Expat Financial Advice Retirement Planning 

Self Invested Personal Pension SIPP

A self-invested personal pension (SIPP) is a pension ‘wrapper’ that holds investments until you retire and start to draw a retirement income. It is a type of personal pension and works in a similar way to a standard personal pension.


The main difference is that with a SIPP, you have more flexibility with the investments you can choose.


With standard personal pension schemes, your investments are managed for you within the pooled fund you have chosen.

The basics

  • To help save for your retirement in a tax-efficient manner

  • To enable you to transfer benefits in other registered pension schemes such as QROP’s to your SIPP

  • To enable you to make your own investment decisions in conjunction with your Investment Manager or Financial Adviser, and utilise a wide range of types of investment

  • To give you choice over how and when you take your benefits

  • To allow you to take regular or variable income from your fund while remaining invested

  • To provide you with a tax-free lump sum

  • To provide benefits for your dependants and other survivors on your death

Qualifying Recognised Overseas Pension QROP

A QROP is a type of pension plan based outside of the UK that meets the requirements by the HMRC to allow individuals to transfer their UK pension funds to.

It was devised for those who live overseas as an expatriate or those who are planning to leave the UK. It’s a scheme that makes it possible to transfer your existing pension plans in order for you to potentially benefit from increased investment growth, flexibility in access to your funds and financial security.

There are a number of countries that permit their resident nationals take 30% tax-free cash, as opposed to 25%, as it stands in the UK. Because HMRC stipulate that a QROPS must provide the same benefits to its members as those entitled to the nationals residing in its country, the QROPS jurisdiction and HMRC allow up to 30% to be drawn as a tax-free lump sum subject to certain requirements.


Another benefit to passing on your wealth through a QROPS is the fact that your family and loved ones will completely and legally avoid paying the Inheritance Tax which is levied on UK pension schemes.

This can be up to 55% of your pension’s fund value. If you have a UK pension, these funds will incur an IHT charge of up to 55% when they are left to your beneficiaries. IHT does not apply to QROPS, the money you have worked your entire life for can be passed onto your loved ones free from tax at source.

Defined Benefit Pension Scheme

A defined benefit pension (also called a 'final salary' pension) is a type of workplace pension that pays you a retirement income based on your salary and the number of years you’ve worked for the employer, rather than the amount of money you’ve contributed to the pension.

While the amount of money your defined contribution pension is worth on retirement depends on how much you’ve paid in and how your investments have performed, the value of a defined benefit pension is based on:

  • How long you’ve worked for the company

  • Your salary while working: sometimes your final salary, or sometimes an average of your salary over your career

  • The accrual rate: the proportion of your salary you’ll get as an annual retirement income

Your employer is responsible for making sure there’s enough money in the scheme to pay you when you reach retirement. If your company gets into financial difficulty and can’t meet its pension commitments, the Pension Protection Fund (PPF) can cover your pension income, but you may receive a lower amount than you were promised by your employer.

Superannuation Pension Scheme

A superannuation pensions scheme is vehicle that allows Australians to build up retirement fund for the future giving them an income stream.


It is compulsory for an employee to pay into a superannuation fund whilst working with an additional top up made from the employer at a rate of 9.5%. 

They are very similar to a defined benefit pensions scheme with how they work. Whilst many Australians have more than one superannuation, each account will have variable charges within them. The overall performance of a superannuation scheme will be based on 

  • How long you’ve worked for the company

  • Your salary while working: sometimes your final salary, or sometimes an average of your salary over your career

  • The accrual rate: the proportion of your salary you’ll get as an annual retirement income

There is no guarantee of the amount that you will receive when you retire and as an expat superannuation's are permitted to stay In Australia unless you have moved to New Zealand. If you have a current superannuation and you are living in another country, our services can possibly reduce the current charge that you paying.   

401K Pension Scheme

Already a US expat living offshore and have 401K/403 or Roth IRA. The process of rolling over or transferring your current scheme is now relatively easy with most providers. With offshore scheme provider’s available you can still invest within the US market from your scheme and take withdrawals. Larger flexibility and compliance with SEC and the IRS is a must for custodians dealing with US pensions.

Like most of the 401/403 and Roth IRA accounts in the US, they are all in invested in the US markets. There are few exceptions that will place investments within offshore funds. Most providers that accept rollovers from 401/403 or Roth IRA invest within the US markets as this keeps authorities happy and allows for the rollover. 

To transfer you 401/403 or Roth IRA under US rules, you will need a custodian to act as the trustee. You will then need to have an account set up in which the funds are invested from. All this can be a daunting task for most US expats.

Under the age of 59 years and 6 months, you may be subject to 10% tax charge and your usual income tax charges if you in-cash you 401K. Your plan provider will typically keep 20% for the IRS. If you are 55 to 59 and 6 months you may be able to avoid the 10% tax charge if you terminated employment no earlier than the year you turned 55.

If you are no longer employed by the company then you can cash in or, rollover your 401K plan into an IRA. Upon on the transfer of your 401K, the tax can be deferred into a Roth IRA allowing you to avoid the US tax as a rollover is not considered cashing in a 401K.

© 2019 ExpatFinancialAdvice.Online

This site was designed with the
website builder. Create your website today.
Start Now