During the time that we work in
the
UK
we will probably have made contributions to two
pensions, the D.H.S.S, Government plan and a private plan operated by our
employer. The first is probably good value for money – providing we
keep up class 3 contributions – and that is a separate subject that
if you have not already done so you should seek advice about, the second
could easily be very bad value indeed.
UK
company pensions are based on the ‘defined
benefits’ system; this means that the pension that is finally paid is
based on a fraction (normally1/40th, 1/60th or sometimes 1/80th of final
salary for every year of contribution. The problem of course is that that
fraction is of a salary at the time of leaving, which could be 30 years
before! It may be that the amount is inflation linked and increases but
still it is based on salary at the time of leaving.
There is also of course the matter of the pension dying when you do -even
if there maybe widow/widower benefits. Lastly and perhaps even more
important you will have no control over where you money is invested, when
and how it is paid to you and how much tax you may have to pay on the
benefits you receive.
Until recently there was very little you could do to alter this state of
affairs, but now any many cases there are options and it costs nothing to
find out what options you may have. There are no hard and fast rules and
each case must be compared and considered individually but as a broad
generalisation if you have contributed to a UK Company or Private Pension
Plan for three years or more you should arrange to have a no cost no
obligation report prepared to determine whether you could do better than
leave your money on ice!
Are you left with one or more small
pensions?
Or larger pensions that are
restricted in some way?
Maybe you have to take an Annuity
and your pension fund dies with you?
If the answer to any or all of
the above is yes then a SIPP may be the answer.
Firstly, what is a SIPP?
A SIPP is a Self Invested Personal Pension (sometimes called a
self-administered pension), fully approved by HM Revenue and Customs.
It offers unrivalled options for retirement provision, with real
flexibility, and a single arrangement for all
UK
pensions.
Left with lots of small pensions- or one inflexible one? Have to take an
annuity?
Why choose a SIPP?
A SIPP offers consolidation of existing arrangements, all pension needs can
be administered under one trust, to produce a coherent pension plan.
It gives access to retirement funds from age 50, the opportunity to take a
cash amount, tax free, and an income as well, there is no need to buy a
purchased annuity, there is a wide choice of investments. An
important point is the improved dependants benefits it offer, its value is
not lost on the death of the holder.
It is an excellent option for
Ex-pats, as well as
UK
residents. Contact us for more in-depth information,
and a discussion of the options available.
Ross
Pays is the Chairman of The FAA based in Cyprus. FAA offer advice on wills,
tax registration services, home, health and car insurance and tax planning, including Inheritance Tax Planning, together
with full accounting services.
Visit Ross Pays website at www.rosspays.com, Telephone 00 357 25 82 58 76, Fax 00 357 25 33 35 93 or
e-mail ross@rosspays.com
Initial consultations are free and no obligation and
fee quotations will be provided in advance for all services.
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