Your existing pensions form a key part of planning for your future
And your retirement may depend heavily on the benefits available from those pensions. A pension is something which will have been set up for you by a previous employer, under their own rules and their control. If you, like many people, have a pension left behind in another country or from a previous employer, then you should consider reviewing your benefits and options.
UK Pension Review
UK Pensions are often frozen when you leave the country. This means your pension’s growth can no longer depend on your contributions. Many people leave the UK without understanding their pension, despite it being a key part of their retirement plans.
Each individual scheme has its own set of rules which our team, with your permission, can request on your behalf and carry out a full, in-depth analysis of your benefits and options. In the same way an M.O.T. on your car tells you everything that is going on with your vehicle, our analysis will help you understand all aspects of your UK pension.
Offshore Pension Review
Similar to UK Pensions, some of your previous employers may have given you access to a pension scheme held offshore. Depending on your individual scheme and where it is held, we may also be able carry out a full and thorough analysis of your benefits and options.
A Self Invested Personal Pension (SIPP) is the name given to the type of UK government-approved personal pension scheme. Under the pension freedoms introduced in the Pension Schemes Act 2015, you can take control of your pension within HMRC regulations. The SIPP is a UK Financial Conduct Authority (FCA) regulated pension wrapper in which you can choose how your pension is invested, when you retire, how much income you take in retirement, and nominate your own beneficiaries on death. It may be possible to transfer your existing pensions into a SIPP, depending on your circumstances.
How do I find out more about my pension?
Our Financial Planners can help you understand your current pension benefits and the options available to you as an expatriate. We can request all of the relevant information from the scheme on your behalf and produce a simplified report detailing all of the facts relating to your pension. This will include your scheme retirement age, your entitlements, your spousal death benefits and a Cash Equivalent Transfer Value (CETV) or Transfer Value Analysis (TVAS).
What is a Defined Benefit pension scheme?
A ‘Defined Benefit’, or DB scheme, is more commonly referred to as a final salary pension. Your pension income is determined by your final salary (or sometimes your average salary), the number of years you worked at a company, and the scheme’s accrual rate. These pensions pay a guaranteed amount to retirees each year – the defined benefit. However, due to retirees having longer life expectancies, two thirds of DB schemes are now running in deficit. The total deficit for DB pensions is approximately £270bn as of May 2020 ( https://www.pensionsage.com/pa/Liabilities-fuel-30bn-rise-in-UK-DB-pension-deficit-PwC.php).
What is a Defined Contribution pension scheme?
Since DB deficits were running too high, nearly all UK companies decided to close the schemes to new entrants and open ‘Defined Contribution’, or money purchase, schemes. It has become too expensive for companies to define how much they will pay to former employees in retirement and therefore they will now only define how much both employee and employer will contribute. The benefit will depend on the underlying investment performance. Despite this change, the employer still decides when the pension can be accessed and how it is invested.
What is an offshore pension?
disadvantages of offshore schemes are often the same as onshore schemes, with the key difference being simply in which jurisdiction they are held. As a member of an offshore scheme, you have the same rights to request your pension scheme information. You also have the same rights to a Transfer Value Analysis and to request transferring to a personal scheme.
What is a SIPP?
A Self Invested Personal Pension (SIPP) is a HMRC approved pension scheme which allows you to take control of your pension. You can choose how your pension is invested, when you retire, how much income you take in retirement, and nominate your own beneficiaries on death. SIPPs give you a choice of currency for your pension if you will be retiring outside of the UK and can also be used for consolidating multiple pension pots.
Are there alternatives to a SIPP
Yes, there are alternative solutions available. For example, South African nationals may benefit from a 40EE and clients returning to the European Economic Area may benefit from a QROPS. These solutions will depend on individual circumstances.
What is a CETV or TVAS?
The CETV or TVAS are essentially the same thing. They are reports provided by the pension scheme giving details of the policy, the terms and conditions and the cash value amount that they will offer to transfer your pension out of the scheme.
How is my CETV calculated?
CETVs are calculated based on gilt rates in the UK, which is the interest rate on UK government debt. The lower the interest rate, the more capital is needed to purchase an annuity for the purpose of providing the pension income. Lower interest rates have historically resulted in higher transfer values, and interest rates in the UK are currently at historical lows.
Who can transfer their pension?
Under law, members of private sector occupational pensions have the right to transfer into a personal scheme. Any transfer must comply with the pension law of the UK, which is regulated by the FCA, The Pensions Regulator, and HMRC. If your request to transfer complies with the rules and is in your best interests, then it can be done.
Who cannot transfer their pension?
Because of the deficits in UK pension schemes, the British government have closed the transfer rights for any government-backed pension fund, as they are more that £1tn in deficit. This will include previous teachers, NHS staff, civil servants, and members of the emergency or armed forces. These non-transfer rights have also been extended to any Defined Benefit scheme pension that is in drawdown (being paid out) and any pension scheme that has fallen into the Pension Protection Fund cannot transfer out.
Should I transfer my pension?
Once we receive the CETV and pension benefits from the scheme, we will discuss with you if we think it’s in your best interests to transfer or to remain with your current scheme.
How does a pension transfer work?
The value of the pension is transferred from being in your company’s scheme into your own, personal scheme. It is like moving your wallet from your left pocket to your right pocket, but after the transfer you have control over when to open your wallet and how much to take out of it. As pensions are highly regulated, there is a step-by-step process we follow to ensure everything runs smoothly.
Existing Pension Queries
Request a meeting with one of our Financial Planners.
Tel. +971 4 436 1800
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