UK Pension Transfer FAQ's, Defined Contribution Schemes

Every new year we see an influx of clients for as everyone has 'sorting out their pension' near the top of their resolution or to do list. With us receiving so many questions, we decided it would be a good idea to release a few posts with frequently asked questions on both types of UK Pension. Whilst this is specific to defined contribution schemes, we have posted another focussed on defined benefit schemes.

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If you contributed to a private pension in the UK then you have the ability to transfer it into a new plan that may bring benefits.

What is a private pension?

A private pension (also known as defined contribution, money purchase or personal pension plan) are pensions that were set up by you. The value of the pension at retirement will depend on how much was paid into it and the performance of the underlying investments over time.

Where can I transfer my pension to?

If you are residing outside of the European Economic Area of one or the ROPS countries (Australia, Hong Kong, India, New Zealand or Barbados) then a transfer of your pension outside of the UK will trigger an unauthorized tax charge of 25%. If you reside in one of those countries then you may want to consider a QROPS which one of our financial advisors will be able to discuss with you. If you live outside of those countries then a solution for you may be our International SIPP which is licensed and registered in the UK with both the HMRC and FCA.

What is a SIPP?

A SIPP (or Self Invested Pension Plan) is a UK registered personal pension that unlike the conventional UK pension plans offers greater flexibility and freedom.

What are some of the benefits in transferring my UK pension into an International SIPP?

Our International SIPP has been structured with the expatriate in mind. Aside from taking advantage of the new rules under the Pension Freedoms Act, giving you maximum flexibility it also offers the further benefits of:

• Having access to a much larger range of investment products

• Access to a Wealth Manager to ensure that your investment strategy is always up to date

• Monies paid out gross to eliminate the risk of double taxation

What is the Pension Freedoms Act and why would this apply to me under the International SIPP?

In April of 2015, the UK government introduced new rules under the Pension Freedoms Act which allow one to have:

• Earlier access to your pension from the age of 55

• The ability to access the pot as you please with no set limit

• The ability to leave 100% of your pension to chosen beneficiaries

Your current pension provider will most likely not follow these rules as there is no legal obligation to do so and they do not want to lose their clients any sooner than they need to.

What is the process for transferring my pension?

In the first instance we would need to understand what pension(s) you have and what your goals for retirement are. We would get in touch with your pension company and ask for the latest valuation along with other information and put together a report of advice.

If after receiving the advice you decide that you would like to proceed then we will establish your new pension trust, contact your pension company and then have them transfer the balance from the sale of your investments directly into your new plan.

How much does all of this cost?

Depending on what type of pension you have, there might be some minimal establishment costs however Loadstone Group only charge an annual management fee to manage the pension after the transfer has taken place. All other associated fees for the establishment, where applicable, will be disclosed prior to any decision being made and will be deducted directly from your pension.

What would be the next step if I want to explore this further?

The next step would be for you to contact us by email or through form on our site. We will appoint a Wealth Manager that covers your region to get in touch with you and after obtaining your latest valuation, provide you with a no obligation report of advice.

To contact us and learn more, please email your Wealth Manager, info@loadstonegroup.com or alternatively complete the contact form on our website at this link.