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Transact SIPP Pension When Living Abroad

Transact SIPP pension

Do you Hold a Transact SIPP Pension and Live Abroad?

As a non-UK resident, you may have been notified that you must transfer out of your Transact SIPP as they can no longer hold your account. Naturally, you may be wondering what your options are.

How can I now access my pension, and where can I transfer to?

The answer to this would depend on your situation, for example, the value of your pension, as well as your residency. In this blog, we’ll run through the options available to you, as well as the best solutions on the market.

Why Can Transact No Longer Hold my SIPP?

Post-Brexit, having UK pensions as a non-UK resident has become incredibly confusing, with different providers interpreting pension legislation in different ways. As a result, certain providers have decided to ask members to transfer their pension benefits to international or local solutions. This will depend on your pension provider, as well as your country of residence.

For example, when the UK was still a member of the European Union and the single market, most pension providers had no issue with you remaining on their books as a non-resident.

Now, with all the law changes and equivalency agreements, you will be typically be offered a few options:
1) Your pension provider may have no issue, and there is no need to transfer
2) You will receive correspondence from your Pension Provider that you can only take benefits as a lump sum, or an annuity (no Flexi-access drawdown)
3) Your pension provider will give you a deadline to move your provisions to an alternative, internationally recognised scheme

For the Transact SIPP, the vast majority of members residing in the EU have been asked to transfer their benefits, as they can no longer service EU residents due to changes in permissions. Furthermore, if you had a financial adviser in the UK, they will no longer legally be able to service you unless they are regulated by a European State.

This means you will no longer be able to make changes to the underlying investments that form your pension and your retirement income – this is something to be avoided, especially given the volatility in financial markets post-covid.

What if I don’t want to transfer my benefits?

In theory, you could accept the options on the table, providing it’s been allowed. The 2 options are typically taking the entire amount in a lump sum, or buying an annuity. Taking your whole pension in one go is highly unadvised, given the likely large tax bill, this would generate in your country of residence (pension income, even if a lump sum, is typically taxed as income).

The second option is also rather unattractive given the current climate. Annuity rates are incredibly low, so you would get little value for your money. Although, very cautious investors might like the fact that an annuity offers a guaranteed income for life – something which can’t be guaranteed with a traditional pension pot.

What can I transfer to?

There are 2 main International Pensions you can transfer your Transact SIPP to. The most common is called an International SIPP (Self-Invested Personal Pension). An International SIPP is still a UK-recognised, HMRC-approved pension scheme that is physically based in the UK. However, unlike the Transact SIPP, it is built for non-UK residents and International Financial Advisers.

This means the following for account holders:

International SIPP Key Benefits

Full Flexi Access Drawdown – an International SIPP will mean you can access your pension to fit your requirements. You can take as much or as little income as you want.

Ongoing Management – working with a Professional Adviser, you can have the peace of mind knowing someone is looking after your pension pot at all times.

Investment Options – an International SIPP will allow you to invest into any regulated Fund, ETF or share providing it’s classed as a UK Standard Asset. This means your portfolio can be incredibly diversifed and invested around the world.

Multi-Currency – you can hold your investments in all major currencies, meaning you can hedge against current risk and hold in local denominations.

Regulation –  An International SIPP is fully regulated by the Financial Conduct Authority, and fully covered by the Financial Services Compensation Scheme, giving you the greatest level of protection afforded to retail investors.

The above makes the International SIPP an incredibly useful alternative, as importantly you get full-flexi access draw down on your retirement income, with no restrictions.

For pension values approaching 1 million or above, a QROPS will likely be more suitable, due to certain tax benefits (there is no Lifetime Allowance Charge within a QROPS). For further information on this, we’ve written a blog here explaining how this would work.

How Can We Help?

At Harrison Brook, we are fully independent, whole of market advisers. This means our only priority is finding the best solution for you. We’ll explain all the options available, the different providers and investments, and charge a transparent fee for our services.

If you’d like to find out more, or discuss your Transact SIPP with us, please do not hesitate to get in touch for a free initial consultation.

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