Pensions Advice

Are Pensions Taxable? Understanding UK Tax Pension

Are Pensions Taxable? Understanding UK Tax Pension

When it comes to pension pots, we are often questioned on whether they are taxable or not. The first important thing to note is that we are not tax advisors. Any advice we provide you at Cameron James cannot be considered tax advice; but we have spent most of our time dealing with pensions, so we are in an excellent position to give you a layman’s perspective.

Watch a video explanation by our CEO and Independent Financial Advisor, Dominic James Murray, about the taxation of your UK Pension. Don’t forget to subscribe for more tips, news and updates from the UK Pension Transfer industry that you should not miss.

UK Government on Pension Tax

Pensions are often not taxable. This means that the government, which permitted the pension system to exist, provides for incentives, which means your pension funds are not taxed. Why do governments do that? Let us illustrate with an example, the UK government does not want everyone to reach the age of 70 with no money. This would be a dreadful scenario for the UK government since they would be forced to provide more funding to these older residents.

As you are aware, in the United Kingdom you accumulate a state pension, also known as a government pension, based on the number of years and national insurance contributions you have made. UK State Pensions and UK Private Pensions are free from Capital Gains Tax (CGT). I.e. there is no capital gains tax on any of the increases in your pension value(s) throughout your lifetime. However, when you withdraw money from your pension fund, you are subject to taxation in the form of income tax, if your annual pension income (including all forms of other income) exceeds your annual allowance of £12,570 (2022/23).

Reason to Get Tax on UK Pension

Why should pension members be charged on their pension? The UK government is supporting you with a tax incentive on your contributions on the way into your pension account. But when you go to withdraw that money later in life, it’s not unreasonable for the UK Government to want to tax you on that money because they did help you out earlier on, so what this means is that pensions are not normally taxable until you start drawing that income down, at which point it is taxed at your marginal tax rate.

This is a critical point for pension assets; you should always aim to expand your UK pension assets as much as possible because there is no capital gains tax until you pull it down, at which point you will be subject to income tax.

UK Double Tax Treaties

However, if you reside outside the UK, just because you have a UK pension does not imply that you will be taxed on it in the UK. It will be determined by where you are a tax resident at the time. For example, if you live in France, you must declare on your French tax return; if you live in Spain, you must declare on your Spanish tax return; and if you retire in America, you must declare on your American tax returns. That is, you will not be taxed twice in the UK and elsewhere.

How to Declare Tax in Country Residence?

Many of our clients who have reached retirement age ask us, “How do I do this?” and “How do I declare my taxes in my country of residency?” Once again, we are unable to help. We cannot report taxes on our clients’ behalf, but the pension providers we deal with can offer a very neat breakdown of what your income has been from that pension fund during retirement, which you can subsequently declare on your tax return.

Pension Commencement Lump Sum

There is a very interesting scenario that comes with the PCLS or pension’s pension commencement lump sum. To provide some context, the PCLS is your pension commencement lump sum from your UK pension. The UK government has put in place laws that stipulate you may receive the first 25% of your UK pension tax-free at the age of retirement, which is presently 55 and will be 57 in 2028.

US & UK Tax Treaty – Is the 25% PCLS tax-free in the USA?

But can this 25% of PCLS be included in the United States, you ask? We’ll talk about the UK-US tax treaty and whether your 25% PCLS is tax-free in the United States. As you can see from our US website, we have many clients across America. Therefore, time and time again we are in conversations with clients about whether or not their 25% of PCLS is tax-exempt in the US.

If you have moved your pension or accessed your pension from the United States, many of our clients believe that the 25% of PCLS will be tax-free in the United States. It is essential to highlight, once again, that we are not tax advisors. We at Cameron James will never send you a tax letter and will always urge you to seek independent tax advice in addition to our financial advice.

