International Pension Solutions:
Tailored pension planning to maximise your retirement savings across borders
Navigating the complexities of international pensions can be challenging, especially with frequent legislative changes that may present both opportunities and risks for your existing pensions.
Making the right decisions about your pension funds is one of the most critical financial steps you’ll take. UK pensions are notoriously complex, and the array of options for accessing your benefits can feel overwhelming, particularly for expatriates.
Key Services:
- Cross border pension planning
- Pension Transfers: Guidance on transferring and consolidating pensions internationally while minimising tax liabilities.
- Tax Planning: Strategies to optimise tax efficiency across different jurisdictions.
- Compliance and Regulations: Advice to keep you compliant with both home and host country rules.
With expertise spanning UK pensions, SIPP’s QROPS, and other international retirement solutions, we deliver advice that aligns with local tax laws and cross-border opportunities.
Defined Contribution Pensions/ SIPPs
Defined contribution pensions, such as SIPPs (Self-Invested Personal Pensions), can offer considerable flexibility compared to other pension types. Potential options include:
- Selecting from a wide range of investment managers and funds.
- Customizing your investment portfolio to suit your preferences.
- Keeping your funds invested in a UK pension while drawing an income via income drawdown (subject to scheme rules).
- Taking flexible lump-sum withdrawals with no restrictions.
- Purchasing an annuity to receive a guaranteed retirement income.
For expatriates, there are additional considerations:
- Withdrawing the entire pension pot to reinvest in a more tax-efficient structure in your country of residence, potentially optimizing estate planning.
- Transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS) for potential benefits beyond your current arrangement.
- A SIPP (Self-Invested Personal Pension) is a UK-based private pension offering greater functionality, transparency, and flexibility. As a UK-regulated plan, it is subject to UK pension legislation, providing benefits and drawbacks that remain applicable whether you reside in the UK or overseas.
Your choice should account for personal circumstances, objectives, risk tolerance, and tax implications. Recent UK reforms, such as the Overseas Transfer Charge and the inclusion of pensions in UK inheritance tax from April 2027, make careful planning even more essential.
Frequently asked questions – SIPP:
A Self-Invested Personal Pension (SIPP) is a type of UK pension that allows individuals greater control over their retirement savings, Key features of a SIPP include:
- Wide Investment Options: You can invest in shares, exchange-traded funds (ETFs), investment trusts, bonds, and commercial property, among other options. This flexibility is one of the main attractions for investors.
- Tax Relief: SIPPs offer tax relief on contributions. For UK residents, contributions made to a SIPP receive tax relief at the individual’s marginal tax rate, making them an attractive option for building retirement savings.
- Control and Flexibility: Unlike many traditional pension schemes that limit investment options, SIPPs allow you to make your own investment decisions or have a financial adviser manage your investments.
- Tax-Free Growth: Investments held within a SIPP grow free from capital gains tax and income tax on investments, which can help maximize your retirement savings.
- Access to Funds: From age 55 (rising to 57 in 2028), you can start accessing your SIPP funds, including taking up to 25% as a tax-free lump sum, with the rest subject to income tax
Anyone who wants more control over their pension investment. It’s ideal for individuals looking to diversify their pension portfolio beyond what’s available in traditional pension schemes or who wish to work with a financial adviser to create a more personalized retirement plan.
If you move abroad, your SIPP remains invested in the UK. You can still access your SIPP, but contributions will only receive UK tax relief up to a specified amount for a specified period. Any income you withdraw from your SIPP will generally still be subject to UK income unless you are able to use a double taxation treaty where the taxing rights are given to your country of residence. From 2027 a SIPP will be subject to UK IHT, regardless of where you live in the world, as it is considered a UK situs asset.
In the UK, a SIPP benefits from tax relief on contributions, meaning contributions can reduce your taxable income. Investment growth is free from CGT and withdrawals are taxed as income. You can usually take 25% of your SIPP as a tax-free lump sum, with the rest being subject to income tax at your marginal rate.
Yes, withdrawals from a SIPP are generally taxed as income in the UK, but the tax treatment in your country of residence may also apply. It is important to check if your country has a Double Taxation Agreement (DTA) with the UK to avoid being taxed twice.
To avoid double taxation, you can apply for tax relief under a Double Taxation Agreement (DTA) between the UK and your country of residence. This could reduce or eliminate UK withholding tax on your SIPP withdrawals, depending on local tax rules.
SIPPs were generally outside of your estate for UK inheritance tax purposes, However, following the UK Autumn budget the rules are changing. UK pensions, including SIPPs will be subject to IHT from 2027. Furthermore, the tax treatment will vary depending on whether you pass away before or after age 75. Typically when the member passes away after age 75 the beneficiary will also be taxed at their marginal rate of withdrawals.
