering more flexibility than ever, people are taking more interest in what they can do with their pension assets.
As an expat, this creates both opportunities for improved access and returns, but also risks of poor advice and commission-driven sales in less-regulated environments.
At Inveq Expatriate Wealth we provide fee-based, transparent and honest guidance on the transfer of pensions to SIPPs, QROPS or if it's best to not to transfer at all.
Transfer & Consolidate Your UK Pensions
Pensions are simply pots of money accumulated to provide income when you are no longer working. This crucial area of financial planning generally exists in two forms:
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Defined benefit (or final salary) schemes are linked to salary and length of employment and administered by trustees that ensure that contributions are made by employers. Defined benefit pensions are gradually being replaced by money purchase schemes as they are too expensive for employers to maintain.
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Money purchase (or defined contribution) schemes are not correlated to length of service, although longer service results in more contributions. Employees and employers contribute to a pension scheme which invests in securities, the performance of which will determine the value of the pension at retirement, less charges deducted.
Changes in UK pension legislation now allows UK pension scheme members to transfer and consolidate their assets into alternative arrangements offering greater access, investment choice and in the case of defined benefit schemes, the ability to leave assets to loved ones after death.
In recent years many defined benefit schemes have fallen victim to the spiralling cost of keeping them solvent and been taken over by the Pension Protection Fund (PPF). This has motivated many scheme members to explore the options available to them which as an expat, generally include an International SIPP or QROPS, with the choice of which to use being largely dependent on the size of the pension, where you currently live or expect to be living when you take income.
It is important for expats to know that as 'non-relevant' UK individuals without UK earnings, tax relief on contributions to a SIPP may not apply, so any further savings may be better invested using an expat investment platform or if available, tax-efficient products available to residents locally in your resident country.
Be Aware That...
Globally, financial regulations vary as much as the protection they offer you. Many regions are still years way from implementing UK-style remuneration rules for expat advisers. The way you pay for expat financial advice has a huge impact on investment performance and the service you receive, so it's vital to clearly understand the terms and conditions of financial commitments you make, and consider how products will fit your needs should your circumstances change.
The requirements to complete pension transfers have become stricter. However, caution is advised as even the UK government's efforts to deter cold-calling scams and the promotion of unregulated investments, has not stopped vulnerable investors losing millions of pounds.
Although there are many benefits transferring a defined benefit pension, the sacrifices also need to be clearly explained and understood. To learn more about if an expat pension transfer to a QROPS or an International SIPP is right for you, contact us today and you'll get the guidance you need to make an educated decision.