Unlock your frozen pensions and we can help you move them to a SIPP, QROPS or QNUPS.

SIPPS

UK Pensions

In the United Kingdom, a Pension is a form of tax efficient wrapper. This type of wrapper is one of the main tools used in retirement financial planning. There are many different types of UK pension from stake holder pensions through to Self-Invested Pensions (SIPP pensions). However, all pensions in the UK do share a basic format.

All UK pensions offer growth free from income tax and capital gains tax. In addition to tax free growth, the British government will refund the marginal rate of tax paid on any contributions by an individual. So for instance a top rate tax payer who makes a contribution of £100,000 to a pension can expect to receive a rebate of up to £45,000 from the government. Part of this money will be automatically added to the pension and the rest can be reclaimed on the annual self-assessment tax form. For this reason pensions such as SIPP pensions can be important personal tax planning tools.

The major drawback of a UK pension is that funds are tied up for retirement and any income taken from a pension will be liable to UK income tax.

Self-Invested Personal Pensions (SIPP Pensions)

A SIPP pension can offer a number of benefits for your Personal Retirement Plan.  With a SIPP, you can invest in a very wide range of investments from property to equities and bonds. Therefore, using a SIPP gives you the ability to take advantage of our portfolio management service. Unlike many other companies, Farringdon Group has an investment management team in-house.  And with a much wider selection of investments we are able to offer better returns with less volatility than many traditional managed pension funds.

Tax Planning for Expats

British expatriates are unable to contribute to a UK pension including a SIPP pension once they have been non-resident for five years. As a non-tax payer there is almost no benefit in contributing to a UK pension when offshore. However for those who wish to return to the UK a SIPP may be an important personal tax planning tool to use as your private retirement plan.

Upon returning to the UK we can set up a SIPP Pension for you. Once you are in the UK and earning tax we can then feed money from your offshore investments into your UK pension. This will then allow you to reclaim tax relief on your future UK earnings. It is possible to make contributions this way of up to £50,000 per year to a total value of £1,500,000. In this way top tax payers can reclaim a rebate of £22,500 per year.

For those returning to the UK, there are a number of benefits in using a SIPP pension as your private pension plan, and the wide investment selection can help you make better returns on your money. However, in order to maximize your benefits it is important to choose a private wealth management company with the right expertise in personal tax planning and with a portfolio management service. Farringdon Group is one of the few Financial Advisors in Malaysia that can offer you all these services when carrying out retirement financial planning.

QROPS

QROPS (Qualifying Recognised Overseas Pension Scheme)

If you have previously worked in the UK and have existing UK Pension Schemes, either occupational or privately arranged (or both), then a QROPS may benefit you.

Since April 2006, it has been possible to move any UK-based pension scheme overseas - as long as it is to a QROPS – and this can give many potential benefits.

Potential benefits include:

  • No limit or restriction on the size of your pension fund
  • Never any requirement to purchase an annuity
  • Tax efficient growth
  • Potentially mitigate income tax
  • Receive up to 30% as a pension commencement lump sum
  • Multi-currency options to minimise the currency risk when retiring overseas
  • Potential saving on (55%) death taxes allowing your entire pension fund to be passed down to your loved ones upon death
  • Increased Investment flexibility and ability to appoint a professional Investment Manager
  • Multi-jurisdictional ability to cater for future changes in your circumstances

The decision to move into a QROPS can be complex, time consuming and is not in everybody’s interest, which is why seeking professional advice on the matter is essential.

Farringdon Group Ltd has many years of experience in helping Expatriate clients assess their UK and Overseas Pensions’ needs. Before making any recommendation, we will conduct a full and thorough analysis of any existing Pensions and your personal circumstances.

We will then prepare a full report for you that will detail:

  • Which is the most appropriate Jurisdiction to domicile your QROPS
  • Any Income Tax benefits of transferring to a QROPS
  • Potential Death Tax savings
  • A full and transparent summary of all costs associated with the scheme
  • Investment Management strategy

We will then assist you with the entire administrative process of transferring your UK Scheme(s) overseas into the most suitable QROPS, and then work with you moving forwards to ensure that your QROPS is managed in line with your individual tolerance for risk, currency needs and any other changing circumstances life throws at you.

 

QROPS Frequently Asked Questions

Q.   What is a QROPS pension?

A.  In 2006, due to a European Directive in pension transferability, HMRC Introduced the Qualifying Recognised Overseas Pension Scheme (QROPS), and it refers to any scheme recognised and approved by HMRC as meeting their standards and conditions for transferring a UK pension overseas.

 

Q.   Can anybody move their UK Pension into a QROPS pension?

A.   Anybody who is intending to retire overseas can transfer their UK Pensions into a QROPS.

 

Q.   What if my circumstances change and I return to the UK after moving into a QROPS?

A.  Many of the tax advantages of a QROPS apply to overseas retirement, but should you find yourself retiring back in the UK after moving to a QROPS scheme, it will be treated the same as a UK Pension scheme so you will be no worse off.

 

Q.   I have heard that if I move into a QROPS there will be no tax to pay on my pension income when I retire, is this true?

A.   Much will depend on the Jurisdiction of the QROPS, the country where you are living and any Double Tax Agreements (DTAs) between the two. There is a potential for the QROPS pension income to be paid gross and, depending on your residence at the time, no income tax to pay, but it is no way clear-cut that the there will be no Income Tax to pay. This is why a full analysis of your circumstances should be done by your Farringdon Advisor before deciding whether to move your pension to a QROPS.

 

Q.   Is it true that there are no Death Taxes to pay with a QROPS?

A.   After being abroad for five complete tax years, the Trustees of the QROPS have no obligation to report to HMRC when a member dies. Therefore, there are no death taxes to pay on a QROPS after this time.

 

Q.   How do I know which is the best Jurisdiction to move my UK Pensions into?

A.   There is no single answer to this question. Much will depend on where you intend to retire and what DTAs are in place with that country before making a final decision. At Farringdon, we understand that circumstances do change so we try to use Trustees which have a multi-jurisdictional presence so that if circumstances change, we can transfer to a more suitable jurisdiction if needed.

 

Q.   I have heard I can hold my residential property inside a QROPS, is this true?

A.   No, under no circumstances can your residential property by held inside a QROPS.

 

Q.   Is there any limit to how much I can draw out of my QROPS?

A.   Yes, from age 55 (or 50 in some jurisdictions) you can draw PCLS (Pension Commencement Lump Sum) of  up to 30% of the Transfer Value.  Income is restricted to, typically, 120% of the amount specified by GAD (Government Actuary Department) tables, compared to 100% of GAD from a UK scheme.

 

Q.   I have heard that there is now a limit on the amount I can hold in my Pension. Is this true with a QROPS?

A.   The lifetime allowance set by HMRC is GBP1.5million (2012-2013).  Any UK Pension fund exceeding this could be liable for a Lifetime Allowance Tax Charge (up to 55%). There is no such limit within a QROPS so if you believe your pension may be in danger of exceeding this Lifetime Allowance, it is critical you contact us for an assessment.

 

Q.   I have heard that if I move to a QROPS, I can take 100% of my funds out of the pension. Is this true?      

A.  Absolutely not! This is a clear violation of HMRC’s rules for transferring funds to an overseas scheme. Any scheme found to be allowing this will be removed from HRMC’s approved list and the member will then face an Unauthorised Payment Tax Charge of 55% of the value transferred into the scheme. 

QNUPS

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