Retaining control over your pensions is important when moving overseas. If you have funds in a UK pension, you may face hurdles trying to manage and access your savings from abroad. That’s why SIPPs are so useful, as they can offer greater flexibility over your retirement fund.
However, it’s important to consider the specific features of the SIPP you use, particularly whether it offers a multi-currency cash account, which allows you to hold cash and investments in various currencies.
This is a crucial feature of our SIPPs that could make it far easier for you to manage your pension and achieve your desired retirement.
Here are five benefits of multi-currency cash accounts within our SIPP.
1. Better control of currency conversion when investing
You may want to invest wealth in markets around the world, including the US, Europe, and Asia, to diversify your pension investments and balance risk.
If you hold wealth in a GBP-only SIPP, you will be forced to make regular currency conversions when investing in non-UK assets. For instance, if you want to purchase US stocks, you will need to transfer your money from sterling to dollars first.
In comparison, the multi-currency cash account in our SIPP allows you to hold wealth in many different currencies. That means you can hold various currencies and only convert funds when you choose.
2. More efficient global investing and reduced costs
Because investing through a GBP-only SIPP forces you to make regular currency conversions, you will likely incur added costs. You will pay a foreign exchange (FX) charge for each conversion, which eats into the wealth you invest in your pension.
These charges can add up over time and affect the size of your retirement fund.
The multi-currency cash account within our SIPP alleviates this problem as you invest directly in assets denominated in other currencies, including euros and US dollars. This makes the process more efficient as you remove the additional currency conversion step and save money on the FX charges, meaning you retain more of your savings.
3. Lower withdrawal friction for non-UK residents
When you come to withdraw from your pension, a multi-currency cash account is invaluable for expats.
With a GBP-only account, you will need to withdraw sterling and then convert it into the currency of whichever country you are in.
As discussed, this means paying regular FX charges that reduce the amount that ends up in your bank account.
Additionally, you are at the mercy of exchange rate fluctuations. If you are forced to exchange currency when sterling is weak, you may spend a larger portion of your pension fund to maintain the same income in your country of residence.
Fortunately, with a multi-currency cash account, you can hold funds in the currency you expect to spend in, meaning you don’t need to convert currencies as often and can reduce FX charges.
4. Better risk management for currency exposure
Having the ability to hold funds in various currencies also means you can be proactive about currency exchange.
Instead of having to convert funds as and when you withdraw them, as you would with a GBP-only account, you can exchange amounts whenever you like and spread your savings across currencies.
This means that, when the pound is strong, you could exchange a portion of your sterling funds to your chosen currency, taking advantage of the favourable exchange rate. Alternatively, during periods when the pound is weaker, you can avoid exchanging and make withdrawals in a different currency.
Ultimately, this means you could maximise the level of income you’re able to draw in your new country of residence, leading to an improved quality of life in retirement.
5. A SIPP specifically designed for expat and international clients
A GBP-only SIPP could be useful if you live in the UK and don’t plan to move, as you don’t need to worry about currency conversions, exchange rates, and FX charges.
However, if you plan to live outside the UK, whether you intend to stay in one country or move around, a SIPP with a multi-currency cash account could be incredibly useful.
Our SIPPs are specifically designed for expats and international clients, with multi-currency cash accounts built into the platform.
This gives you the flexibility to manage investments, withdraw funds, and exchange currencies easily. By reducing FX charges and giving you control over how and when you exchange currencies, you may be able to retain more of your hard-earned pension savings.
Get in touch
If you want to learn more about the benefits of our SIPPs for expats, 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 individuals only.
All information is correct at the time of writing and is subject to change in the future.
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.
