How many of us ever make a conscious effort to spend time considering and planning our retirement? When it’s often deemed an issue that will affect us only in the distant future, it is easy to relegate the topic to the ‘back burner’ and spend our energies coping with our all-too-often frenetic working conditions, our families and fitting both into busy social lives.
Yet, providing for retirement is a major consideration and one we all need to take a long honest look at, because it affects not only ourselves, but our families too. Deciding when we can afford to retire, yet maintain a particular lifestyle, requires careful planning.
It is essential that we begin saving for our retirement even if we are just starting out at work. Regular contributions now will mean more opportunities to secure the continuation or even improvement of our lifestyle when we start to ‘draw down’. The longer we contribute, the easier it will be.
Very few of us actually know the capital amount we will need at retirement. We may already know what we would like to do when we retire or even have a vague ‘bucket’ list: our homes are paid for; we may want to travel widely; take care of our children and grandchildren; concentrate on the hobbies we haven’t had time for while working… How much will all this cost? How much will we need coming in each month, each year?
This, of course, is where professional financial planning comes in. We need help to ascertain our personal pension situation as it stands now, what the shortfall is and what we need to save in order to achieve our ‘game plan’.
Hard Facts from the UK
If you already have a UK pension, do you know where your money is invested and how it is performing? Will it be enough for your retirement? Zoe Turner a pensions’ specialist at Globaleye will be able to answer these questions for you and help you work towards peace of mind for the future.
Pension Transfers for British Ex-Pats
SIPP (Self-Invested Personal Pension)
A SIPP is a personal pension plan that works in the same way as other personal or stakeholder pensions in terms of tax benefits, contribution limits and retirement options, but with a better choice of investments. A SIPP is also a way of amalgamating old pensions into one pot.
With a SIPP plan, you can:
benefit from a broad spectrum of investment options creating greater flexibility
benefit from a phased retirement
move your SIPP to another jurisdiction using a QROPS plan if you retire abroad never returning to the UK
prior to taking a lump sum, taking an income or buying an annuity, the fund is free of Inheritance Tax (IHT) to beneficiaries
SIPPS fall under UK regulations.
Qualifying Overseas Recognised Pension Schemes (QROPS)
QROPS are available for those who wish to transfer UK pensions into another country’s jurisdiction for retirement abroad - with no plans to ever to return to the UK.
QROPS can offer greater benefits than leaving your pension in the UK. It allows immediate access to funds from age 55, as it still has to follow the UK pension rules with regards to the age that income can be taken and, sometimes, a more tax-efficient income.
In the UK, all pensions have income tax deducted at the basic rate before they are paid out to the pensioner, whereas QROP income will be taxed at the rate applicable to the country that the QROP is based in. Due to Double Taxation Agreements (DTAs) this can sometimes be 0%. A tax-free lump sum of up to 30% (again, a HMRC requirement) can be drawn down, leaving 70% that can provide a regular income – another requirement of the HMRC.
A QROPS enables greater flexibility over where you invest. Funds can also be left to beneficiaries, tax-free (subject to the fund having been off-shore for more than five complete UK tax years) and there is no UK Inheritance Tax upon death at any time after the five years has elapsed.
There are several jurisdictions where the QROPS can be placed and, of course, each country’s tax laws will have a bearing on that choice. Speaking to our advisers and independent trustees of QROP schemes will enable you to make the right choice under current understanding of this complex and changing area.
Your Next Move…
Globaleye consistently delivers unbiased and professionally tailored pension solutions, continuously providing clients with the best advice at all levels.
For further information please contact:
Zoe Turner, MA, BSc