However, if you read the UK-US tax treaty, you’ll see that it’s not quite as black and white as that. Anyone who believes they can just take the 25% tax-free from their UK pension and pay no tax on it in the US without having to complete any paperwork is in for a surprise, and it might be something that you get called out on later in life.

We need to think about this objectively. If you’re an English person, and you have a UK pension, and you live in the US, you’re the same as everyone else there; they don’t have a 25% tax-free allowance from their US pensions. So why would the United States allow you to come to their nation and benefit from a better pension and tax system than their citizens? This makes no sense, and this is where the debate begins.

There are many financial advisory companies out there; if you go to the internet and type in 25 is tax-free in the United States, you’ll find 10 to 15 financial advisors who tell you that there’s no problem; it’s tax-free, but they’re not a tax advisor, they’re not qualified to give you tax advice, and you should always seek independent tax advice.

Why Do You Need Tax Advisor Service?

Some of our clients who are experts in this field are convinced the PLCS in the United States is quite complex, and they have the confidence to seek qualified advice from an independent tax advisor. On the other hand, we get some people who come in who don’t have a solid financial background and say they saw online that it’s 25% tax-free and they’re pleased with that. This is critical, we recommend you seek comprehensive advice from a tax advisor.

At the end of the day, it’s not our concern, and what they take from their pension and where they pay the tax is not our concern, but we like to be open and honest with our clients about the fact that we don’t believe it will be as simple as having that 25 percent of your pension fully tax-free. At the very least, you will need to fill out some documents with your tax advisor and confirm that you have taken advantage of the tax treaty between the UK and the US.

Our advice is to always expect that 25% of your PCLS will not be tax-free in the US and to address this with your independent tax advisor in your state of residence.

Pensions Advice

Quarterly Market Analysis – Q1 2022

Quarterly Market Analysis – Q1 2022

The quarterly review of global capital market performance and events for the first quarter of 2022. This review contains the current global event overview, a review of stock and bond asset classes in the US, UK, and international markets, a look at UK pension transfer industry, and company updates from Cameron James. All of them are presented by our CEO and Independent Financial Advisor, Dominic James Murray.

Who Saw Putin Coming?

While possibly predictable with continued growth of NATO on Putin’s doorstep (despite many Western promises not to) the Russian invasion of Ukraine has resulted in the greatest humanitarian crisis since the Second World war. With many lives lost and the displacing of millions from their homes. The impact of this war has been felt globally, posing a significant challenge to the post-Covid19 pandemic recovery.

Russia’s invasion of Ukraine has drawn widespread condemnation and elicited a range of unprecedented sanctions from the US and its allies. The US was the first major country to put a ban on Russian Oil, Gas and Coal as President Biden said, “targeting the main artery of Russia’s economy.”

The Fall Of Londongrad?

Even the UK, famous for allowing Russian wealth to flow into the streets of Mayfair & Belgravia, has tightened  its  policy.  The  loopholes  in  UK  law  which  have  long  enabled  London  firms  to  launder oligarchs’ wealth are quickly disappearing. Will this be the end of Londongrad or the ‘Moscow-on-the-Thames’ as we know it? I suspect not.

But for now, it is currently very unfashionable to be doing business or being seen to be doing business with Russia. Unless you are China or India, of course, who seem content to lock-in low oil prices no matter the bad publicity. Whether the big profit-driven corporations pulling out of Russian is for moral or PR reasons on Twitter is yet to be seen.

Russia and China, have always been a huge risk and these really events in Russia (on top of Mr Alibaba, Jack Ma, going missing in China following his remarks), have highlighted more than ever the risk  that  ‘emerging’  market  dictators  can  pose  on  a  client’s  portfolio.  The  US  might  have  ‘high’ valuations, but it’s economy is controlled by more than one person. 


Russian Bloodbath

Sources close to Moscow, say that Vladimir Putin is somewhat isolated and does not use any forms of social media himself. Even his family, and children, are shrouded in secrecy.

However,  he  will  know  what  his  economy looks like following this invasion, and it paints a sorry picture for a country that has made so much economic progress over the past decade.