You can continue to contribute to your SIPP if you live abroad, but the eligibility for UK tax relief will depend on whether you have relevant UK earnings or meet specific residency conditions.
Qualifying Recognised Pension Scheme – QROPS
A QROPS (Qualifying Recognised Overseas Pension Scheme) is an internationally recognised pension plan approved by HMRC to accept transfers from UK pensions. A QROPS enables expatriates to transfer their pensions out of the UK. Similar to a UK SIPP, QROPS offer added advantages, including:
- Receiving payments in your chosen currency.
- Payments made gross of UK tax. NB: Tax may be due in your country of residence.
- Greater control over who inherits the balance upon your death.
- Protection from potential adverse UK pension reforms.
However, QROPS transfers may not be suitable for everyone. Recent changes mean many expatriates, are now subject to a 25% Overseas Transfer Charge. Careful analysis is crucial to determine whether QROPS is the right fit for your needs.
Frequently asked questions – QROPS:
A Qualifying Recognised Overseas Pension Scheme (QROPS) is an overseas pension scheme that meets HMRC’s requirements to receive UK pension transfers. It’s designed for people who are moving abroad permanently or are already living overseas, providing greater flexibility with how their pension can be accessed.
A QROPS may be suitable for UK expatriates or those planning to retire abroad. It can offer potential tax advantages, access to your pension in your country of residence, and more control over your retirement funds without being subject to UK pension rules. Although since October 30th 2024 individuals should be mindful of the changes to QROPS rules and the widening of the 25% overseas transfer charge. The Overseas Transfer Charge (OTC) is a 25% tax on transfers to QROPS. Until now, transfers to QROPS in the EEA or Gibraltar were generally exempt from this charge, However, from 30 October 2024, this exemption will be removed.
Transferring to a QROPS may incur a tax charge known as the Overseas Transfer Charge, which is 25% if the amount you are looking to transfer is over a specified amount. It’s crucial to seek advice to fully understand the tax implications of a QROPS transfer. Additionally tax charges may be due where the QROPS does not meet the eligibility criteria. It is now likely that the OTC will make a QROPS much less favourable.
Yes, it is possible to transfer a SIPP to a QROPS. This could provide more flexibility and tax benefits depending on your country of residence, but it’s essential to get professional advice to determine if it’s right for you.
If you return to the UK, your QROPS will still remain valid, but it will be subject to UK regulations and tax rules. It will also be liable to IHT from 2027 if you are considered a long term UK resident by the 10 out of 20 year rule. It’s important to assess the impact this move will have on your pension benefits and tax position.
Transferring your QROPS back to a UK-based pension, such as a SIPP, could be beneficial in some cases. However, this decision will depend on your individual circumstances, taxation and costs should be considered. For example if you are a long term non UK resident it is likely to be more beneficial to retain your QROPS, as this will not be subject to IHT if you continue to meet the long term non resident criteria.
If you become a UK resident again, your QROPS will be subject to UK income tax on any withdrawals you make based on your marginal rate of income tax.
There may be fees associated with transferring your QROPS back to a UK pension, such as exit charges from your current scheme but there are typically no penalties. It’s important to review the terms and conditions of your QROPS to understand any potential costs.
Contact a qualified financial adviser with experience in cross-border pensions. They can help you evaluate whether transferring your QROPS or keeping it overseas is the best option for your retirement plans and financial well-being.
QROPS were generally outside of your estate for UK inheritance tax purposes, However, following the UK Autumn budget the rules are changing. And whether you are liable for IHT or not depends on your long term residency status rather than the pension product itself. If you are considered a long term UK resident when looking to the new 10 out of 20 residency based rules a QROPS will be subject to IHT from 2027. If you are considered a long term non UK resident as the scheme is not a UK situs asset it will not be subject to UK inheritance tax on death.
Consolidating Your Pensions
If you have accumulated multiple pensions over your career, managing and investing them across different schemes can be challenging and costly.
Consolidating your pensions into a single wrapper can streamline administration, enhance investment strategy, and reduce overall costs.
Taxation of Pensions Overseas
When retiring abroad, your pension income is typically taxed in your country of residence depending on the rules of the Double Taxation Treaties in place. Some things to be mindful of:
- UK government pensions remain taxable in the UK, with double taxation treaties often preventing dual taxation.
- You don’t always get 25% tax free cash! Lump-sum withdrawals are fully taxable in countries like Spain, France, and Portugal, to name a few – without a tax-free component.
- Tax rates on pension income vary significantly, with some countries offering reduced or nil rates under specific circumstances.
- Plans are designed for tax efficiency with the ability to build an investment portfolio in the currency of the country where the retirement income is needed. This allows individuals to address currency issues. In some cases, pensions can be moved to alternative jurisdictions to mitigate other risks, such as tax or political risks. In the UK,
- Countries with double tax treaties can provide taxpayers with attractive treaty benefits.
