What you should know about International SIPPs
If you live outside the UK, a search for British pensions, will result in references to SIPPs and International SIPPs. It is unlikely to actually cover British pension providers such as Aegon, Aviva, Friends Provident, Royal London, Scottish Widows, nor Phoenix amongst others.
Why do only SIPPs or International SIPPs feature overseas for expats and their advisers?
We will explain in detail what a SIPP or International SIPP is later in this passage. Before we do that we want to explain about the 4 Main considerations are when receiving advice!
1. Who should you ONLY seek advice from?
Before engaging with an expatriate adviser for advice about your British pension, or about transferring your UK SIPP, or utilising an International SIPP you may want to ask the adviser a few questions:
- Does your PI cover (insurance) specifically cover British pensions’ advice (for example some in the European Union do NOT cover pensions from other countries)?
- Is your European company regulated to give advice on British pensions at all?
- Does your regulated company hold terms of business with my current British pension provider (such as Aegon, Aviva, Friends Provident, Royal London, Scottish Widows, nor Phoenix amongst others)
2. Why should you ask these questions of your adviser and why might they lie to you?
Most EU based advisers and their regulated firms will not hold terms of business with British Pension Providers.
3. Why is terms of business really (we mean really, a lot) significant?
No terms of business with British pension providers such as Aegon, Aviva, Friends Provident, Royal London, Scottish Widows, nor Phoenix amongst others means they cannot earn any fees or commissions from the providers. It ALSO means that with no terms of business they are not covered by relevant valid PII cover (insurance) – which means you are not covered either – and they are unlikely to have any regulation associated with pensions – this means their EU regulator has no interest and does not provide any cover for what they would see as non-relevant unregulated advice.
4. Why are pension transfers sometimes unnecessary recommended if you are an expatriate?
Without the ability to earn money from you, the only conclusion form expatriate advisers without the correct terms of business (point 3) is to transfer your money. Even worse, it is often to transfer your money into structures which cost more than your existing British pension, and to charge hidden commissions on your products using insurance bonds, which they tell you is an investment wrapper.
5. The significant rule of receiving pensions advice
It is not about the pension!
It is about what your goals and ambitions are, along with your attitude to risk, and you need to consider your investments as well as your pensions; this was true pre and Post Brexit.
If your current pension company can provide the investment options you want, but your adviser has no terms of business, then you will be recommended to transfer to a SIPP or an International SIPP irrespective of best outcomes for your goals or objectives.
In fact, only an adviser firm with UK terms of business with your pension company can truly help you. See our NOTES section at the end for more comprehensive details on these matters.
Whilst, the most important thing is for you to have a review, you need to understand that you should be seeking that review only from advisers that are qualified and regulated in both territories (you need the local advice about what is available just like you need the specialist advice from the UK side).
The Aisa Group have advisers in both the UK and the EU, qualified to both UK and EU standards. Who better to contact about your UK pensions and investment Post Brexit?
The firms Aisa Financial Planning and Aisa International operate under both regulatory setups separately and they use EU passporting within the EEA, whilst having all the qualifications and licences to give both pensions and investment advice.
What is a SIPP?
A SIPP is a Self Invested Personal Pension, it is a UK pension registered with HMRC. SIPPs offer more investment options than traditional personal pensions and more flexibility. However, you need to ask yourself two questions before considering a SIPP
- Do I need more investment options? For many with modest pension funds, there is likely to be little benefit in moving to a SIPP.
- Would a more flexible contract be more useful to me in retirement?
SIPPs and Final Salary Pensions
They are both UK regulated personal pensions. International SIPPs are offered to those residing outside the UK and may offer additional currency options. Bear in mind, most non-UK advisers will not be able to offer SIPPs across the whole market as they will not have the relevant UK licences.
Why is access to a group with access to a UK licence important?
UK pensions’ advice can sometimes be complex and access to all UK pension companies and advisers with UK pension qualifications will more likely ensure more comprehensive advice.
Is an investment licence important for International SIPP advice?
Yes. In fact having discretionary investment securities licences makes us almost unique, being able to offer award winning investment advice alongside the specialist pension advice.
For example, the UK establishment has defined benefit pension advice licences. Try and find another group in the EEA that has discretionary investment licences and the highest mark of pensions advice qualifications.
What about advice on UK pensions for residents in EU/EEA states going forward?
MiFID rules for the EU do not actually cover pensions at all- a myth further exploited by EU based advisers looking for business by moving UK pensions. In fact, given the UK requirement to achieve a professional level standard of qualifications it is far more likely that a UK based firm will be better placed to understand your UK pensions and advise you accordingly.
What is the Overseas Transfer Charge?
The OTC is a 25% charge on transfers from UK registered pensions to QROPS if the investor is not resident in the EU/EEA or not resident where the pension is being transferred to(there are different rules for offshore employer schemes)
Can I still pay into my UK pension if I live abroad?
You may be able to do this for up to 5 years but they would need to be to a pension you were already a member of before moving abroad. The amount will depend if you have relevant UK earnings or, if not, it is capped at £3,600 pa.
What if I access my UK pension and return to the UK, can I still pay into the pension?
You should be very careful about accessing your UK pension if your intention is to return to the UK and contribute in future. You may be restricted by the MPAA to £4,000 pa contributions.
Lifetime Allowance(LTA)- What is it?
There is a limit as to how much you can hold in a UK pension without being taxed on a transfer abroad or when you access the pension.
What is the LTA limit?
It is currently £1,073,100, though there are previous protections that may provide for a larger LTA.
There appears to be a misconception, particularly among EU based advisers, that UK advisers cannot advise EU residents on their UK/British pensions. It may be due to a lack of understanding or a deliberate attempt to encourage people to transfer their UK pensions to alternative arrangements for the purpose of generating commission for themselves.
The end of EU passporting services into the EU by UK advice firms means that UK advisers cannot market their services within the EU or travel to the EU to offer their services. It does not prevent those with UK pensions contacting their UK advisers in the UK to advise them about their current UK pensions- provided their Professional Indemnity Insurers allow this.
In fact, given the UK requirement to achieve a professional level standard of qualifications it is far more likely that a UK based firm will be better placed to understand your UK pensions and advise you accordingly. Further, the MiFID rules for the EU do not actually cover pensions at all- a myth further exploited by EU based advisers looking for business by moving UK pensions.
That being said, if you have pensions left in the UK- Post Brexit- you really ought to have a review of these, in conjunction with your other pensions and investments. The Aisa Group have advisers in both the UK and the EU, qualified to both UK and EU standards. Who better to contact about your UK pensions Post Brexit?
We have no reason to recommend a pension transfer unless it is in your interests. We earn fees as we have terms of business with all the providers and we agree these fees transparently with you when you engage us.