Standard Life Pension Transfer for Non-UK Residents
LEARNING OBJECTIVES
We’re passionate about providing relevant, high quality and up-to-date financial information to British Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How Standard Life pensions work for non-UK residents
The options available for taking benefits
How much a pension transfer should cost
The reasons to consider a transfer to an International Scheme
This article is intended for non-UK residents who hold existing pension schemes with Standard Life.
Following Brexit, Standard Life contacted their pension members offering very limited options for retirement benefits.
We will outline the overall position while detailing the options and associated costs involved in a Standard Life Pension Transfer.
Standard Life Pension Transfer Background
Standard Life Master Trust Schemes (SLMTC) has over 250,000 members and £5.5 billion in assets. As part of the Phoenix Group, they are the UK's largest long-term savings and retirement business. Their pension pots include legacy policies from Phoenix Life, Standard Life SIPP's and workplace pensions, plus the recently acquired Chubb Pension Plans and Chubb Security Pension Fund. As a UK resident, you can utilise a Standard Life Pension Scheme with or without an adviser.
Cashing in your Standard Life Pension
Since early 2021 Standard Life has been writing to their non-UK residents citing 2 options.
Option 1:
Cash in your full pension plan. Please be aware that this is exclusively for individuals aged 55 and above. It requires the disinvestment of all funds and the full encashment of the pension fund. This will create a significant tax liability as the tax treatment abroad is not the same as a resident in the UK.
For example, in the UK you can take 25% tax-free (Pension Commence Lump Sum - PCLS). The remainder falls in line with UK tax bandings which can be found here.
Option 2:
Transfer your Standard Life pension to an overseas scheme, also known as transferring to a QROPS .(Qualifying Recognised Overseas Pension Scheme). As part of the process, Standard Life require the completion of an overseas transfer out application and a standard life transfer form.
You will also be required to speak to MoneyHelper. The government organisation that offers free and impartial help for UK registered pension scheme transfers.
Importantly, Standard Life fails to inform you that there are other options available. The International SIPP is the third option and the most suitable for the vast majority of pension members.
Why is Standard Life Restricting my Pension Options?
In layman's terms, licensing and regulation.
A knock-on effect of the UK leaving the EU is financial service providers and advisers are no longer authorised to service non-UK residents. As a result, you need to find a European or appropriately regulated adviser based on your location to assist in the transfer and management of your UK pension scheme.
UK Pension Transfer Abroad
Pension transfers abroad are no longer commonplace following the Chancellors' budget in March 2023. With the abolishment of the Lifetime Allowance Limit, QROPS benefits have been significantly reduced.
The key benefit is the removal from the UK system and as such, Inheritance Tax. If you have been recommended to transfer a pension to an overseas scheme, exercise caution.
This can allow your pension pot to be invested in unregulated securities, thus putting your money at risk.
Furthermore, you will incur significantly higher scheme administrator costs.
UK Pension Transfer Options
Option 1:
Transfer to an overseas scheme as mentioned above. We have previously discussed the framework of a QROPS including the benefits which you can find here.
Option 2:
Transfer to an International SIPP. A comprehensive breakdown of an International SIPP (International Self Invested Personal Pension) can be found here.
There are numerous Internatinal SIPP providers available. Our current view is that Novia Global UK is the best international SIPP provider. Find a review of the Novia International SIPP here.
The right solution will depend on your specific position and objectives. Whilst a QROPS is used less frequently in expat retirement planning, it can still play an important role.
Both pension solutions allow you to utlise an offshore investment platform. As an expat living abroad, this offers many benefits including;
Mitigating currency risk
Flexible access to your UK personal pension including lump sum withdrawal and regular income
Ongoing management of your investments in line with your ever changing goals
Retention of the protection of the FSCS, FCA and the Pension regulator
To see how we can help, contact us using the button below to explore your options with your Standard Life pension.
FAQs
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Outside of the UK, (unless you are in a country with zero income tax such as in the Middle East) the whole amount is taxable.
Depending on the country you reside, there may be options for preferential tax treatment, by taking the money in a certain way.
We always recommend speaking to a regulated tax expert in the country you reside. Should you require an introduction we have a panel of tax experts we work with and can happily introduce you. -
Whilst this is often stated as an option, we are yet to find an annuity provider who can service a non UK resident.
Depending on your requirements, there are other solutions available that can provide an income in your retirement.Today, annuity rates are lower compared to the rates in the 1980s and 1990s.
A guaranteed annuity rate is a rate specified in the terms and conditions of your pension policy at the time of purchase, offering a higher rate than what is currently available. -
No, a UK financial adviser is regulated by the FCA.
Post Brexit, they are unable to passport into Europe and the rest of the world to provide financial advice. -
An International SIPP is a portable solution and can be utlised when residing anywhere in the world. A QROPS is only for residents of EEA member states.
Should you relocate within 10 years there is a Overseas Transfer Charge of 25% of the initial pension transfer value. -
No, in order to take the money from your UK pension and invest in an Assurance Vie, Portuguese-compliant bond or Investment platform, you will need to encash the full policy.
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This is dependent on the exchange rate at the time of wanting to convert. There is no requirement to convert all or some of your pension at the time of the transfer.
Therefore, if there is no immediate requirement for income, it would be sensible to wait for the pound to strengthen, and take advantage of better exchange rates.
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Costs vary per financial advice firm. The Wealth Genesis provides a fixed cost for the transfer advice of £3000 whatever the pension value.
We charge an ongoing fee of 0.85%.
Providers have their own costs which are factored in when recommending a solution.
Contact us now to discuss your existing pension and the options available to you.
