Getting to know Brite
There are many reasons people transfer a pension overseas but some of the key factors include:
- They are not planning to retire in the UK and having their pension overseas means they can convert the funds into the currency that they will be spending in. This avoids having to convert their monthly UK pension every month they receive it and mitigates currency fluctuations and charges.
- They can draw from their pension more flexibly.
- They may be able to access the funds earlier.
- They may be able to mitigate UK taxes.
- It can be advantageous from an inheritance point of view, offering more flexibility in terms of beneficiaries.
Simply put, overseas schemes often benefit from lower tax and are protected from inheritance tax. Larger tax free lump sums can sometimes also be a factor.
Generally, overseas pension transfers give people more control and flexibility with access to their funds anywhere in the world. You can read more about overseas transfers here.
The lifetime allowance (LTA) is the maximum amount you can have in a UK pension before incurring a tax charge. This charge is incurred when there is a ‘benefit crystallisation event’ (BCE). A benefit crystallisation event will typically occur as soon as funds are drawn from the scheme, or simply when the pension beneficiary reaches the age of 75.
The allowance is subject to change and currently sits at £1,073,100 (Frozen until 25/26 tax year). The charge can be between 25% and 55% depending on how funds are taken from the pension. For more information regarding the Lifetime Allowance please visit our page here. Or you can watch a video by one of our specialists explaining in more detail here
One of the factors that is considered a key benefit by many when transferring a UK pension is the enhanced control over the funds that transferring offers. There are 3 main areas of increased control that can come from a pension transfer:
- Investment flexibility
Once a pension is transferred the funds can typically be invested into any stocks, bonds or funds that the pension holder wants. Many consider this level of flexibility a potential risk as some people may invest outside their risk profile or receive bad advice. At Brite we have a range of model portfolios we have built to be low cost and to be balanced inline with the clients risk profiles. You can read more about our investment strategies and view all our portfolios here.
- Drawdown flexibility
When transferring from a defined benefit pension to a private pension, it is usually possible to access the funds earlier than the exited scheme would permit. A defined benefit pension will pay a retirement income in line with the scheme’s policy whereas a private pension can be withdrawn from flexibly inline with the pension holder’s needs.
- Estate planning
The rules around inheritance of a defined benefit pension are typically that there will be a spousal benefit of 50% of the pension income in the event of the death of the pension member, some schemes will also offer a benefit to children under 18 or who are still in full time education in this case. Once a pension has been transferred to a private scheme, the money can be left to whomever the pension holder chooses.
A ROPS (QROPS) is available to anyone, however the benefits of these schemes typically depend on the jurisdiction of the ROPS trustee and the residency of the applicant. Therefore each person’s decision is unique and advisors should provide guidance on a case by case basis. An expat in Australia will face different rules, potential benefits and potential implications than say, an expat in France. To get the best deal, an experienced advisor is recommended to deal with overseas schemes, as knowing the legislation in the country of residence of the client and the pension provider is essential. Brite are the leading Pension Advisors in the UK and Overseas, helping millions of UK Expats to secure the best returns possible at a low fee and with full transparency. Book a friendly call here.
There are three key factors that ensure you maximise your pension pot.
- Making sure you have the ideal scheme for you.
The type of scheme that works best for you will depend on your retirement plans. Finding the right trustee and pension type is important in order to minimise tax liabilities. At Brite we help you find the type of scheme best suited for your needs and which jurisdiction has the most favorable tax relationship with the country you plan to live in. Read more about different types of pensions here.
Investors can’t control the markets, but they can control their costs. Brite offers a low cost solution that means you keep more of your money. You can read more about our low fee model here, or get in touch and one of our team will run a comparison of your current arrangements against ours so you can see how much you could save by switching to Brite.
- Portfolio management
Making sure your portfolio is in line with your risk profile and desired investment outcomes can help you achieve the best from your UK pension. Our in-house investment experts work to ensure that our clients are best placed to achieve their investment goals.
If you have already transferred a UK pension, Brite can show you how to reduce your fees. The rules around pension transfers are always evolving and what was considered good before, may not be considered good now. This particularly applies to the products and structures that advisors typically used to transfer a pension. Many of these outdated products, such as personal portfolio bonds, are now considered unnecessarily expensive or have opaque charging structures that lead to clients paying far more than they realise. Speak to one of our team to see how much you can save by switching to Brite.
Use this handy UK Government website link below to reconnect with your lost UK pension. Just add the required information including your National Insurance Number and you should be able to locate any forgotten UK pensions.
To find out more about how we can help you, simply leave your details here and one of our advisors will be in touch.
Getting a pension review and a fresh valuation is the best way to understand what is the best pension scheme for you what it could be worth both now and in the future.
We build a pension solution to suit you and are dedicated to helping you achieve your financial and retirement goals. We help you take complete control of your money.
We collect all the required information on you and your pension details and get an understanding of your retirement plans. After this assessment we talk to you about the suitability of an overseas pension transfer or recommend that you leave your pension in the UK. We do not charge anything for a pension review.
If you want to switch we will make all the arrangements necessary for the pension transfer. Our fees are paid within the transfer arrangement so there is no need for you to send us any payment.
To find out more about how we can help you, simply leave your details and one of our advisors will arrange a time to talk or visit you.
A ROPS (Recognised Overseas Pension Scheme) is probably the most well known of the overseas pension schemes. Also known as QROPS (Qualifying Recognised Overseas Pension Scheme) before HMRC dropped the ‘Qualifying’.
Her Majesty’s Revenue and Customs (HMRC) have acknowledged the pension issues that exist for UK expats and have created options, such as ROPS specifically for them. This gives individuals access to their benefits locally and is subject to taxation where they reside, rather than the UK.
If you live abroad or are planning to do so in the near future transferring your pension to a ROPS could allow you the freedom and flexibility you need.
Introduced in 2006, ROPS (or QROPS then) were designed to enable British expats move their pension funds to an overseas jurisdiction where they could enjoy minimal tax rates, greater income potential and increased financial freedom. ROPS are pension schemes outside the UK that are recognised by HMRC and regulated in the local jurisdiction.
Trusteeship and administration is provided in sound and robust jurisdictions such as Malta, Hong Kong, Gibraltar, Australia, New Zealand and Guernsey.
Benefits of a QROPS:
Benefits can be drawn in your new place of residency and subject to local tax rates, which could be very low or even nil.
QROPs are generally not subject to inheritance or income tax in the UK and they are often based in locations with a lower tax rate than the UK. You can take income from your pension in a more tax efficient way and may be able to access a larger tax free lump sum, too – as much as 30%.
Once transferred, your money is no longer subject to UK taxation and, on death, your entire remaining pension fund is passed to your beneficiaries tax free.
Yes, our team are experts in reducing fees and cleaning up underperforming pensions. In almost every case we can reduce the fees you are paying on your QROPS, many of which may be hidden in the investments themselves. Our low cost portfolios and straightforward charging structure means we are well placed to move you from an outdated and opaque QROPS product to a low cost solution that is inline with best practices.
If you have a QROPS, speak to one of our team for a free comparison to see how much you could save by switching to Brite.
QNUPS are an international pension scheme often used by high net worth individuals who have already reached their income tax relief limits on pension contributions in the UK.
There are no restrictions on residence – you can live anywhere and have a QNUPS, however, the tax on the scheme will depend on your country of residence.
Presently there are no HMRC reporting requirements, as QNUPS are not permitted to receive transfers from UK tax relieved funds.
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