Transfer Transact Pension As A Non-UK Resident
Have you been told you need to transfer your Transact Pension Scheme because you reside outside the UK?
In this article, we will detail how you can transfer your Transact Pension as a non-UK resident, through the use of a globally regulated Expat financial adviser.
Forced Exit Of The Transact Personal Pension Scheme
Transact has notified numerous non-UK resident members of their scheme, instructing them to exit their pension. This often raises common questions, including
Can I still make withdrawals?
What are my options for transferring?
Is my pension safe and what is the cost of transferring?
Why Is Transact Making Me Transfer My Pension?
Post-Brexit, various UK financial services have adopted different interpretations of rules and regulations. Transact, in response, has determined that their UK pension scheme is intended exclusively for UK residents.
Consequently, if you live abroad, you should consider a product specifically designed for your situation. This includes an International SIPP and QROPS. Essentially, Transact believes it lacks the necessary licensing permissions to cater to members residing overseas.
Why Can't My UK IFA Advise Me?
Similarly to Transact's restriction on non-UK residents, UK FCA (Financial Conduct Authority) regulated advisers are no longer licensed to provide advice to clients in Europe.
Before Brexit, UK financial advisers could passport into Europe via their FCA license. Nonetheless, these authorisations were rescinded when the UK departed from Europe. As a result, any independent financial adviser seeking to advise clients in Europe must now hold the relevant license.
The result is twofold:
You must not only exit the Transact SIPP but also find a new European-regulated financial adviser.
What If I Don’t Want To Transfer My Transact SIPP?
Transact has two options available:
Encash The Full Pension
If you take the whole pension in one lump sum, a substantial and unnecessary tax liability may arise. Here's a breakdown:
The first 25% (Pension Commencement Lump Sum) is tax-free (in the UK) and will be paid to you gross.
Subsequently, an additional £12,570 can be paid to you free of UK tax (taxes may apply in your country of residence).
Beyond that, tax will be deducted at source based on UK tax bandings: 20%, 40%, and 45%.
For instance, if you have £200,000 in your Transact pension scheme and have not taken the 25% tax-free lump sum, the tax implications would be as follows:
£50,000 paid gross (without holding tax but tax due in the country you reside)
£12,570 paid gross (without holding tax but tax due in the country you reside)
£12,571 - £50,270, basic rate of 20% will apply
£50,271 - £125,140, higher rate of 40% will apply
Over £125,140, additional rate of 45% will apply
If you've already taken your Pension Commencement Lump Sum (PCLS), the entire remaining amount will be taxable after the tax-free allowance of £12,570, assuming there's no other UK income.
Take An Annuity
Whilst this is offered by Transact, upon further investigation, we are unaware of any UK annuity provider who can offer a non - UK resident an annuity.
Furthermore, swapping your pension pot which offers flexible access, for a guaranteed income can be suitable for some. But, you are locking in an income in the wrong currency (currency risk) and reducing your income options in retirement.
What Can I Transfer My Transact Pension To?
You have two key options:
An International SIPP
A detailed article on international SIPP's can be found here. In short, it's an FCA authorised UK Pension scheme that has been specifically created for non-UK residents. Key benefits include:
Full Flexible Access Draw-down
Access your pension pot at your convenience, whether opting for regular monthly payments or making ad hoc withdrawals of any value.
Investment Management
Work with a European-regulated adviser like ourselves, ensure your portfolio is aligned with your risk tolerance and objectives.
Extensive Investment Options
As with the Transact SIPP, gain access to a wide range of regulated investments including ETFs, mutual funds, FTSE listed shares and DFM’s.
Multi currency
Invest in all major currencies enabling you to mitigate the currency risk of holding your pension in GBP whilst living and speaking in Euros.
Regulation
An International SIPP is essentially a UK SIPP, providing you with the regulatory oversight and protection of the FCA, the Pensions Regulator, and the FSCS.
Portability
The International SIPP can follow you to any country in the world, eliniating the requirement to transfer again even if you return to the UK.
QROPS
Qualifying Recognised Overseas Pension Scheme. A QROPS (Qualified Recognised Overseas Pension Scheme) still provides substantial Inheritance Tax (IHT) benefits for specific scenarios, even though many other benefits were removed with the elimination of the Lifetime Allowance in the March 2023 budget. More details on the intricacies of QROPS can be found in this comprehensive article.
Note, with the new budget changes of 2024, unless you are resident in Malta or Gibraltar a QROPS will likely no longer make sense.
Working With The Wealth Genesis
Our flat-fee structure ensures equal and transparent charges for all clients.
Our complete independence grants us access to an extensive array of investment options and financial products from diverse providers. This enables us to craft the most tailored solutions for our clients, unrestricted by in-house constraints or pre-determined choices.
How Much Does a Transact Pension Transfer Cost?
£3000 advice fee and 0.85% ongoing.
For further information and to arrange a free initial consultation, use the diary below.
