UK Self Invested Pension Plans

If you have pension benefits in a UK scheme you may be unsure of the best way to take these benefits. It may be the case that the best course of action would be to leave these benefits where they are but there may be advantages to transfer them to an alternative scheme.

EFPG has found on occasion that it is beneficial to transfer Gibraltar residents’ UK pension benefits to a Self Invested Personal Pension (SIPP).

The pension reforms that were introduced in April 2015 have given holders of SIPPs much more flexibility with regards to how they can take their pension benefits and invest their pension funds.

Now there is no necessity for customers to purchase an annuity on receiving their pension benefits. Instead 25% of the pension pot can be withdrawn as a tax-free lump sum and lump sums and income from the other 75% are subject to the UK marginal rate of income tax (PAYE). 

The majority of SIPPs have an ‘unlimited withdrawal’ system called flexi-access drawdown and it allows customers to arrange their own income payments. The plan allows you to take as much or as little as you like. 

One major advantage of this is you can adjust your withdrawals to meet your current needs, unlike previously with an annuity.  Further, with careful planning it is possible to take the entirety of your pension benefits over a period of time (the length depending upon the value of your pension) free of UK tax.

If you die and there is money still remaining in the pension pot then this may be passed onto your beneficiaries tax-efficiently or potentially even UK tax-free.

The only issue with the flexi-access system if you are depending upon your pension to give you income for life is that it is possible to run out of money if your withdrawals are too great or you live longer than anticipated. 

EFPG have a tailored solution which features low cost pension administration, a capital guarantee investment option with smoothed returns designed to meet your income needs and minimise or even eliminate the impact of UK tax on pension income.