UK Pension Transfer FAQ's
What type of UK pension do I have and how do I get details on it?
EMPLOYER PLANS: If you were in employment in the UK and part of your employer's pension plan you may have a defined contribution pension (otherwise known as "money purchase"), a defined benefit pension (otherwise known as "final salary") or a combination of the two. The value of a defined contribution pension will depend upon the investment performance of the funds invested. The value of the defined benefit pension will be calculated based upon a person's number of qualifying years in employment and their salary at date of leaving. The value of the pension at the date of leaving is commonly indexed to RPI/CPI to a maximum of 5% p.a. (or benefits accrued after April 2009 to a maximum of 2.5% p.a.).
PERSONAL PENSIONS: You may also have contributed to a UK personal pension, usually offered by a life insurance company with funds invested in their "with profits" or unit trust funds. The value of your pension will depend upon the investment performance of the funds invested.
INFORMATION: We know that it can be difficult to find up to date information on your pension(s), particularly if you have accumulated a few over the course of employment in the UK. For this reason, all you need to do is complete a Florin Authorization Form with as much information as you have and we will do the work for you.
Can I transfer any type of UK pension to a SIPP or QROPS?
Yes, most UK pension plans are able to be transferred to a SIPP or QROPS, as appropriate.
Can I transfer my UK pension to my US retirement plan?
Unfortunately, the transfer of a UK pension to a US retirement plan, including an individual retirement arrangements (IRAs), cannot be made as such plans are not permitted by the Inland Revenue Service to accept a transfer of funds from a UK pension scheme.
What is a SIPP?
A SIPP (or Self Invested Personal Pension) is a type of personal pension that, as opposed to a conventional personal pension, can offer greater flexibility and individual control. Investments are also permitted in a wide range of assets including shares, unit trusts, cash and commercial property.
What is a QROPS?
A QROPS (or Qualifying Recognised Overseas Pension Scheme) is a pension scheme set up outside of the UK and regulated as a pension scheme in the country where it is established. A QROPS must notify HM Revenue and Customs (HMRC) that it meets specific conditions set by UK legislation to receive UK pension transfers. In addition, the jurisdiction where the QROPS is established must also permit such a transfer. QROPS can, in certain circumstances, have tax benefits for expatriates by removing the pension assets from the UK tax regime. QROPs are not subject to UK inheritance tax or the 55% UK income tax charge imposed on the payment of a lump sum to a dependent on a pension member's death. In addition, QROPS can enable you to obtain a larger lump sum of up to 30% of the value of your pension fund (5% more than a UK based pension).
What are the benefits of transferring to a SIPP or QROPS?
There can be a number of benefits with transferring your existing UK pension to a SIPP or QROPS, as appropriate. For details, see our Why Transfer? page. However, it is important that you get advice from an investment adviser like Florin before making any decision to transfer. Your current pension may have certain guarantees/benefits which could be lost upon transfer and, therefore, need to be considered carefully.
How long does a pension transfer take?
UK pension plan administrators vary widely in the speed of their response to pension transfer enquiries and the transfer of funds. However, most transfers take around three months to complete. We will do our best to expedite the process, including regular follow- ups with pension administrators and providing you with progress reports.
Am I entitled to a UK State Pension when living abroad?
If you worked in the UK you may qualify for a UK State Pension. A UK State Pension is payable to residents in the US at the same index linked rate as if you were living in the UK. If you have enough insurance under both US and UK schemes to qualify, you can receive state pensions from both countries. However, if you are entitled to a UK State Pension, the amount of US pension you receive may be reduced in certain circumstances because of US windfall elimination provisions.
For further information on receiving your UK State Pension, including obtaining a pension forecast, go to: http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_10026714