Insurance Facts

At some point in your career you will need to consider a Self-Invested Personal Pension (SIPP). The UK began this type of scheme in 1989 in order to help people save for their own retirement. The plan is designed to help people save money for their retirement and at the same time give the investor considerable tax benefits along the way.

Generally in state pensions, people are only allowed to invest in relatively few funds. These funds are controlled by the company’s fund manager. This process severely limits the investment opportunities and limits the potential profits. However, a Self-Investment Personal Pension allows investors to choose from a wide variety of funds from many categories giving the investor more opportunities. Then, the investor can diversify their funds and have a better chance of higher profits while reducing the risk for loss.

The flexibility that comes from investing in a SIPP should also be considered. If you have invested in a Self-Invested Personal Pension and are between 55 and 75, you can take up to 25% of your investment in cash form. The rest of the money will be paid like any other pension. You will be required to pay taxes on the payments from the pension.

There are tax benefits from investing in a SIPP too. Those in a higher tax bracket stand to benefit more from investing in a SIPP. However, the tax incentives unique to a SIPP make it an attractive alternative to all investors.

The tax advantages of pensions are tremendous. The sooner you start investing into a Self-Invested Personal Pension, the sooner you will reap the rewards. Not to mention, the sooner you start the more money you can save up for your retirement. Between the state pension and a SIPP you should have plenty of money to retire without worry about financial future.

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Many people want to move their pensions. They can’t understand why the government won’t allow them to move their pensions around as they wish. It seems only fair to move your 30 plus years of acquired pension to your new community that offers better pension schemes. So why doesn’t the UK allow you to move your pension at least in part to another locale.

First, you have to understand the UK’s view on taking care of its people. They believe that they have an obligation to take care of the elderly and not allow their citizens to get in a situation from which they can’t recover. They do not want to see the elderly poor or destitute at retirement where it would be unlikely for them to recover their financial stability.

Therefore, the country insists each person pays money into the state to provide for their retirement. The government finds it too risky for the people to get unrestricted access to their money. However, the EU has recognized the mobility of its people and has come up with the QROPS. This allows pensions to be transferred to an overseas country and schemes.

QROPS were introduced in 2006 and allow people to transfer non-state pensions to approved oversea schemes. It is important to note that you do not have to move to the country you wish to transfer the money to.

The key to transferring money between schemes is the word “approved.” The oversea scheme must be approved by Her Majesty’s Revenue and Customs (HMRC). All that means is that the scheme has been registered and approved in that country. It also means that it complies with HMRC mandatory reporting requirements.

Hopefully, this has answered some of your questions about transferring your pension. It is not impossible to transfer your pension to another country, but it does take some extra time and steps.

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