Moving out of the United Kingdom and becoming a British expatriate can be an enormous life change. Often times, there are significant factors to sort out which can create a frantic time during the move. Coming to terms with where to live, go to school, or work for a living are only the basic factors involved. Opening a new bank account and transferring UK pensions overseas are also basic things that need to be dealt with before the move.
Do Not Forget the Pension
Many individuals simply do not consider what they are going to do with their pension once they move overseas. Most simply do not realize that they can transfer their UK pension to their new country of choice, which will serve as a great benefit when the time comes to receive their funds. There are a variety of things that need to be considered when moving the pension. Because of that, it is important to seek out quality financial advice from individuals that completely understand how to deal with UK pension schemes.
Considering QROPS
The easiest way to avoid any major taxation problems is to consider using a QROPS (Qualifying Recognized Overseas Pension Scheme). This can only be accomplished by financial institutions that have applied and fully met all of the standards to achieve a QROPS status. This status with the financial institution is always under review.
Based on the country of choice, the British expatriate can often have a higher level of flexibility transferring their UK pension to their new country. This is good for both employer (occupation) plans, and personal plans. However, because there are specific schemes available through an occupational plan, it is often highly advisable to seek out the skills of a financial advisor or representative to ensure the transfer offers the best benefit to the individual.
Considering SIPP
A Self-Invested Personal Pension (SIPP) is often referred to as just a personal pension. This is different from a conventional personal pension because it offers greater individual control and flexibility. It also allows for investing in a huge assortment of varying assets that include unit trusts, shares, commercial property and cash.
The Benefits of Transferring
There can be a variety of benefits to the individual that is transferring an existing UK pension scheme to a QROPS or a SIPP, whenever it is appropriate. To be sure that the individual obtains all the benefits they have coming, it is important to seek out an investment advisor to help understand all the nuances and distinctions between the two. In addition, the current pension that the individual has might also hold specific benefits or guarantees that could possibly be eliminated during the transfer. Because of that, it is crucial to use the advice of a skilled financial advisor or representative to carefully consider every option before making the best decision.
Benefiting the Family
QROPS are typically not subjected to inheritance taxes on the death of the recipient. However, there may be jurisdictional taxes that might apply based on the country of residency. This makes QROPS a wise choice when handing down an inherited fund to beneficiaries. In addition, moving a pension plan overseas is also an effective way to support any claim that the individual is no longer considered subject to paying UK inheritance tax.
There are significant persuasive reasons for exporting a UK pension plan when moving overseas to retire or to work abroad.
