As the years have rolled on, the investment options for your UK pension have significantly increased. As a UK expat, however, the main issue is government taxes whether from the UK or the US. Choosing the right scheme for your case benefits you in the most obvious way: more money and more options. The question is which scheme is best for you?
If your pension is distributed among many employers’ defined contribution schemes, then investing in SIPP is a good option. SIPP or Self-Invested Personal Pensions is a contract made between an individual and a pension provider. It offers many freedoms like:
- Quoted stocks and shares for the UK and abroad
- Unlisted shares
- Investments as a collective
- Investment trusts
- Property—but most residential lands are not considered
Benefits of SIPP
A SIPP scheme is a money purchase scheme. Its value is determined by several factors:
- Total contributions made
- Period of each investment and growth in this period
- Level of charges
Current laws state that drawing retirement benefits is possible by age 55. Drawing benefits also do not mean stopping work. Benefits may still be drawn while in active employment.
A margin of up to 25% may be withdrawn tax-free as a lump sum.
How much you get to draw is dependent on your selected payment options.
Annuity and income drawdown are a couple of ways the income may be enjoyed.
Any old schemes still active may be transferred to SIPP. Review your case to see the possibility of doing so.
You can use SIPP to purchase some investments like mortgage funds for a property. Renting these out and the proceeds received by SIPP can be used to mortgage repayments and property management. However, not all SIPP schemes allow investment in the entire range of possibilities. Some SIPPs hold specialist investments and may be subjected to charges of mainstream investments.