What is a SIPP?
SIPP stands for “Self Invested Personal Pension”, and is one of the main tax-advantaged ways those who have worked in the UK can take control of how their own retirement savings are invested. After leaving a job in the UK, employees can transfer their company pension to a SIPP and then direct (or have a professional direct) investment of the SIPP into shares, funds, or other investments. Advantages of transferring and consolidating company pensions into one SIPP include simplicity of one account, transparency on all fees, and control over investments and withdrawals.
How can I transfer a UK pension to a SIPP?
We are pleased to work with two SIPP trustees who are happy to handle pension transfers for UK expats, including here in Hong Kong where we are based:
- Sovereign Trust – Sovereign has an office in Hong Kong (Suites 1601-1603. Kinwick Centre, 32 Hollywood Road, in Central), which can be an advantage in account opening and the pension transfer office, and
- The Pension Solutions Group – TPSG aim to be more online-friendly.
What are competitive fees for a SIPP?
Fees are an important thing to watch for in any pension plan, including a SIPP, and it is still easier to see all the fees being charged in a SIPP than to see all the fees charged in a company pension. The fees to watch out for include:
- A one-time pension transfer fee to transfer your pension from the company plan to a SIPP. This should be around £300-500 for full-service transfers for UK expats (which should include transfers from multiple company plans into your one new SIPP), though I have seen as low as £100+VAT for self-service transfers in the UK for UK residents, plus
- Annual SIPP plan trustee fees of £400-600/year, plus
- All the investment fees
What can I invest a SIPP in?
We pride ourselves on full fee transparency, and while it is difficult to reduce #1 and #2 when complying with HMRC’s tax rules for a SIPP, we have the most transparent fee structure in Hong Kong with only one layer of fees on directly managed accounts, invested directly in the world’s best stocks, bonds, and ETFs. Depending on the trustee, you may also be able to invest your SIPP into physical real estate, private businesses, or other more exclusive assets.
How does a SIPP compare with other retirement systems?
SIPP plans might be compared to the American IRA, the Canadian RRSP, or the Australian Self-Managed Super Fund (SMSF).
While I have heard several advisors advertising the benefits of transferring a UK pension out of the UK into a qualifying recognised overseas pension scheme (QROPS), it is important to compare the costs vs benefits of transferring a UK pension to a SIPP vs QROPS, and read up on what the HMRC writes on their website.