Edition 1453
09 December 2017
Edition: 1453

Read this week's issue online exactly as it appears in print.

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Reviewing your existing pensions arrangements is essential

by Advertiser, in Profiles · 11-05-2017 15:29:00 · 0 Comments

Changes to the rules governing SIPP’s in 2015 and ongoing tightening of rules governing QROPS, mean it is questionable why anyone should be considering transferring their UK pension into a QROPS today, and in many instances for those people who have a QROPS they should seriously consider taking advice on whether they should switch back into a UK SIPP to protect themselves against the possibility of future regulatory change.

Reviewing your existing pensions arrangements is essential

As is usual with UK pensions, little is straightforward, so it’s important to take advice from a qualified UK pensions expert, but some points to consider include:
SIPPs are significantly cheaper to run than QROPS. Annual charges are typically around £300 for pensions in drawdown compared to around £1,000 for a QROPS. Other ancillary charges are also considerably less.
There is now no restriction of the amount of money you can withdraw from your SIPP each year and if you are non-resident in the UK for tax purposes, you can receive this sum free of UK tax.
On death, all the assets in your SIPP are free of any UK tax up to age 75, to another qualifying pension scheme or the beneficiary can take the whole lot as a lump sum, but if they are a UK resident they will be taxed on this sum at their own marginal rate of tax. Over age 75 death benefits are different, and you should contact us to discuss this further.
Currently for people living and having their QROPS administered in an European Economic Area (EEA) country, the recent changes made by HMRC have had very little impact. However, this may change and it seems likely that the UK government will look closely at further tightening the tax treatment of QROPS. This might seem like scaremongering, but do you want to risk your pension assets being subject to an unexpected tax charge?
One final point, whether your pensions assets are held in a QROPS or a SIPP, we see no reason why they should be invested through an insurance bond as there are absolutely no tax advantages that we know of. And in most instances it considerably increases the annual cost and as a consequence decreases your pension at the end of the day.
It is important to note that this article is intended for general guidance only.
Alan Beaney, Director, RC Brown Investment Management Plc

For further information,  Tel:  (+351) 707502535, email: enquiries@rcbim.pt or visit: www.rcbim.pt 

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Edition 1453
09 December 2017
Edition: 1453

Read this week's issue online exactly as it appears in print.

Twitter