Johnnyboy11

Buried in yesterday's budget. I guess the local 'Financial Advisors' won't be too happy...

Overseas pension transfers

From midnight tonight a new 25pc tax charge will be applied to transfers of pensions to overseas schemes when the saver is not living in that country.
There are between 10,000 and 20,000 transfers to foreign schemes a year, the Government estimated. However, the schemes have been mired in claims that they help facilitate pension scams.
The charge will not apply if the individual and scheme are within the European Economic Area or if the overseas scheme is provided by the individual's employer. Only a "minority" of transfers will be affected, the Government said.

Meow

It wasn't exactly buried and it won't please the sales sharks.

This will apply to QROPS and QNUPS, not SIPPS and the latter are more suitable for the majority of people anyway.

mission

how many people do actually have a pension?

Meow

UK pensions? Many people, especially those who worked in the UK for a while. You can't take out a UK pension once you have left the UK so people have other savings and investments as expats.

No pension = no money when you are old so some form of retirement planning is essential. Doesn't have to be a traditional pension but the UK's basic State Pension (even if you do qualify for the maximum) is just not enough on its own.

mission

i seriously need to sort something out

martinbkk

Hopefully now I'll stop getting the cretins calling me to suggest I move my pension.

Meow

Nah, they'll just want to move you to a SIPP.

Johnnyboy11

Can't see the point of an expat paying into a SIPP. Money tied up until age 55, no tax relief on the way in, then 20% income tax (on 75% of the pot) on the way out. Madness, no?

Meow

Er, you're the one who is always telling people to set up a SIPP!

Expats can't pay into a SIPP, unless it was up and running before they left and they are restricted to just GBP 3,600 gross a year for five year anyway. The point of the SIPP is that it is a vehicle to receive the proceeds of an existing pension fund.

Many UK personal pension have very limited investment options and aren't being managed anyway. Many final salary schemes have substantial funding deficits, or restricted death benefits, and in those cases people have the option to transfer to a SIPP. It also provides far more options at retirement.

Advice to transfer from a defined benefit (final salary) scheme must be from a FCA broker (I can do this) and then managed properly on an ongoing basis. The issue with many offshore salespeople (I can't call them advisers) is that too much commission is taken on transfer as it does not yet need to be disclosed (I take a far lower amount) and lack of management or putting people into riskier funds for secondary commissions. I manage differently, using UK investment and analytic tools, so they do work - assuming it is appropriate to transfer.

Pensions are a complex area, too complex, yet it is so important to get it right for the long term. It's incredibly frustrating to see so much poor advice, and hard to correct it, but changes are afoot that might improve the situation a little in time.

Johnnyboy11

Yes, I tell people to open a SIPP to benefit from free money. However, I'd never tell an expat to transfer an existing pension, which is way beyond my ken, and an area rife with scams.

Since most UK expats are 'Relevant Individuals' when they leave the UK, they can open a SIPP or other personal pension up until the end of that tax year. Contribute £2,880 that tax year and the subsequent 5 tax years and benefit from 20% tax relief (£720) each time. Everyone likes free money, which you can get your hands on at age 55 onwards

Meow

Well I might know a thing or two (or 97) about pensions. And I am qualified to advise on them.

Edo

Hey Meow, I need an independent advice on QROPS. Is it OK if I PM you please?

The OneEyedMan

This article may be relevant to some:

Inside Investment: UAE-UK tax rule frees up offshore pension transfers | The National

"Under the new UAE-UK double taxation convention that came into force on January 1, if you are a UK expat over 55 and have pension funds in Britain, then it is now possible to cash out the full pension pot entirely tax-free.
..."

Sabi Star

I think anyone - even in UK - over 55 can only cash in 25% of the total pot cash free - not the whole lot. You can transfer the other 75% to another provider tax free though.

Beta

Is it safe to hire a private pension consultant to act on your behalf? I have been offered this service in Dubai, Need your advice please