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Transfer Workplace Pension to an International SIPP

transfer workplace pension to an international sipp

Transfer Workplace Pension to an International SIPP

Do you want to transfer your workplace pension to an International SIPP? Do you hold old workplace pensions in the UK which you would like to access? Often when relocating abroad legacy pension schemes, whether workplace pensions or personal pensions, tend to take a back seat in the priority list. Members tend to assume that because they do not make up the bulk of their retirement pot or, they don’t have details there is no point in transferring and gaining greater control. Within this article, we discuss transferring your workplace pension to an international solution (SIPP) including the process, options, and all associated fees.

Workplace Pension

A workplace pension is any pension scheme that was set up by your previous employer in the UK. Also known as ‘work-based pensions, company pensions, occupational pensions or works pensions’. In layman’s terms, they work by contributing a percentage of your pay into the scheme on a monthly basis. You would receive tax relief on these contributions and usually, your employer will contribute further monies themselves. There are 2 types of workplace pension, defined contribution, and defined benefit. This article will focus on the defined contribution schemes. For further information on defined benefit workplace pensions, you can read an article here

Access my workplace pension

Access to your workplace pension depends on the scheme itself. As a general rule of thumb the older the scheme the less likely you are to have flexible access. Furthermore, although the scheme may state you do, as a non-UK resident this often not the case. As a starting point, this should be the first thing to check with or without an adviser.

Management of workplace pension

Your existing company pension will be managed by the chosen provider. The main players in this area are household names such as Aviva, Standard Life, Aegon, Fidelity etc. The portfolio allocation will be aligned with your current age and expected retirement date. I.e a balanced portfolio for a 50-year-old would consist of 60% equities and 40% bonds. As the pension is UK-based they tend to have a greater proportion of the portfolio invested in the UK and will also only be able to invest and payout in GBP.

Transfer workplace pension to an International SIPP

If you cannot access your workplace pension or require ongoing management, usually the best option is to transfer to an International SIPP. You can consolidate one or more workplace pensions and will need to utilise a regulated independent financial adviser. There are various International SIPP providers available on the market, for a comparison of the current offering you can read my colleagues article here

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Key Benefits of an International SIPP

As mentioned, an International SIPP will allow both flexible access to your occupational pension as well as ongoing management. For clarity, I have listed some of the key advantages below.

  • Protection 

As the SIPP remains in the UK you maintain the protection of the UK regulator (Financial Conduct Authority) and Financial Services Compensation Scheme

  • Flexible Access

Full flexible access from age 55. Control how and when you take your pension monies.

  • Ongoing Management

Your adviser can ensure the right strategy is in place to align with your needs whether it be capital preservation, income generation or capital growth.

  • Extensive Fund Range

Access to thousands of ETF’s, mutual funds, and Discretionary Fund Managers

  • Multi-Currency

Invest, exchange and withdraw in all major currencies.

  • UK Compliant

Should you return to the UK there is no requirement to exit the SIPP as it already in the UK and fully compliant.

  • Low Cost

You can open a SIPP with zero setup fee and as low as £180 a year annual trustee fee.

  • Portability

Should the position change you can transfer out of an International SIPP to a QROPS or back to a standard UK SIPP (although the latter not required if returning to the UK).

  • No Overseas Transfer Charge (OTC)

As the SIPP trustees are in the UK, if you live outside of the European Economic Area (EEA) there is no Overseas Transfer Charge 

  • Consolidation

You can consolidate 2 or more existing personal or company schemes into your SIPP. Thus reducing cost and allowing a strategy to be implemented

Disadvantages of an International SIPP

In general, there is no disadvantage to the product itself however beware of the following:

  • Lifetime allowance Limit (LTA) of £1,073m

Depending on your age, the value of pension, and requirements, you could incur an additional tax of up to 55% if the value exceeds the LTA.

  • Extra Fees dependant on structure

Beware of advisers recommending a Bond inside the SIPP. This will result in large commissions paid out of your monies and include exit penalties.

  • Self Management

Unless a professional investor, self-managing your pension can result in substantial losses

What does transferring a workplace pension cost?

This depends entirely on the type of adviser you use to assist you. I have gone into great detail on the subject in a separate article here

How do I Transfer my Workplace Pension to an International SIPP?

Again we are focussing solely on defined contribution schemes here. The first step is to speak to a regulated, independent financial adviser. Make sure they are ‘whole of market’, impartial,  fee-based, and specialise in this area. They can discuss your current position, short, medium, and long term requirements, and advise accordingly. For a quick chat on your current position, you can contact me directly here.

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