- We can also work with clients’ tax advisors and lawyers to help ensure the most suitable pension jurisdictions and providers are selected.
Strategic planning can help minimize your tax liabilities, ensuring your retirement savings work harder for you.
Is Your SIPP or QROPS Still the Right Solution for You?
If you’ve already transferred your pension to a SIPP (Self-Invested Personal Pension) or QROPS (Qualifying Recognised Overseas Pension Scheme) but are unsure if it’s still the right fit, you’re not alone. Changing personal circumstances, evolving financial goals, or dissatisfaction with performance or high ongoing fees can often lead to second-guessing your pension choices.
Additionally, pension legislation is constantly evolving. For instance, the UK is set to introduce inheritance tax (IHT) on UK pensions from 2027, which could have significant implications for how your pension is treated after your death. These changes highlight the importance of regularly reviewing your pension arrangement to ensure it aligns with both your long-term goals and the latest tax rules. Using the wrong product or failing to adapt to legislative changes could result in unnecessary tax liabilities or missed opportunities for growth and protection.
The Importance of Drawdown Planning
If you’ve already consolidated or transferred your pensions, ensuring you’re in the best possible position during the drawdown phase is equally critical. This is the stage where your pension provides you with income, so it’s essential to have a strategy that balances sustainable withdrawals, investment growth, and tax efficiency.
The drawdown phase comes with its own set of challenges. Market volatility, fluctuating income needs, and tax implications can all impact your retirement lifestyle. Without the right guidance, you could risk depleting your pension too quickly or paying unnecessary taxes.
It’s important to ensure that your pension is not only optimized for growth but also nurtured during the drawdown phase. We help you create a plan that adapts to your changing needs, offering peace of mind that your retirement income will last for the years to come. Retirement is a dynamic phase of life, and your financial needs may evolve over time. With expertise in both UK and international markets, we’ll ensure your financial planning remains on track—no matter where life takes you.
The Lump Sum Allowance is the maximum tax free amount that can be withdrawn from a pension as a lump sum without incurring an additional tax charge. With the abolition of the lifetime allowance, lump sum withdrawals above the tax-free portion are now taxed at the recipient’s marginal income tax rate.
If you have no protection in place and do not benefit from protected tax free cash You can withdraw up to 25% of your pension tax-free, subject to a limit of £268,275. This amount is known as the “lump sum allowance” and represents the maximum tax-free lump sum you could have received under the previous lifetime allowance rules.
Lump sum allowance and lump sum and death benefit allowance where lifetime allowance protection applies. Although the lifetime allowance no longer applies from 6 April 2024, the various forms of lifetime allowance protection often also protect the amount of tax-free cash that can be paid to an individual.
Beneficiaries should consider the timing and method of receiving death benefits, as this can have different tax implications. Receiving funds as income may be more tax-efficient than a lump sum, depending on their personal circumstances.
Do you need help to navigate the complexities of cross-border retirement
We can help you ensure that your retirement strategy is both compliant and optimised for your unique circumstances.
Speak with an expert today.
Jessica Cook LLB (Hons) Chartered MCSI
Private Client Adviser, Pensions Specialist
Meet Jessica Cook
It starts with a client’s life and ends with their investments, not the other way round. Helping people live rich and without regrets, rather than dying rich and with regrets. To help people improve their lives by bringing truth, understanding, and discipline to the choices they make every day.
I’m Jessica Cook, Wealth Adviser to international professionals and families across the globe. Featured in the 2022 Times Newspapers’ Guide to the UK’s top-rated Financial Advisers.
My background is law, and a former career with the Financial Times. I’m also a regular financial columnist for multiple publications.
Working in partnership at AES International as a Private Client Adviser means delivering the next generation of demonstrably beneficial services to our clients and creating positive change.
I work with absolute integrity and dedication to my clients’ needs. With an ongoing commitment to providing professional excellence in every aspect of the advisory role.
Testimonials
I feel I have received the best advise I could have had and feel that my pension is now much better off than it was before I started to work with Jessica.
I feel I have received the best advise I could have had and feel that my pension is now much better off than it was before I started to work with Jessica.
From the start she gave open, honest and good advice. She answered all my questions clearly and helped me understand my options
From the start she gave open, honest and good advice. She answered all my questions clearly and helped me understand my options
Jessica was great, she provide guidance and advice in a way that was easy to understand. She is always available to answer my questions, offer advice and help solve any issues.
Jessica was great, she provide guidance and advice in a way that was easy to understand. She is always available to answer my questions, offer advice and help solve any issues.
Jessica provided excellent impartial sound financial advice that we have been following to great effect for the past 5-years.
Jessica provided excellent impartial sound financial advice that we have been following to great effect for the past 5-years.
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