On your side: A consolidated scheme will have much better investment options and the potential for a higher return – provided it is properly managed. Keren Bobker explains.
Should expat living in UAE change his UK pension plan to a Sipp or a QROPS?
I have been contacted about making changes to some pension schemes that I have back home in the UK. While I am not comfortable dealing with anyone who cold calls me, I would be interested to know if there are any real benefits to me in doing this, so would be grateful for your unbiased opinion. CE, Abu Dhabi
It seems that CE has a number of UK pension plans, both personal arrangements and one from a previous employer. The pensions are of sufficient size for it to be worthwhile for them to be consolidated and so reduce paperwork. Whether a Sipp (self invested personal pension) or a QROPS (qualified recognised overseas pension scheme) is most suitable depends on his circumstances, but a Sipp is often best, unless you have been out of the UK for a long time or do not intend to return due to the legal and tax structure and charges that are likely to be higher than you are paying currently for a Sipp. A QROPS can be appropriate but many have been mis-sold as some kind of wonder pension that allows someone to get around HMRC (Her Majesty's Revenue & Customs - the UK tax authority) rules, whereas the penalties for breaking the rules are substantial. Unlike a QROPS which is an overseas pension arrangement, a Sipp remains a UK pension plan, albeit one with far more choices regarding structure, investment and the drawing of benefits than a standard personal pension. For the personal arrangements it is a question of charges and preferences, but a properly arranged and managed consolidated scheme will have much better investment options and so the potential for a higher return - provided it is properly managed. Sadly, this is where I see a lot of problems. When it comes to company pension schemes, the underlying guarantees and scheme funding situation must be properly reviewed, as it is not always in the individual's interest to make changes. As ever, unbiased, qualified advice should be sought.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at firstname.lastname@example.org