News & Insights

The Three SIPPs

And chances are that when you come to discuss the issue with your expat financial services specialist, the issue of a SIPP will raise its head.

However, the idea of a SIPP is often not well understood – particularly the distinctions between the three major types of account. Here we take a look at the three types of SIPP and examine why the schemes might be a tax-efficient way to help you save for retirement.

Full SIPPs

A full SIPP provides the greatest flexibility and the broadest range of investment opportunity, but it may also have higher charges. It is important to understand that a full SIPP should never be entered into without full comprehension of the fact that – unless you ask a professional to manage the fund on your account – you will have to manage it yourself, which, to the lay investor, bears all the risks of high stakes pensions roulette.

Also, be aware that a full SIPP is only suitable for larger sums. The average amount invested in a SIPP is between £150,000 and £450,000

Full SIPP fees can be charged at a flat rate or as a percentage of the value of the investment. Full SIPPs also come with a creation fee, an annual management charge and may sometimes require a minimum monthly contribution.

Low-Cost SIPPs

A low-cost SIPP is usually “execution only” meaning that unless you are a seasoned and confident investor who is fully appraised of all the risks you will be learning on the job. Your SIPP provider will not be offering you advice; therefore, you will be responsible for all the choices you make.

Furthermore, although a low-cost SIPP offers a wide range of investment choices, these cannot include offshore funds, unquoted shares or direct property ownership. This is not to say that a low-cost SIPP is unsuitable for everyone; those with smaller pension pots and clear investment ideas may still find this type of pension plan is a suitable retirement savings vehicle.

One benefit of the execution-only nature of a low-cost SIPP is lower charges. There is no annual charge, online trades cost around £15 a time and telephone trades are charged at around 1%.

‘Hybrid’ SIPPs

These are essentially insurance products. In a sense they negate one of the main selling points of a SIPP in that unless you have already invested heavily in the insurance companies, you will have little to no control of how your money is invested.

A Hybrid SIPP usually comes with a creation fee and a capped annual management fee, although there are not likely to be any trading fees.

Expat Pensions Advice from Expat Financial Services Professionals

If you are a British expat in Europe and want to protect and grow your pension pot in a way that allows you to pursue your long-term goals while maintaining your present cashflow needs, Blacktower FM can help you find the international pension transfer strategy and products that are right for you.

For more information, contact your local office today.

Other News

RTC Deadline Looms

Clocks and TimepiecesTime is fast approaching for UK taxpayers and expats with UK tax obligations to ensure they meet the 30 September 2018 deadline laid down by HMRC for the declaration of all UK tax liabilities on overseas income and assets that fall under the auspices of the Requirement to Correct (RTC) legislation, Finance (No 2) Act 2017.

Non-compliance, even if it is inadvertent, has the potential to be met with uncompromising penalties, so anyone who is any doubt about their tax obligations regarding offshore investments – if you have expat regular savings or wealth management concerns outside of the UK – should contact their financial adviser immediately as a matter of urgency.

The penalty for most breaches is 200% of the tax that has been avoided. However this may be reduced to 100% depending on the taxpayer’s perceived level of compliance. That said, the minimum is 150% in cases where disclosure has been prompted by HMRC. Larger non-disclosures may be punished by further penalty of 10%

Read More

Will your income be cut by the new dividend tax?

Blacktower Financial Management TaxMany ex-pats are still suffering from the cuts in income that have taken place due to the very low interest rates they continue to endure on their savings.

Well brace yourselves for more!  Any of you who rely on dividends from shareholdings to supplement your income are about to see a whole new look to the tax regime associated with them.

Dividends are annual cash payments made to holders of certain shares, they provide a vital source of income to many pensioners who rely on savings in retirement. The way dividends are to be taxed is to change from April 2016 and will see basic-rate taxpayers subject to a new levy of up to 7.5 per cent.

Read More

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