The establishment of private pensions, in addition to state pensions, has been encouraged through UK government policy for many years. This started with occupational pension schemes established by employers for their employees and in more recent years with personal pensions established for individuals. The provision of private pensions has largely been encouraged by the granting of tax reliefs to those establishing pension schemes and to their members in relation to contributions, pension fund income and pension benefits.
The general administration of private pension schemes is the responsibility of the Department for Work and Pensions (DWP) with the Pensions Regulator responsible for ensuring schemes are run in a proper manner as required by law. The administration of tax reliefs granted to pension schemes is the responsibility of HMRC, the UK tax authority. The Financial Conduct Authority (FCA) is also responsible for investments and financial advice in respect of personal pension schemes.
In 2006, the UK government brought in pension simplification by introducing two new controls, the pension lifetime allowance and pension annual allowance, which replaced the previous eight different tax regimes. In 2015, it further removed the requirement to purchase annuities, so members can now take a 25% tax-free lump sum and the remainder of the fund as a cash sum less tax at their marginal rate.
Sovereign provides a selection of award-winning UK and international retirement planning products and solutions. These include Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSAS) in the UK.
SIPPs are a UK-registered personal pension arrangement that is available to both UK residents and expatriates. Typically favoured by savers seeking additional investment options or increased flexibility at retirement, a SIPP can be funded by new contributions or the transfer of existing pension plans.
A SSAS is an individual occupational pension scheme that can be established by directors of UK-registered companies for the provision of retirement benefits. It has wide-ranging investment capabilities, including the ability to provide a secured lending facility to scheme participants and to acquire commercial property, which makes it the pensions savings vehicle of choice in the UK for entrepreneurs and the owners and directors of SMEs. A SSAS can receive pension transfers from, and make pension transfers to, SIPPs and QROPS.
All UK SIPP providers are regulated by the UK’s Financial Conduct Authority. Sovereign supports the work of the UK Pension Scams Industry Group (PSIG) in combating pension scams and adopts the principles of its Code of Good Practice.
With increasing international mobility, many people find themselves working in several different countries and perhaps retiring in yet another, adding to the complexity of saving under different pension and tax regimes and then drawing funds tax efficiently in retirement. Qualifying Recognised Overseas Pension Schemes (QROPS) and Qualifying Non-UK Pension Schemes (QNUPS), which enable the transfer of UK pensions benefits abroad, have been introduced to assist this market.
Sovereign Pensions provides a wide range of QROPS and QNUPS options from Gibraltar, Guernsey, the Isle of Man and Malta. The best fit for you will depend on the double tax agreements between these locations and the countries where you live or work. There is no ‘one size fits all’ solution.
Where there is no suitable home or host-country retirement plan, Sovereign also offers several individual solutions. International Pension Plans (IPPs) offer a single plan to employees irrespective of where they are based, allowing for regular, consistent contributions.
Portable IPPs can be set up on an individual or group basis. These trust-based solutions are ideal for internationally mobile employees and permit investment into more esoteric assets alongside conventional investment funds. Companies can also take advantage of the flexibility of IPPs to top up existing retirement savings, particularly for senior employees or for expatriates working in locations where retirement plans are mandatory, and benefits may be lower than any home-country plan.