Expat pension transfers are becoming less and less frequent thanks to the rules change that was implemented in March 2017, where as if a pension is transferred out of the United Kingdom they would be subject to a 25% exit tax, according to figures from HMRC.
This has a huge impact on the financial viability of Qualifying Recognized Overseas Pension Schemes (QROPS).
Although regardless of the new tax large numbers of expats are looking at ways to withdraw their pension from the UK.
- 2016/17, a total of 9,700 QROPS transfers were completed with a value of £1.2 billion.
- 2015/2016 13,700 transfers with a value of £1.2 billion were completed.
- The figures for 2017/18 are expected a significant decrease.
With pension deficit still increasing many retirees are turning to Self Invested Personal Pension (SIPPS) as way to get their money into a safer environment.
A Self-Invested Personal Pension (SIPP) can provide the benefits of a QROPS, with the added value of wider investment choices and greater control over investment choices. Perfect for someone with investment experience.
A SIPP can hold a range of different investments within one envelope, until retirement or a specified age the investor wished to draw on their pension, drawdown age is 55 years of age
At age 55 with a Self Invested Personal Pension you may withdraw 25% as a tax-free lump sum. The tax-free element only applies to the UK, not the country of residence.
SIPPs are kept in the UK, and so the investments and payments have to be in British Pounds (£), so exchange rates will apply.
Self Invested Personal Pension Investments can be: UK & foreign government bonds, Gilts and bonds, Stocks and shares, Investment trusts, Exchange traded funds, Commercial property, Real estate investment trusts and Offshore funds.
- Low-Cost SIPP, have lower running costs, no assistance you decide the investment.
- Full SIPP, higher charges but greater investment choice.
- Full SIPPs offer a wider choice of investment.
Able to transfer existing pensions into your SIPP to consolidate them.
Required monthly contributions into a SIPP tend to be very low.
With greater control of your pension comes greater risk, so if you are an inexperienced investor be sure to get professional advice before embarking on any investment at all.
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