The International SIPP | Everything You Need To Know
LEARNING OBJECTIVES
We’re passionate about providing free, high quality and up-to-date information to Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING
Key features of the International SIPP
How and why they differ from UK SIPPs
Who the best providers are and qualities to look for when making a decision
Red-flags when considering a UK pension transfer
The International SIPP, or Expat SIPP is a UK registered pension scheme specifically designed for non-UK residents.
These accounts operate similarly to standard low cost SIPPs, except they are built to provide full-flexible access draw-down to Expats around the world.
The products have increased in popularity and have overtaken QROPS schemes as the predominant choice in expat retirement planning.
The SIPP for Non UK Residents
Post Brexit, the vast majority of UK pension providers no longer allow control of pension pots for Expats. These providers include, but are not limited to:
Aviva
Aegon
Reassure
Transact
Scottish Widows
Fidelity
This leaves international retirees with 2 choices:
Leave their pension in the UK and no longer benefit from ongoing investment management, multi-currency options and flexible draw-down.
Transfer to an International Pension, such as a QROPS or International SIPP.
The Key Benefits of an International SIPP
Below is a brief summary of the main benefits of utilising this pension as a non-UK resident:
Wide Investment Choice: Expats can invest in a wide range of international assets, including stocks, bonds, and mutual funds and ETFs providing diversification and the potential for higher returns.
Tax Efficiency: International SIPPs often come with tax advantages, such as tax-free growth on investments and the ability to receive income or lump sums with favourable tax treatment, depending on the jurisdiction.
Currency Options: Investors can hold and transact in multiple currencies, helping to manage currency risk and facilitating investments in different markets without constant currency conversions.
Portability: International SIPPs are designed to be portable across countries, allowing expats to maintain their pension plan even if they relocate to a different jurisdiction.
Retirement Planning Control: Investors have greater control over their retirement planning, with the ability to choose investment strategies, adjust contributions, and tailor the pension to their specific needs.
In terms of potential drawbacks, the most obvious and common query is cost. International SIPP accounts, whilst significantly cheaper than QROPS pensions, will likely cost more than standard UK SIPPs. This is because they are a more niche product, and deliberately tailored to Expats around the world.
They also typically do not facilitate the purchase of individual shares, which can be problematic for active or professional investors who wish to self-trade on a regular basis.
International SIPP Providers
Since the produce first came to market just over 10 years ago, many different firms have entered the market with their own take on the International SIPP - just like there are various providers of standard UK SIPP accounts. These include:
PSG (no longer taking new business)
My Expat SIPP (execution only service)
iPensions (formerly Momentum)
Trireme
Sovereign
Novia Global
All of the above vary in cost, and have certain advantages associated with them.
The main features to look out for when transferring a UK pension are cost and servicing standards.
Any costs have to be made back before realising investment growth. As such, we advise clients to compare and identify the cost structures of all the major providers before making any decision.
Servicing standards also vary drastically between the above options. It's essential for peace of mind in retirement that your pension provider has the capacity to respond to your queries promptly, as well as facilitate any draw-down requests without delay.
In most instances, we would recommend the Novia Global SIPP to our clients, as it is currently the lowest cost option on the market. They also have the highest servicing standards, with their client services team responding to queries immediately over the phone, and facilitating draw-down requests within 10 working days providing the correct paperwork and documentation is held on file.
For our full review and breakdown of the Novia Global International SIPP, see our article here.
Expat Wealth Management | Pension Transfer Red-Flags
Unfortunately the international financial advice space has certain firms that do not act independently. This means that they sell products to clients, as opposed to advising on the best solutions relevant to the client position.
We advise all Expats to understand exactly what they are being charged, and to specifically look out for the following terms used in any pension transfer proposal:
Early Surrender Charge
Exit Penalty
Allocation Rates
Loyalty Bonuses
Guaranteed Returns
If you see any of the above, this almost certainly means that the adviser is being paid a large commission (typically between 5-12% of your pension account) to sell a product to you.
It also means that you will likely be stuck with the pension, and unable to withdraw 100% of your funds due to the lock-ins and early surrender charges.
Conduct thorough due-diligence on any firm, check their regulations and be sure to understand exactly what they charge for their services, to the pound and pence.
Expat Financial Advice with The Wealth Genesis
The Wealth Genesis is the first international adviser to charge all clients the same flat wealth planning fee, regardless of the size of the pension transfer or complexity. We also charge an industry leading low annual management fee.
This approach, coupled with our expertise, ensures we are in the best position to advise our clients on a strictly independent basis, taking into account only your priorities.
To discover how we can help you secure your international retirement, schedule an initial consultation using the button below.
