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Pension Planning SIPP 2015 rules

An award winning advisers take on UK Pensions

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Should you even be considering a SIPP? We publish simple information below to allow you to decide

Many people here first about QROPS and moving their pension overseas, and later discover that a SIPP may have been the better option. We publish on our QROPS page a list of who should or should not consider one. Here we detail the information about SIPPs!

Transferring your UK pensions to SIPPs may bring several advantages:

  • Leave remaining pension funds to your chosen beneficiaries free of death taxes if you are under 75
  • Continue to make contributions to your pension, offset by any UK tax you may be earning, or up to £3,600 per annum if you are a UK resident or have been in the last 5 years
  • Enjoy the lowest cost option of all offshore pension solutions ( A true low cost SIPP, not those peddled by offshore salesmen as SIPPs can be obtained for £80-150 per annum)
  • Can take commercial loans within your pension fund
  • Take the option of just tax free cash or just income or combine them under new pension rules from 6 April 2015
  • Under the age of 75 if you have funds that are unlikely to exceed £1,000,000 then a SIPP should be your first port of call - see below for more information about the age 75 decision and how it could affect you
  • Enjoy greater flexibility and investment freedom than a standard UK pension
  • Be given the option to choose various low cost structures
  • Pension income paid in accordance with relevant double tax treaty with the country that you reside in at retirement - for smaller incomes this could be most tax efficient method when balanced against greater charges of other offshore options
  • CLICK HERE for further info about DTT (Double Tax Treaties).

AVOID HUGE COMMISSIONS: We will conduct business at minimal cost to you:

If you do not require advice, or if you have received advice and want to save money then we are able to conduct your business at minimal cost to you and your pension with no commissions charged.

The new age 75 split from April 2015

In essence, if you are under 75 then a whole new raft of flexibility has been made available to you. Death tax benefits have been reduced to ZERO for any funds accessed after 6 April 2015 (even if the person dies in the meantime), and there is greater access in your lifetime up to 100% of your funds wherever you are in the world. The most asked question is, "Do you need a QROPS anymore?" Contact us to find out and we will advise you on your personal situation.

If you are approaching 75 then you need to consider your options more carefully. Over 75 there are reduced options of either an access tax (45% until 2016) or in the future beneficiaries will have to pay income tax on any proceeds they take, although if they leave the fund to accumulate for future beneficiaries then there is 0% tax applied; they can leave the fund until 2016 even if you die in the meantime to take advantage of the new lower tax rules and options.

If you are overseas you will need to consider your DTT with the UK.
CLICK HERE for further info about DTT (Double Tax Treaties).

Qualifying criteria for a SIPP:

  • I have UK pensions ( excluding state pensions) worth at least £50k

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  • My fund is unlikely to exceed £1 million by the time I wish to access it

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  • I wish to have a low cost structure

    UK Pensions for Expats

  • I may be returning to the UK

    UK Pensions for Expats

  • I have a QROPS and want to consider a SIPP

    UK Pensions for Expats

  • I have already purchased an annuity?

    UK Pensions for Expats

  • My private/personal pension is already in drawdown?

    UK Pensions for expats

  • My company/occupational pension is already in drawdown?

    UK Pensions for expats

  • I am still a UK resident and have no intention of moving overseas?

    UK Pensions for Expats

  • I am overseas and want to take advantage of the new 2015 rules

    UK Pensions for Expats

What is a SIPP and who should have one?

A Self Invested Personal Pension (SIPP) is simply a UK pension vehicle for allowing investors to control their investment strategy, and retirement, themselves. It offers more control to the individual and does not rely on trustees to make decisions for them.
It is ideal for those with larger UK pension pots who want increased investment flexibility including currencies, or for those who are temporarily, but not permanently non-resident expatriates (expats), or for those who think they are likely to return to the UK to live in the future (or their surviving beneficiaries will return to the UK after their death). If your fund is likely to exceed £1,000,000 by retirement, then a QROPS should be considered. SIPPs are the main-stay of retirement planning and are also inheritance tax free and good for IHT planning.

Why would a SIPP be better than a QNUPS or QROPS?

With the new rules brought in April 2015 then some benefits, such as income and flexibility to take capital have improved dramatically under a SIPP. Also, the fact is that QROPS or QNUPS are far more expensive than most SIPP products, if not initially then in terms of annual charges. Also, whilst a SIPP should never be utilised with investments held in an investment bond, and therefore be a fraction of the cost of QROPS, thus improving returns over QROPS.

QROPS rules are still being consulted on as of May 2015, but as stated above, in most cases for people up to the age of 74, they are better off with a SIPP for retirement planning, rather than a QROP, because of the Budget 2014 and new rule changes in 6 April 2015.

UK pension transfers by overseas advisers

Beware recommendations of an investment made into an investment bond via a SIPP. This is often very costly bad advice dictated by the limited licences and lack of knowledge of the advisers / advisors! In fact some of the better advice, following UK regulations, is only available through quality specialist pension advisers who understand regulations in the UK, and do not base their advice on who pays the highest commission.

Case study

  • European client with a UK pension was looking to simply consolidate multiple pensions, invest in normal collective funds managed by ourselves.
  • There was no esoteric investments and we were looking for most cost effective solution that would also provide a lump sum tax free and no future income withdrawal.
  • We moved the funds to a SIPP custodian with a one-off up-front fee of 2%. We managed the funds using our own portfolios developed in the UK. Total annual cost, including funds charges, of 1.25%.
  • This worked out 8% cheaper than a QROPS recommended by a salesman to the same client using similar fund types in an investment bond.
  • The client therefore made more than 10% by following our advice in the first 18 months.

How we can help you

  • Would you prefer UK qualified experts to provide competent advice, rather than an offshore salesman seeking commission?
  • Are you no longer resident in the UK or considering moving abroad?
  • Do you have more than £50k in your UK pensions?
  • Would you like to pay less tax and have greater investment freedom?
  • If you answered YES to these questions Pensions4Expats could greatly improve your financial and tax situation.

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