International SIPP | How Does It Work?

For expatriates holding UK pensions, an International SIPP constitutes a primary choice as part of your retirement strategy.

We aim to explain how an international SIPP works whilst identifying key areas to be aware of.

What Is An International SIPP

An International SIPP (Self-Invested Personal Pension) is a UK pension that's been specifically designed for non-UK residents.

It works similarly to a regular UK SIPP but is created for individuals who have worked in the UK but are now living abroad.

This means it is regulated and protected by the Financial Conduct Authority, Financial Services Compensation Scheme and The Pensions Regulator. At the same time, it gives you the ability to gain control of your investments.

International SIPPs work in the following way:

Eligibility

To open an International SIPP, you must have accrued pension rights in the UK. This could be from previous workplace pensions or private pension pots.

Provider Selection

Numerous providers are available. a comparison of these can be found here. Key factors to consider include cost, service, investment options, and reputation.

Investment Options

Like a regular SIPP, an International SIPP offers a wider range of investment options. These include stocks, bonds, mutual funds, ETFs, property, and other assets. You control how your pension funds are invested so they align with your risk level and objectives.

Tax Considerations

Regarding tax treatment, there are three main areas.

1) As an International SIPP is a UK SIPP, you can transfer and consolidate one or more existing UK pensions without it being a taxable event. This means there is no tax liability for UK pension transfers of any kind.

2) Subject to your country of residence holding a tax treaty with the United Kingdom, you can withdraw your pension income free of UK tax. Note you will need to obtain an NT code.

You will need to declare the pension income withdrawal on your tax return and pay the subsequent income tax accordingly.

If you live in a country with no double tax treaty with the UK, tax will be held at source and paid to HMRC.

Pension Commencement Lump Sum (PCLS)

You can access the 25% PCLS, however it is unlikely to be tax-free in your country of residence. You will however receive income gross of UK tax.

Flexible Access Drawdown

From age 55, (57 from 2028) you can withdraw from your iSIPP however you wish. This includes regular income, lump sum withdrawals, and a combination of the two.

By doing so, you can drawdown in a tax efficient manner mitigating the risk of going into higher tax brackets.

Currency Conversion

Within your SIPP you can invest and withdraw in all major currencies negating the risk of being invested in Pound Sterling and spending in your local currency.

Investment Management

As with any investment, it's essential to regularly monitor and review your portfolio to ensure it aligns with your retirement goals and risk tolerance. You will also need to adjust your investment strategy over time as your circumstances change.

Retirement Planning

You can use your International SIPP to plan for retirement wherever you choose to live.

Overall, there are many advantages to an International SIPP. They provide a flexible, safe, and portable way to manage your investments for retirement.

What Should I Do Next?

The Wealth Genesis provides regulated offshore financial advice to expats globally. We can help you implement an investment strategy to match your retirement goals and needs.

As experts in international pension planning, we help you choose the most suitable International SIPP, and customise your investments based on your unique needs and situation.

Contact us below to speak to one of our qualified, regulated and independent financial advisers.

International SIPP FAQs

• What type of pension plans can I transfer to an International SIPP?

  You can transfer any of the pension types listed below;

  Personal pensions, SIPPs, workplace pensions, executive pension plans, occupational money purchase plans, Maltese QROPS, pensions in drawdown, and defined benefit pension plans.

• What are the main benefits of an International SIPP?

  The primary advantages of an International SIPP include flexible access draw-down, greater control over your investments, wider investment choice, multi-currency options, protection and safety, UK compliance, pension consolidation, low cost, and the ability to receive pension income free of UK tax.

• When can I start taking withdrawals?

  You can withdraw from age 55 (57 from 2028). In exceptional circumstances such as ill health you may be able to access before.