What is an ‘International’ Self Invested Personal Pension (SIPP)?

SIPP taking notes about pensions

The International SIPP is a UK pension designed for expats

An international SIPP is a fully functional UK Self-Invested Personal Pension (SIPP) plan designed specifically for non-UK residents. It works in the same way as a UK SIPP, but with added benefits for expats.

Why was the ‘International’ SIPP introduced?

With the sinking popularity of the QROPS, the International SIPP has emerged as a hugely popular alternative. Designed and introduced for the cross-border market, the International SIPP is a valuable UK pension wealth planning tool for non-residents.

Just because it has ‘International’ in the name doesn’t mean it is. The International SIPP is a fully functioning UK pension with additional features for non-UK nationals and expats. UK pensions have certain rules and qualifying criteria, and if you hold UK pension wealth, you will only be able to switch your funds to UK or qualifying international pensions such as QROPS.

There are only a handful of pension trustees offering an international version of the UK SIPP. It is important to choose the right one to best suit you. Each pension provider designs their pension ‘product’ to suit a particular market. We have recently seen the introduction of SIPPs specifically designed for US connected individuals. The US version of the international SIPP is designed to assist in the onerous financial and tax reporting a US resident undertakes.

The international financial market can be complex. Additional reporting requirements, rules and restrictions operate in most overseas jurisdictions. UK pensions can be ‘treated’ differently for residents across the world. While it is important to understand the rules yourself, it is very valuable to have a pension provider who is knowledgable and comfortable in international financial planning. International SIPPs not only offer additional functions to benefit expats, they are also provided and managed by a team of experts who specialise in cross-border planning.

The benefits of the International SIPP for non-UK residents

The key benefits of consolidating your UK pension wealth into an International SIPP include:

A protected UK pension

Regulated by the UK’s Financial Conduct Authority. The UK’s regulation over an ‘International’ SIPP offers pension savers an added level of peace of mind.

Fully functioning to all modern UK rules, and adaptable to any future changes and developments

Self-Invested Personal Pensions were designed to be adaptable. You shouldn’t have to switch plans again in the future to benefit from any newly introduced pension benefits.

Offering flexi-access income drawdown

The SIPP allows flexi-access drawdown. This means the member can access unlimited withdrawals and have total income drawdown control from minimum pension age. Flexi-access drawdown provides the pension member with total control over their income and allows ad-hoc income withdrawals to suit your financial lifestyle.

Allows Uncrystallised Funds Pension Lump Sum (UFPLS) withdrawals.

UFPLS lets you utilise the tax free allowance and take this ad-hoc to reduce income tax exposure over time. This allows for phased drawdown, spreading your 25% tax free allowance over time. This best suits those with high income tax exposure and lesser need for large withdrawals.

Improved death benefits

The SIPP funds are free of UK death taxes for death of a member pre-75 years. The beneficiary must declare distributions to income tax for any death benefits post age 75 years.

Investment options

SIPPs offer a huge range of investment options, including collective funds, ETFs, and direct share holdings. Within a SIPP, funds must be regulated and approved to be available for investment. This can offer additional peace of mind to investors. If you seek advanced investment opportunities, you may qualify as a sophisticated investor.

Low costs

SIPPs are favourably priced for large pension funds as they operate with fixed annual costs. For modest amounts, some International SIPP providers offer ‘lite’ options, meaning a preferential cost structure for smaller pots.  

Currency options

Unlike traditional UK SIPPs, International SIPPs offer a range of currency options to reduce risk and costs to expatriates, including:

  • Ability to invest funds into international funds, under alternative currencies to GBP
  • Ability to hold cash accounts in various major currencies, for cash holdings and to prepare for withdrawals
  • Option to generate income and make ad-hoc withdrawals in an alternative currency to GBP

Designed for non-UK residents

As the International SIPP is designed for non-UK residents, it is managed by a team comfortable with cross-border planning. That means a smooth administration process, from checking your ID and confirming your identity to assisting you in correct local reporting.

Works for UK residents if you return

You would not need to change your international SIPP upon return to the UK. It would simply function the same and be able to pay your income under PAYE to remove your UK income tax reporting.

Cross-border income, international bank accounts

The International SIPP providers can pay out income and ad-hoc withdrawals to non-UK bank accounts. This can help reduce your personal administration burden and the need for multi-currency accounts.

Specialist International SIPPs

Some international SIPPs are specifically designed for regional markets. For example, a USA SIPP can offer assistance for tax reporting.

How to find out more about your eligibility for a UK SIPP with International Benefits

Contact us to discuss your requirements.

We can help talk through your options and steer you in the right direction for a secure retirement.  For further guidance around pension transfers and the UK pension planning options available to you, claim your free pension guides.

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