SIPP Investment | Benefits Of A SIPP | International SIPPs
Should you be considering a SIPP as an expat?
We publish simple information below to help you to decide better.
Whilst QROPS may be the first type of pension you consider as an expat, the truth is that a SIPP may be the better option. Here, we detail the information about SIPP investment, and the potential benefits of a SIPP.
Difference between a SIPP and an International SIPP?
Essentially, a SIPP and an International SIPP are identically regulated. Whilst a few years ago an International SIPP may have differentiated itself by offering currency and other additional SIPP investment benefits linked to expats (hence sometimes being referred to as an ‘expat SIPP’), the reality is that many SIPPs now offer exactly the same without calling themselves International SIPPs.
Transferring your UK pensions to SIPPs
Transferring your UK pensions to SIPPs may bring several advantages:
Leave remaining pension funds to your chosen beneficiaries free of death taxes if you are under 75
Continue to make contributions to your pension, offset by any UK tax you may be earning, or up to £3,600 per annum if you are a UK resident or have been in the last 5 years
Enjoy the lowest cost option of all offshore pension solutions (a true low cost SIPP, not those peddled by offshore salesmen, as SIPPs can be obtained for £80-150 per annum)
Take commercial loans within your pension fund
Enjoy greater flexibility and investment freedom than a standard UK pension
Take the option of just tax free cash, just income, or combine them More ›
These are just some of the benefits. To learn more, speak to one of our expert advisers today.
“SIPPs/International SIPPs are ideal for those with larger UK pension pots who want increased investment flexibility”
What is a SIPP (or ‘expat SIPP’) and who should have one?
A Self Invested Personal Pension (SIPP) is simply a 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 term expat SIPP is often used to describe a UK pension for expats.
SIPPs/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).
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 free from Inheritance Tax and ideal for cross-generation planning.
Qualifying criteria for a SIPP
|Holds UK pensions (excluding state pensions) worth at least £100k|
|Needs access to currency or investments outside and inside the UK|
|Desire to have a flexible low cost structure, and more control|
|Individual may be returning to the UK or staying overseas|
|Holds a private/personal pension that is already in drawdown|
|Holds a QROPS and wants to consider a SIPP|
|Still a UK resident with no intention of moving overseas|
|Living overseas and wants to take advantage of the 2015 rules|
Why would a SIPP be better than a QNUPS or QROPS?
With the new rules brought in as of April 2015 then some benefits, such as income and flexibility to take capital have improved dramatically under a SIPP. Furthermore, QROPS and QNUPS are far more expensive than most SIPP products, if not initially then in terms of annual charges. Also, a SIPP should never be utilised with investments held in an investment bond, and therefore should be a fraction of the cost of QROPS, thus improving returns.
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 announcement of 2014 and rule changes as of 6 April 2015.
The 75 years age split since April 2015
In essence, if you are under 75 then a whole raft of flexibility is available to you. Death tax benefits have been reduced to ZERO for any funds accessed after 6 April 2015, and there is greater access in your lifetime up to 100% of your funds wherever you are in the world.
If you are approaching 75 or your funds approach or exceed £1 million then you need to consider your options more carefully, as a QROPS should also be considered. Over 75 there are reduced options of access tax, or in the future beneficiaries will have to pay income tax on any proceeds they take (although if they leave the fund to accumulate for future beneficiaries then there is 0% tax applied). A QROPS may be a better solution but is not always available in your jurisdiction with heavy taxes due and so your future plans are significant to any plans made.
If you are overseas you will need to consider your DTT with the UK. More ›
Avoid further loss of your future retirement income by taking action now.
Watch our video to find out more
For Bond information CLICK HERE ›
FCA explains defined benefit transfer process
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