Pension Transfers in Three-Steps

1Investigation
and Analysis

With your authorisation, we will trace and contact all UK pension schemes where you hold benefits. Pension schemes and the benefits they offer can differ significantly, therefore, our analysts will request detailed breakdowns of all the benefits you hold and their specifications.

2Full Financial
Review

Financial Planning provides a route from your current position to your future goals. In order to provide advice on your current financial plan or the suitability of your existing pension arrangements, we require a full understanding of your current circumstances. Only after a full financial review, can we assess the suitability of your current UK pension benefits.

3Financial Planning
Recommendation

Following our analysis of your existing pension benefits alongside a full financial review, we will be able to provide you with a financial planning recommendation. This comprehensive recommendation will not only focus on your retirement planning, but on all aspects of your financial planning requirements.

Pension Transfers

Pension Transfers from one Defined Contribution scheme to another Defined Contribution or Personal Pension, are reasonably straightforward because you are moving a pot of money from one pension provider to another pension provider offering the same type of scheme. However, there are three key things to consider:

  • The charges (costs) – are the charges higher or lower than the scheme you’re considering transferring away from and how much will it cost to make the transfer? There may also be exit penalties to consider.
  • Investment risk – the level of risk of the pension fund you’re invested in and the fund or funds you’re considering investing in. Are they suitable for your appetite for risk?
  • Guarantees or ‘safeguarded’ rights – does the existing scheme provide any guarantees like bonuses or a guaranteed annuity rate (income) at retirement? Losing these may be very costly.

Transferring benefits from a Defined Benefit pension scheme to a Defined Contribution or Personal Pension is a completely different exercise. By definition, you are giving up certain guaranteed benefits in favour of benefits that are not guaranteed. The benefits will rely on future investment returns, charges and inflation.

Before transferring a Defined Benefit pension scheme that is worth more than £30,000, you must receive professional advice from someone who is registered with the Financial Conduct Authority (FCA) as a ‘Pension Transfer Specialist’.

Defined Benefit Pension Transfer/ Final Salary Pension Transfer

You should be very cautious about transferring benefits from a Defined Benefit pension scheme and we recommend that you avoid firms who are actively promoting the idea of doing this.

However, there may be specific reasons or circumstances that mean a DB transfer would make sense. For example, your health and the death benefits, whether you have any dependants, when you want to retire, how much the lump sum benefit might be and what other income or assets you have available for your retirement. However, you need to fully understand the options and risks as well as the potential benefits.

UK Pension Types

Defined Contribution

Members and their employers typically contribute a percentage of the members salary into a defined contribution scheme where a fund value is held. This fund value is then invested and will rise/fall depending on investment performance as well as further contributions.

Defined Benefit/Final Salary Pension

A final salary scheme is pre-defined in its structure. A structured income for life is provided, with elements such as; age of access, death benefits and benefit escalation also structured by the scheme.

Self-Invested Personal Pensions – SIPP

A SIPP is a flexible pension structured that allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue and Customs. SIPP’s are renowned for being able to provide flexible retirement options.

Small Self-Administered Schemes – SSAS

A SSAS is primarily set up by private and family run businesses for the benefit of the owner directors and family employees. The number of members for a SSAS generally does not exceed 11.

A SSAS can offer particular benefits to business owners including:

  • Commercial property can be bought and leased back to your business (or any third party)
  • Loans can be advanced to your business.
  • Investing in your company via the SSAS by purchasing an equity stake

State Pension

To get the basic State Pension you must have paid or been credited with National Insurance contributions.

The basic State Pension increases every year by the ‘triple-lock’ or whichever is the highest of the following:

  • earnings – the average percentage growth in wages (in Great Britain)
  • prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
  • 2.5%

Non-UK alternatives e.g. QROPS, QNUPS etc

QROPS – Qualifying Recognised Overseas Pension Scheme

QROPS stands for Qualifying Recognised Overseas Pension Scheme (QROPS) and is a retirement package based outside of the UK that has similar rules to a UK registered pension scheme.

QROPS were designed to allow individuals permanently living overseas to simplify their affairs and enable them to continue to save to provide an income for retirement by transferring their UK pensions to a pension based in their new country of residence.

QROPS are complicated packages and are not a one-size-fits-all solution for every expat.

QNUPS – Qualifying Non-UK Pension Schemes

A Qualifying Non-UK Pension Scheme can allow individuals to invest more into their pensions than the usual UK limit in terms of both annual contributions and lifetime allowance.

In order for a pension scheme to be considered a QNUPS it must:

  • Have the same earliest retirement age as would apply in the United Kingdom, currently age 55.
  • Not provide an income prior to retirement.
  • Be available to the local population in the jurisdiction in which it is located.
  • Be recognised for tax purposes in the jurisdiction in which it is located.

QROPS and QNUPS are highly similar pension schemes. Which is most appropriate for an individual depends on their financial circumstances and the country in which they are domiciled and/or resident.

What you'll learn in this FREE guide:

Learn how expats all over the world have moved to a personal pension, allowing them to:

  • Access their 25% tax-free lump sum at age 55
  • Guarantee their spouse 100% of their pension
  • Access their pension from 55
  • Reduce their income tax
  • Mitigate Lifetime Allowance taxes
  • Consolidate all their pensions

Get Your Free Guide Now

Inside this four page free guide, you’ll learn more about what options are available to you as a British expat.

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