Retirement Solutions

At Square Mile we can provide you with a range of Retirement Solutions

Following the pension reforms which came into effect in April 2015 the rules surrounding the different pension schemes have become far more aligned and there has been an effort to simplify and unify both UK domiciled schemes and overseas pensions schemes.

Traditionally there has existed two types of pension - one where your employer(s) (both former and/or current) provides a scheme that is based on your length of employment and the salary you were receiving when you finished working. This is known as a Final Salary or Defined Benefits (DB) scheme. The benefits are known and wont alter based on investment. 

The other option is known as a Defined Contribution (DC) scheme, and is sometimes called a private pension, a SIPP (self invested personal pension), or simply Personal Pension Plan - it also includes Personal Pensions located in an EEA jurisdiction such as Malta or Gibraltar which are known as ROPS (recognised overseas pension scheme).

With these schemes, the member pays in an amount, typically monthly, and the trustees and/or a financial adviser will help choose where the money being accumulated is invested. These schemes are normally administered by Insurance Companies and so are also sometimes referred to as insurance contract pensions. 

For holders of either a DB or DC scheme the legal right to transfer this pension to a scheme of your choice has existed since 2006. It is not often publicised as understandably your current pension provider is not always keen on YOUR money leaving THEIR grasp.

Since the 6th April 2015 a change to the UK Pension rules means that if the circumstances warrant then a person with a defined contribution "personal pension" scheme (such as a ROPS or SIPP) can, from the age of 55, have greater access to the pension fund - even to the point of taking the full fund.*

These rule changes include any pension schemes both in the UK and overseas that are HMRC approved and administered in an EEA jurisdiction. So for example a client with a pension in Malta or Gibraltar can enjoy broadly the same benefits as offered by a UK pension.

There are many good reasons to transfer your pension scheme. Many Defined Benefits or Final Salary schemes don't offer access to the fund before the age of 65, and many are very underfunded and in danger of not being around to pay the promised benefits.  This type of pension though does offer safeguarded benefits and before considering a switch a detailed analysis needs to be undertaken. This analysis, by UK law, must be undertaken by a suitably qualified adviser with specific permissions to do so. Square Mile has a number of UK regulated partner firms that provide this service and we can arrange for these types of transfers to be conducted. 

With a Personal Pension it is much simpler and there are many reasons for ANYBODY with a UK personal pension to consider either switching to a SIPP (a UK based self invested personal pension) or a ROPS (an EEA based international personal pension).

In both cases by transferring pension assets to a ROPs or SIPP, clients can enjoy increased flexibility in drawdown and investment choice, there is no need to ever buy an annuity (although a client may opt for this should they require the certainty an annuity can provide) and they can leave their funds to named beneficiaries on death. Additional reasons may include:

  • Investment Selection: Broader range of risk appetite-appropriate investments.
  • No Lifetime Allowance test once transferred to an International Pension. The UK Government has reduced this by £800k over the last five year to £1m.
  • Lump Sum Flexibility: In the UK the tax-free lump sum is 25%, while 100% lump sum withdrawal is available from a UK pension the appeal of a 100% withdrawal in a different jurisdiction with more attractive tax rates maybe more beneficial for the client longer term
  • Consolidation: Ability to pool existing pension pots (and add future ones) to keep administration, paperwork and fees down to a minimum
  • Costs: Like most things, advances in technology, ability to have cheaper labour or administration based overseas, more efficient administration processes, and general market forces means that pension schemes fees for both SIPP and ROPS are constantly being reviewed and more often than not reduced - that means that like any other product periodic shopping around could save you considerable amounts on your annual pension fees.
  • No Percentage Fees: we work with trustees whose fees are fixed so as your pension grows your pension fees don’t
  • An International pension removes savings from the UK arena that is forever changing legislation.
  • Advantages on Death of the treatment of your money.
  • Potential taxation benefits on the income once you start to draw benefits.
  • Portable: Once the ROPS or SIPP is set up there remains the ability to move to other schemes and more favourable jurisdictions in the future if beneficial to the client.

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