International SIPP pensions explained
The international SIPP. What is it, and why has it become the number one transfer solution for those with UK pensions living in the Middle East?

If you have a UK pension and you're resident in another country, one of your options is to transfer to an international SIPP. So what are they, and why would you consider doing this?

SIPP pensions first appeared in the UK in the late 1980s as a savings vehicle where the plan holder could have more influence and control over a much wider range of investments than those offered by many existing pension providers. The international version of the SIPP is still a UK-sited and regulated pension, but it's structured specifically for residents of countries outside the United Kingdom.

Which pensions can be transferred
Let’s take a quick look at which types of pensions can or cannot be transferred to an international SIPP if you no longer live in the UK. In the main, you can transfer from most private or company pensions. You can also consider transferring from a defined benefit or final salary scheme as long as you're not already taking benefits.

However, you can't transfer your state pension. You also can't transfer out of many public sector schemes in the UK, such as the NHS, police, MOD, teachers, and some, but not all, government pensions. And finally, if you’ve bought an annuity, you can’t transfer from that arrangement either.

Why expats use International SIPPs
So why would you move from your existing UK pension to an international SIPP? Well, if you live and work in Dubai, for example, the chances are that when you retire, you’ll relocate to another part of the world. Logic dictates that your pension should have the flexibility to serve you wherever you settle in your later years.

Furthermore, this type of plan allows you to avail yourself of advice and management from a firm regulated in the country where you live. So your pension management services can move with you wherever you decide to go.

Flexibility and pension freedoms
Another reason is flexibility. Following the introduction of pension freedoms in 2015, many people were looking forward to a more flexible way of accessing their pension pots. The legislation allowed scheme members, in theory, to take what they want when they want it, whilst being mindful of potential tax implications.

Many UK pension providers created new plans to allow for these freedoms. However, many of these providers are now refusing to allow non-UK residents to switch to their flexible schemes. Instead, they encourage either a poor-value annuity purchase or a transfer to an international plan if you want UK-style flexibility.

So step forward the international SIPP. With a transfer into this solution, you have full flexible access at benefit age, meaning you can take what you want when you want it, knowing you’re in a pension plan specifically for non-UK residents.

Other benefits
Other benefits include potential tax efficiency in many global jurisdictions, the ability to consolidate two or more pensions into one, and being very favourable in terms of cost compared to a QROPS, for example.

They’re also a great tool for passing on wealth to loved ones when you die, as they can circumvent probate and are free from UK inheritance tax.

Advice and regulation in the UAE
Another advantage of an international SIPP is that you can avail yourself of qualified and regulated guidance here in the UAE. We’re professional advisers living and working in Dubai with expert knowledge of both international and UK systems.

Pension scams warning
Finally, a word of caution. Always be aware of the potential for pension scams. Don’t give your personal details to anyone before verifying who they are, that they’re a qualified adviser, and that they work for a properly regulated company with permission to give advice in the country where you live.

Avoid anyone who says they can release your pension before official retirement age or promises very high returns from exotic-sounding investments.

Summary
In our view, the international SIPP is an excellent solution for global expats with UK pensions, whether you plan to return to the UK or not.

My name is Patrick Macdonald. Please feel free to get in touch via the contact details below and we can have an initial chat in person or via video call.

Thanks for watching, and I’ll see you next time.