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UK Pension Funds and Future Planning

Making sure you have the right advice for pension planning is paramount when you are planning to move.

It is often the case that your existing adviser can no longer look after you once you have moved, as they don’t know the tax rules and no longer have the relevant licences.

A great option is an International SIPP (Self Invested Personal Pension). This lets you take control of your finances and have more choice and flexibility regarding your investment, plus it gives you a choice of currency; something that isn’t always available with standard UK SIPP’s.

You can consolidate your UK pensions and the SIPP is adapted for international clients who have built funds from earnings whilst you have worked in the UK. This will still meet the requirements of the FCA (Financial Conduct Authority) in the UK so you have comfort that the structure is still as robust as before.

Going forward, you will have an adviser who understands not only the UK pension rules, but also the rules of the country in which you live.

We can go through the choices you have with the types of pensions you hold and explain your options for regular withdrawals and lump sums and also take account of any State pensions you have accrued throughout your working life. We can be by your side to help you make the right choices.

Final Salary or Defined Benefit Pension Schemes

If you worked for the Civil Service, Emergency Services, NHS or were a Teacher, the pension benefits associated with these employers are established on a defined benefit or final salary basis. Generally, retained benefits in these pension schemes cannot be transferred.

However, many other employers historically offered defined benefits and although many schemes have been closed over recent years, if you have benefits in this type of arrangement you need to consider them very carefully.

The basis of providing benefits is by reference to the period you were employed and your final pensionable salary (which may be different to your actual final earnings). Typically, you will be guaranteed a pension for life, which will escalate during payment and will, in all probability, include a dependent spouse’s pension, which becomes payable on the death of the member. If you have not yet drawn on the pension, you will also be entitled to commute part of the pension into a lump sum. Take care here though; what is described as a tax free benefit in the UK, may in fact be taxable overseas.

If you were a member of one of the Government schemes, your benefits may well be taxed in the UK still when you draw them and not where you then live, even if you have moved overseas and are no longer a UK tax resident. This is when dual tax agreements between countries can have an impact.

There are pros and cons with this but as a result, you could still receive your lump sum without any tax applying but pay more tax on your pension income than would apply were you to transfer your pension to an overseas scheme. However, a cautionary note: not all schemes will allow you to take a transfer value.

For many people, the guaranteed benefits are the most important feature and should be preserved at all costs. For others however, the flexibility a transfer can offer may be more attractive or even more relevant to their circumstances.

Just one final point in regard to final salary schemes; you may also have been paying AVCs into a stand alone arrangement – AVCs are additional voluntary  contributions. If you were, you may be able to deal with these separately from the main scheme and you might even decide to draw the main benefits from the UK scheme and transfer your AVCs to another pension.
ABC Europe Limited
First Floor, Unit 9/10, Riverview Business Park, Station Road, Forest Row, East Sussex RH18 5FS, United Kingdom.
Tel: +44 (0) 20 3167 0880 Email: info@abc-eu.com

The financial advisers trading under Alexander Bates Campbell Europe Limited are members of Nexus Global. Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved members of Nexus Global are Appointed Representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under license number 3647.