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Our expert insight into UK pension and retirement topics

3 sensible reasons to transfer your pension to a SIPP

Posted by Technical team on Sep 11, 2019 1:24:47 PM

If you have a pension in the UK and have now left the UK or are planning to leave in the future, you may be thinking about ways of gaining more control over the money in your pension.

Just because you’ve left the UK, it doesn’t mean you have to leave your money in the same pension plan as there may be another plan that is more suited to your needs.

That’s why many people choose to transfer their pension to a SIPP.

1. Control over your money

This is generally the main reason why many people choose to transfer their pensions to a SIPP (Self Invested Personal Pension). As the name suggests, you (“self”) are in control of the management of your pension.

It is not controlled by an old employer that you left years ago and it is not under the control of an old insurance company.

Whilst you’re not responsible for the administration of the SIPP, as this must be done by an FCA regulated company that has the necessary permission to ‘operate’ pension schemes, you get to decide how it's invested and how you take the money from your pension.

2. Investment choice

A SIPP allows you to invest your pension in a much wider range of investments. You are not restricted by an insurance company’s fund list or a small range of funds offered by your old employer.

HMRC rules allow a SIPP to invest in:

  • Mutual Funds such as Unit Trusts and OEICs
  • Exchange Traded Funds (ETFs)
  • Investment Trusts
  • Direct Shares in the UK and overseas
  • Direct Corporate and Government Bonds

Typically a SIPP will hold an investment account on a platform so you can easily buy and sell investments and track their performance all in one place.

3. Flexible withdrawals

Thanks to the ‘pension freedoms’ that were introduced in April 2015, it is possible to have much greater control over how you withdraw the money from your pension.

A SIPP is able to take advantage of the new ‘flexi-access drawdown rules’ meaning you’re no longer restricted by any limits on how much you can withdraw from your pension and there’s no requirement to purchase an annuity.

Not all pension plans are able to offer withdrawals using the new flexi-access drawdown rules, which is the case for most old insurance company pension schemes that usually only offer you the option of buying an annuity. The good news is that you can transfer these pensions to a SIPP to take advantage of flexi-access withdrawals.

From age 55 onwards, you can take 25% of your pension tax free, although this doesn’t have to be taken all at once, it can be paid in instalments as and when required.

You have the option of keeping your pension invested whilst taking withdrawals and will be able to set up regular withdrawals or just take ad-hoc lump sums, or a combination of the two.

The remaining 75% that isn’t tax free is treated as income and therefore subject to tax in the UK. If you’re resident overseas, you may be able to use a double tax treaty to ensure you are not taxed twice on this income.

Most of the UK's double tax treaties state that you will only be taxed on the income by the tax authority in your country of residence and not the UK.

Why transfer your pension to MyExpatSIPP

Our service has been designed for non-UK residents and expats to enable you to stay in control of your pension once you leave the UK.

We know the implications of moving overseas and tailor our service to the needs of non-UK residents.

The SIPP even allows you to hold investments in different currencies. This may make sense for someone living in the US to have their SIPP investments in US Dollars, or someone living in Spain to have their SIPP investments in Euros.

MyExpatSIPP provides you with:

  • An easy to use online SIPP account to manage your pension
  • A wide investment choice of over 5,000 ETFs, Unit Trusts, OEICs and direct Stocks
  • 5-star rated customer service from our expert Account Managers
  • Assistance claiming double taxation relief on withdrawals using tax treaties

It only takes a few minutes to open a SIPP account online and we will handle the transfer of your pension to ensure it goes as smoothly as possible with minimal fuss.

Get in touch if you have any questions about transferring to our SIPP.

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Technical team

Written by Technical team

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