Later Life & Pensions Planning
A great many people who are about to reach retirement can expect to see a good third of their lives still ahead of them. (Many of the children being born today can realistically expect to live until they are 100!)
The provision you have made during your working life will determine the lifestyle you will be able to enjoy once you cease working.
So, ask yourself a few questions:
Have you made sufficient provision for your future, to continue to enjoy a similar lifestyle?
Have you thought about which aspects of the life you now enjoy you’d be prepared to give up when you retire?
Are you happy to give up anything?
If you don’t make provision for yourself, you will certainly have to give up some things.
Having more time on your hands ought to allow you to do more of the things you enjoy, but will your income allow you to do so?
‘Pensions’ can take many different forms, but they are, essentially, simply a sort of investment. The main difference is that they are generally long-term investments, which means we can take a longer-term view with the assets we choose to make up your investment portfolio than we might perhaps take with shorter-term investments.
Pensions offshore wouldn’t normally need to be within a ‘pensions wrapper’ if there are no tax benefits associated with them. This is because you don’t then carry any restrictions around what you can save and when you can have access. You can simply plan for your retirement in a fully-flexible portfolio.
Many pensions carry tax breaks / benefits in the countries in which the client is being taxed, as governments try to incentivise people to do something about planning for their later lives, so as not to become a burden on the state.
However, there are some special arrangements for people transferring their existing pensions offshore, which we can discuss with you, if you have existing arrangements.
(Q)ROPS
Having initially grown out of a UK business, you might correctly expect us to have a lot of former experience managing pensions in the UK, where there are a great number of differently-structured arrangements, with differing rules.
One particular area of expertise we have built up offshore has been that of UK pension transfers formerly, called Qualifying Recognised Overseas Pensions Schemes (QROPS) – or more recently just the ‘ROPS’ bit of the name.
These are offshore schemes, recognised by the UK’s HMRC, for the legitimate transfer of UK pension schemes, for people wishing to take their pensions out of the UK (typically when moving or planning to move abroad).
These transfers have become less common, more recently, due to increasing conditions placed upon them by the UK authorities.
The UK authorities have now made it a requirement that transfers from Defined Benefit schemes (otherwise known as ‘Final Salary’ pensions, where there is a ‘guaranteed’ pension benefit) must first go to a UK-qualified pensions adviser, for their advice, before being available for transfer consideration. This entailed an expensive, additional line of advice (even supposing you could get an adviser to give you the formal advice required). This has really made the task too onerous -and/or costly- to warrant the benefits.
Pension transfers from Defined Contribution schemes (otherwise known as ‘Money Purchase’ pensions) have less onerous rules to follow. This is because these schemes simply build up a fund of money, which you can arguably invest just as well offshore as you can onshore (probably better). There are no guarantees involved in the way there are for Defined Benefits.
We still manage a great number of
former QROPS transfers,
and we can still arrange
new transfers, but these tend to be from
Defined Contribution schemes, nowadays.
Self-Invested Personal Pensions (SIPPs)
These have been a growing area of trustee-managed schemes offshore, and ones with which we were very familiar in the UK market, where they can be much more flexible for the pensions investor (typically the self-employed), than other sorts of pensions. (They are often used to help finance commercial property purchase – particularly for the client’s own business premises.)
In the offshore world, they offer a pension in which a much broader range of investments types may sit, than usual. As well as traditional, collective pension funds, like Unit and Investment Trusts and OEICs, they often allow the full range of those other investment vehicles which can be found in non-pension investments. (These might include such things as direct equities (shares),
Exchange-traded Funds (ETFs), financial derivatives, traded endowments, commercial property, etc.