An International SIPP (Self-Invested Personal Pension) is a UK pension for UK expats who want to manage their UK pension investments whilst living overseas.
A Self-Invested Personal Pension (SIPP) is a pension registered in the UK, and where the investor (you) has significant control over the investments within that pension. As an investor, you can have access to an extensive range of investments such as shares, funds, and commercial property.
A standard SIPP is a UK-registered pension available to any individual and is therefore not targeted at non-UK residents (expats). An expat can still hold a SIPP. However, there may be logistical or financial challenges in managing the SIPP from outside the UK.
An International SIPP is also a UK-registered pension. However, it is marketed and designed for non-UK residents (expats). An International SIPP will therefore have some features that make it more admin-efficient to manage from outside the UK.
International SIPP <> Standard SIPP: key differences
Currency: A standard SIPP will most likely be a pound sterling (£) investment wrapper. As such, your pension would be invested in £, and you will likely be affected by currency exchange rate movements on the date you draw your pension income (or access your pension savings) in a different currency. An International SIPP can offer the investor flexibility in their choice of investment currency(s).
Investment Options: Both SIPP and International SIPPs can typically invest in an extensive range of investments (stocks, funds, commercial property). However, with an International SIPP, the selection of international funds and assets may be more straightforward.
Admin Experience: Providers of International SIPPs have the needs of non-UK resident clients at the forefront and may, therefore, have some useful admin-efficient features for expats.
Pension Transfers
For most expats, the use of a SIPP or International SIPP is likely to be as a vehicle to consolidate multiple existing UK pensions into a single SIPP for ease of management. The process will include:
Tax relief on contributions made to a SIPP is usually at your highest rate of UK tax. If you are no longer a UK taxpayer, you will not get any tax relief on any new contributions you make to either a SIPP or an International SIPP.
There are several potential pitfalls. These include exit fees charged by your existing pension provider and ensuring that all required due diligence has been completed.
Support on whether to do an International SIPP or not
The choice between a standard SIPP, an International SIPP, or another offshore pension alternative, such as a QROPS (Qualifying Recognised Overseas Pension Scheme), is a decision that should not be taken lightly. The expat financial and legal environment is subject to change.
A qualified financial advisor with expertise in expat pensions can offer you personalised guidance based on your specific situation, country of residence, long-term objectives, and risk tolerance. They can help you navigate the complexities of tax treaties, pension transfer regulations, and currency management, ensuring your retirement savings are structured in the most efficient and beneficial way for your future.
Both standard and International SIPPs offer valuable options for UK expats to consider when it comes to managing their retirement savings. The best choice for your circumstances will depend on a thorough evaluation of your needs and a clear understanding of the benefits and potential challenges associated with each option. With the right guidance and information, you can make an informed decision that sets you on the path to a financially secure retirement, no matter where in the world you choose to make your home.