Choose the right UK pension plan for you

UK pension plans are not a one-size-fits-all model as AIDAN BAILEY of The Fry Group reveals, outlining the many schemes available.

If you’ve worked in the UK but have retired to another country, under UK law your UK pension remains liable for income tax. However, this can easily be avoided by taking action. The current trend is to transfer pension benefits to a Qualifying Recognised Overseas Pension Scheme (QROPS) – designed to give you complete control over your finances while avoiding UK tax. While considered a powerful tool, a QROPS is generally more expensive than other UK-based equivalents. So it’s always wise to conduct a full review of your pension benefits and consider all available options.

Pension options
Double Taxation Agreements (DTAs) Most DTAs require your pension to be taxed only in your country of residence – beneficial if tax rates in your resident country are lower than the UK. While a DTA doesn’t exist between the UK and all countries, it’s available in many countries within and around Asia, so it pays to check if your country of choice complies. 
Foreign Service Relief Your pension can be exempted from UK tax if a substantial portion or better yet, the entire amount was earned through overseas employment. Complete a simple application to Her Majesties Revenue and Customs (HMRC) and your pension could be paid out in gross.
Qualifying Recognised Overseas Pension Scheme (QROPS) If both DTA and Foreign Service Relief are not applicable for you, choose a QROPS. This overseas self-invested personal pension plan enables UK-registered pensions to be transferred to overseas jurisdictions upon approval from HMRC. As long as your funds are from a UK-registered pension and you’re a non-UK resident, Income Tax will not be deducted from any ongoing pension payments.

Although tax is often the primary consideration, it’s not the only thing. Depending on where your pension is being transferred from and whether it’s the Final Salary or Money Purchase, other considerations should include:
• Fund performance comparison
• Charges
• Flexibility
• Death benefits
• Guarantees
• Ancillary benefits
 
Clearly, this is a very complex topic requiring in-depth, quality advice. To understand all your options, The Fry Group operates a Pensions Assessment Service® consultancy service to help assess your pension arrangements and determine which of the many options would suit you best. In many cases, this may be a combination of advice and adopting a financial planning solution.
 
Aidan BaileyBA (Hons) CertPFS AWPCM 
General Manager Singapore, International Division

 

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This entry was posted by The Fry Group on Mon, 01 Nov 2010 06:12:00 GMT and Posted in . You can follow any any response to this entry through the Atom feed. You can leave a comment .
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  3. Pension over 3 years later:

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UK Financial Update

With Aidan Bailey, providing financial advice & support to expats & UK residents

Frygroup

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The Fry Group specialises in providing financial advice and support to expatriates and UK residents. With offices in the UK, Singapore, Hong Kong and Brussels, the company has a truly global grasp in managing people's finances - regardless of location.

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The Fry Group
6 Battery Road, #13-03
Singapore 049909
Tel: 6225 0825
Fax: 6225 4679
Web:   www.thefrygroup.co.uk
Email: aidan.bailey@thefrygroupsg.com