Existing UK pensions, QROPS and SIPPS

This is the area of Financial Planning that is most overlooked and poorly understood. Unfortunately many investors consider the job done once they have established a pension. They don’t appreciate the fact that the way their pension is invested is often entirely their responsibility unless they are working with an adviser. We frequently speak with new clients who have existing pensions and upon review we find their pensions have held the same funds since when the pension was first established. There has been no management to consider the performance of the funds, the costs or the clients changes of circumstances which changes their required retirement income and their risk profile. Whilst having an existing pension is certainly a step in the right direction, it should not be considered the job done.

We review all of our clients investments twice per annum to ensure the performance is on track and that our clients circumstances haven’t changed. We’re able to complete detailed forecasts to see what needs to be saved to achieve your desired retirement plan.

If your existing pension is held in the UK, many expats choose to move their existing pensions into either a SIPP (Self Invested Personal Pension) or a QROPS (Qualified Recognised Overseas Pension.) Whilst a SIPP is a straightforward UK based pension, a QROPS would involve transferring your existing pension overseas to an international HMRC recognised pension scheme to gain certain advantages. Both of these from a structure standpoint are quite similar. They provide you with greater control of how your pension is invested and greater flexibility over income options when you reach retirement age.

The benefits and rules of a QROPS have changed considerably over the past several years and increasingly become suitable for only a select few situations. The main considerations around a QROPS come down to tax agreements between the UK and the country where you are domiciled and also the amount which you hold within your existing UK pensions being tested against the UK lifetime allowance. If you are well suited for a QROPS, they can be utilised to improve your tax efficiency. We would recommend speaking with one of our advisers to gain a full understanding of the current rules and benefits of a QROPS.