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bigduckontax
bigduckontax, Accountant
Category: Tax
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I lived in the UK years and have a UK private pension

Customer Question

Hi. I lived in the UK for 12 years and have a UK private pension worth £ 60 000. I now live in Switzerland permanently. I don't know whether I should:
a) leave it in my previous employer's scheme
b) transfer it to a QROPS
One advisor suggested I transfer it in to a UK onshore SIPP and at retirement age in to an offshore QROPS.
I don't know how fees compare between my previous employer's pension scheme, a SIPP, a QROPS.
What happens if the UK leaves the EU in terms of me having access to my pension?
Thanks.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. If the UK leaves the EU then the various Double Taxation Treaties will still remain in place, but I would gently point out that Switzerland is not a member state of the EU, nor indeed of the European Economic Area (EEA). Here is what the Gov UK web site has to say about the Swiss situation: 'Switzerland is neither an EU nor EEA member but is part of the single market - this means Swiss nationals have the same rights to live and work in the UK as other EEA nationals.' Now when you left the UK did you submit a Form P85 to HMRC? If you did not then you should do so immediately. Fortunately there is no time limit as to its submission, it is available on the web and can be filed on line. On receipt HMRC will classify you as non resident for the tax year following your date of leaving and furthermore split the leaving year into two portions, one resident, the other non resident. Transferring pensions is always an expensive exercise unless you are moving from one defined benefit scheme to another, one of Maggie's earliest triumphs when she made such transfers compulsory if the employee so requested. By far the better course of action would be to set up a SIPP and transfer up to 3.6K per annum or 100% of your UK emoluments thereto, With a SIPP you can go back three years to mop up unused contributions. Finally transferring to a QROPS can be done but after you are 55. Here is more Gov UK advice: 'Tax relief is given on pensions to encourage saving to provide benefits in later life. Accessing benefits (directly or indirectly) before age 55 will result in a liability to UK tax charges in all but the most exceptional circumstances. You should seek suitable professional advice including from a regulated financial adviser.' Now I cannot go much further on this advice as I am not regulated to give pensions advice; what you have received so far is general knowledge. My gut feeling follows the advice you have already received and that eventually a transfer to a QROPS would be a good idea, but you must bear in mind transfer costs which can be hefty up to 20% of your pension pot. I do hope I have helped shed some light on your position.
Customer: replied 1 year ago.
Hello Keith
Thanks for your answer. If I may follow up with a few questions/ clarifications:>Switzerland is not a member state of the EU
Right, so you think that whether or not UK remains part of the EU with whom at this point Switzerland still has bilateral agreements (whatever that implies), will have no significant effect on my access to a pension left in the UK?>the better course of action would be to set up a SIPP
Why not just leave it a Tower Watson (my previous employer's pension scheme)?
Is a SIPP not more expensive?
Is there a benefit to a SIPP if I don't want to make additional contributions?>transferring to a QROPS can be done but after you are 55
Sounds like you are saying it can only be done after I'm 55 without incurring hefty tax charges? Strange, the QROPS advisors (bar one) I've spoken to so far are all very keen to sell a QROPS to me right away....Do you know any of these companies: Forth Capital, Holborn Assets, Knight Hayes?Thank you.
Expert:  bigduckontax replied 1 year ago.
Delighted to have got you thinking!
The position of the UK viz a viz the EU will not significantly impact upon Switzerland. There are simply hundreds of Double Taxation Treaties world wide. For example the UK has one with the USA and with a number of individual States also.
I accept that to leave it where it is forms an excellent solution and one many advisers would advocate. That's another of the changes from the late 70s, the ability to freeze your occupational pension if you move on making it a preserved pension; very common with public schemes like the Civil Service, Military and Local Government.
A SIPP would probably be more expensive than leaving it where it is.
I have no doubt that the QROPS advisors would be keen to sell you their products, but like Urquhart in the 'House of Cards, 'I couldn't possibly comment!'
I have heard of these companies, but have not researched them. As I told you I am not licenced to give detailed pensions advice. This is a highly specialized area and unique to each individual.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.