Financial planning update – November 2018

Stock market jitters continue

The stock market jitters that began in October have continued throughout this month.

US markets are now down 8-9% over the last two months, while European markets have lost 6-7% over the same time period and in the UK, the FTSE has dropped by a similar amount. Continue reading “Financial planning update – November 2018”

How does cohabitation affect your pension?

At the recent Conservative party conference, Theresa May announced that legislation would be altered to allow mixed sex couples in England and Wales to form a civil partnership.

While the choice to be married, in a civil partnership or living together as cohabitees is a personal one, it should be noted that, at least from a pension perspective, cohabitation carries certain disadvantages. Continue reading “How does cohabitation affect your pension?”

Should you access your pension tax free cash?

Today’s question is ‘should you access the tax free part of your pension fund?’

A few caveats to begin with.

Firstly, tax free cash (TFC) can also be known as a pension commencement lump sum (PCLS). I generally prefer the second term as the payment may not actually be tax free. Continue reading “Should you access your pension tax free cash?”

How the Overseas Transfer Charge affects a QROPS transfer

If you are considering transferring your UK pension funds to a QROPS, you must remember that you may be subject to the Overseas Transfer Charge (OTC) not only at the time of transfer but also, potentially, in the future.

What is the OTC?

The Overseas Transfer Charge came into effect from 9th March 2017 and applies to most QROPS transfers (there are special circumstances where such transfers are exempt, see below).

It is charged at 25% of the transferred value.

The charge is automatically deducted by the QROPS manager from your fund and transferred to HMRC.

The tax is applicable to transfers into a QROPS, whether the source is a registered UK pension scheme, another QROPS or a scheme that once qualified as a QROPS.

It is not applicable to transfers that were requested before 9 March 2017, nor is it applicable to funds derived from UK pension transfers to QROPS before 9 March 2017.

It is also not applicable to transfers to another UK registered pension scheme, e.g. a SIPP (Self Invested Personal Pension).

When is the OTC not payable?

There are a few scenarios where the OTC is not payable. However, for the purpose of this post, the most relevant is when the funds are being transferred to a QROPS that is established in a country within the European Economic Area (EEA) and the member is also a resident in a country within the EEA.

For example if the QROPS is established  in Malta and the individual is resident here in Poland, then the OTC would not apply at the time of transfer.

What happens if my circumstances change?

However, if your circumstances change within the first five full tax years (6th April to 5th April) after a QROPS transfer has taken place, then a transfer that was not subject to an OTC at the time of transfer could become fully chargeable.

For example, if within five years you move from Poland to another country that is not in the EEA, then the OTC will then be payable.

Future QROPS Changes

Legislation around QROPS transfers is constantly changing; the Overseas Transfer Charge outlined above was introduced with 24 hours notice.

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Are you making the most of your employer pension?

If you are one of the more fortunate expats that retain membership of an employer pension scheme, it is possible that you are not taking full advantage of the benefits that are on offer.

You see, the way a typical pension works is that staff pay a fixed percentage of their wage into the scheme and then the employer pays in as well.

What is less well known however Continue reading “Are you making the most of your employer pension?”