Whilst working in the UK, you accrued pension assets either in a personal pension or a company pension scheme. Now that you no longer live in the UK, you should consider what to do with your pension benefits. There are three main options:
- Leave your UK benefits where they are.
- Transfer into a UK based international Self-Invested Personal Pension (international SIPP), the name given to the type of UK Government approved personal pension scheme suitable for overseas residents.
- Transfer into a qualifying Recognised Overseas Pension Scheme (ROPS), which is an overseas pension scheme that meets certain requirements set by Her Majesty’s Revenue and Customs (HMRC).
The key reasons why people transfer their UK Pensions to a SIPP or a ROPS are:
- You can access your pension funds from age 55.
- Potential to greatly reduce your income tax liability when taking your pension income via a ROPS.
- Take income and benefits in the currency of your choice
- You can have certainty that your heirs inherit the entire balance of your pension fund.
- Access to up to 100% of your pension fund under flexi-access rules. Amounts above your tax free allowance (up to 30% for ROPS and 25% for SIPP) will be taxable.
- Internationa;l SIPPS and ROPS can be managed by an internationally qualified adviser.
- You can consolidate multiple UK schemes into one for simpler reporting, servicing and reduced costs.
- No death charge on ROPS for those who exceed 5 full UK tax years as a UK non-resident.
- ROPS provides the benefit of testing against your Lifetime Allowance NOW – the lifetime allowance has been steadily dropping since 2010/11. No growth is tested after transfer to a ROPS.
Whether a ROPS or an International SIPP is right for you will be determined by your particular situation, especially your country of residence and future plans.
We strongly urge you to make an appointment with a qualified BMP Wealth Manager to discuss these points. We also want to make sure that you understand the answers and fully are aware of both the benefits and the risks of a transfer.