Protect your pension pot
Many expats have pensions scattered around the world. As you approach retirement, it's a good idea to consolidate these pensions, so that you know exactly what you have.
A detailed review of your pension will help you to identify any tax issues and legislation changes that may affect your over-all retirement fund.
UK pension transfer to Switzerland and Europe
British citizens can also choose to transfer to an offshore pension scheme, if it is a QROPS.
Taxes could apply even in this case, and the concerned government bodies do not provide guarantees, which means you will have to make sure the benefits you are expecting from a QROPS will attach.
In the case that the scheme you are using is not a QROPS, the UK scheme could decline the transfer, or it will warrant a 40% tax rate.
This tax does not apply to people who have already applied for a transfer before last month.
If the scheme being transferred to is in a member of the European Economic Area (EEA), tax will not apply unless you do not live in the EEA, or move elsewhere within five years.
Since Switzerland is not part of the EEA, expats may chose a favourable country with a recognised QROPS scheme to carry out the transfer without tax liability.
By having a greater understanding of your pension options, you’ll also be able to make adjustments such as; avoiding various taxes, choosing to pass it onto beneficiaries tax-free; or getting earlier access to your pension pot. To find out how to transfer your UK pension in Geneva or Switzerland, speak to one of our advisers.
Can I transfer my UK pension?
This depends on the type of scheme that you are enrolled in. Many pension schemes, whether it be defined benefit (DB) or defined contribution (DC) will permit transfers out. However, if you have worked in the public sector such as the Armed Forces you will have an ‘unfunded’ pension and you won't be able to move.
How does a pension transfer work?
If you decide to transfer your pension offshore, your financial adviser will ask you to sign a ‘letter of authority’ which grants them access from the pension trustees to information about your pension. The trustees of your pension scheme will then convert the benefits you’ve accumulated into a cash equivalent transfer value (CETV), which can then be invested into a recognised offshore scheme such as a QROPS.
What is pension transfer value?
Transfer value is different from your fund value. The transfer value is the cash amount you would get if you moved it offshore. It’s important to note that transfer values can change and there may also be exit fees depending on whether your transfer value is the same as the total fund value or not.
What is a QROPS?
QROPS, now referred to as ROPS, is a personal pension scheme which was established outside of the UK and which is recognised by HMRC – Her Majesty’s Revenue and Customs. If you qualify, QROPS enables you to transfer your existing UK pension and receive your benefits free of tax.
What is a SIPP?
A Self-Invested Personal Pension is a scheme that offers a greater level of flexibility and greater investment choices compared to conventional pensions. A SIPP may also be referred to as a ‘wrapper’ due to the fact that any investments you have placed within this ‘wrapper’ are dealt with in a certain manner.