A self-invested personal pension (SIPP) can help you manage your retirement savings effectively if you have emigrated or plan to in the future.
Our guide to SIPPs and moving overseas explains how SIPPs work, what the benefits are, and how you can choose the right provider to support you with your pensions.
Last month, the first part of the series explained what a SIPP is and how it differs from other types of pensions.
This month’s instalment explores the benefits of using a SIPP to manage your retirement savings when moving overseas.
A SIPP gives you more control over how you invest your retirement savings
Most workplace pensions give you a choice of different investment funds. This allows you to select funds based on the risk level or parameters such as sustainability. However, you won’t be able to choose specific investments, so your control over your retirement savings is limited.
A SIPP, on the other hand, allows you to select specific investments. With our support, you can build a custom portfolio designed with your goals in mind. As such, you may be able to generate more growth in the lead-up to retirement and beyond, potentially improving your quality of life.
This increased control lets you respond more effectively to periods of volatility. We can ensure that your investments are well-diversified and your portfolio is robust in the face of market fluctuations.
Additionally, if you have several existing workplace or personal pensions in the UK, you can consolidate them into a SIPP. This allows you to manage all your retirement savings in one place with our professional support, instead of dealing with various providers.
You have easier access to your savings if you live outside the UK
If you live and work in the UK for part of your life, you’ll likely build pension savings here. Accessing these savings could be a challenge if you later move overseas.
Some UK pension providers might pay into a bank account overseas, but many won’t. Those that do may also charge additional fees.
You might decide to have your pension income paid into a UK bank account, then transfer the funds abroad. However, transferring money into a different currency may incur fees and expose you to exchange rate fluctuations.
A SIPP allows you to pay your pension income into a bank account overseas. You can also receive payments in various currencies.
This streamlines the process of drawing from your retirement savings and could prevent expensive fees when receiving your income.
We can understand the risks of double taxation on your pension income
Drawing a pension from overseas can create a complicated tax situation. You risk paying tax in the UK and your new country of residence.
Fortunately, certain countries have a “double taxation agreement” with the UK to prevent expats from paying tax twice.
While you may still benefit from double taxation agreements even if you don’t have a SIPP, navigating this complex tax landscape can be difficult. Any mistakes could mean that you pay more tax than you need to.
One of the key benefits of working with an experienced SIPP provider is that we can explain how double taxation agreements work and what steps you need to take to apply to HMRC. We’ll also let you know about any changes to your tax code so you can spot any potential tax issues right away.
Armed with this knowledge, you can make sure you benefit from double taxation agreements and avoid overpaying tax.
SIPPs may have lower fees than other types of pensions
Pension providers typically charge fees for managing your savings and making investments on your behalf. The amount you pay varies depending on the provider. High fees can add up over the years, significantly reducing the size of your retirement pot.
SIPPs often have lower fees than other types of pensions. If you transfer several pensions into your SIPP, you will only pay fees for a single scheme rather than multiple pensions.
Ultimately, this means you can retain more of your savings to spend on your dream retirement.
The right SIPP provider can help you realise your ideal retirement
As you can see, SIPPs offer many benefits if you’re moving overseas. However, it’s important that you have the right support when building and drawing from your retirement savings.
In the upcoming final instalment of the series, you will learn the key factors to look for when choosing a SIPP provider.
Get in touch
If you would like more information about SIPPs and how they might benefit you, we can answer your questions.
You can email us at [email protected] or call 03303 202091 for more information.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