As  Baron  Rothschild  once  famously  said, “Buy when there’s blood in the streets…”. However, even as an Adventurous investor with a long-term outlook and a firm understanding of risk, I could not bring myself to buy the dip in the bloodbath that entailed in Russia.

Below is a screenshot I took from my phone around late February. Across my career, I have not seen such daily drops in one specific country, irrelevant of their sector or company performance.


The Oligarchs & Navalny

Putin is playing a high-stakes game, and for how long the countries Oligarchs will put up with his recent polices is yet to be seen. With every super yacht which is sanctioned or detained, the internal pressure of the Kremlin grows. Has Putin bitten off more than he can chew this time, or will he eventually prevail through the bullying and coercive tactics that saw him rise to power in the first place?

While the Kremlin controlled media has been sprouting accusations that Bucha is fake news and distracting  Russians  from  what  is  really  happening,  Russian  Authorities  (aka  Putin)  sentenced prominent opposition figure Alexei Navalny to nine years in a “strict regime penal colony” in a fraud case which Navalny obviously rejects as entirely fabricated.

I was in Moscow and Sochi in November 2021 and saw a modern and technologically driven Russia. This latest chapter has set its economy back 10-years and there is still more fallout to come. 


The EU Response

On the 3rd of April Lithuania, Latvia and Estonia (those closest) announced a ban on Russia Gas imports, the first European countries to announce such a move, putting pressure on the rest of Europe to follow by example. The EU has upcoming discussions to draw up plans on how to minimize Russian energy imports, with EU President Macron calling for bans. We expect some pushback from Germany, which are heavily dependent on Russian energy (Politico).

Sanctions also targeted the Russian financial system. Assets of the Russian central bank were frozen, while coordinated steps were taken with numerous allies to seek to deny Russia access to the global financial  system.  Some  of  Russia’s  wealthiest  people  have  also  been  hit  with  asset  freezes  and seizures, while a slew of major international corporations has withdrawn from the country. Numerous other sanctions have been instated (Schroders).


Global Economic Outlook

Fitch Ratings have cut its world GDP growth estimations for 2022 by 0.7% to 3.5%. They indicate the main reasoning for its reduction is higher energy prices and the tightening of US monetary policy (Fitchratings). The OECD believes GDP growth could  be  1%  lower  and  inflation  2%  higher  as  a consequence of the Ukraine conflict (OECD).

As I mentioned last quarter, inflation is rife and far above the target inflation of 2% due to supply chain distributions caused by Covid-19, but now we expect even great disruptions as a result of the Russia – Ukraine conflict. Put simply, Russia supplies around 19% of the world’s natural gas and 11% of oil. Europe is particularly dependent on Russian gas and oil, it gets approximately 40% of its supply from Russia. As you can see by the graphs below, the price of oil has nearly doubled over the last year, whilst the price of gas has increased 10-fold.


We can expect extreme price pressures to follow through 2022 before decelerating and falling below-target inflation in 2024 (Bovina, S&P Global).

Other Commodities have also surged, Ukraine and Russia are both important producers of wheat, fertilizers, and metals. Rising metal prices could have a wider supply chain effect on industrial manufacturers such as aircraft, car, and chip manufacturing.


So, Why Is Everything Getting More Expensive?

We can see from IMF analysis that a significant driver of inflation has been rising shipping costs (IMF Blogs). The cost of shipping one container has increased a whooping 7x in the 18 months following March 2020 (IMF Blogs). This has resulted from the supply distributions resulting from Covid-19 with ship workers sick and unable to work, an inability to cross borders due to restrictions, and  exacerbated demand from back-ended orders. They anticipate the inflationary impact of shipping costs will continue to pass through to domestic countries and that this impact predates the Ukraine conflict, which will only exacerbate global inflation.

Other drivers of global inflation are the increasing price of food and fossil fuels. Crude Oil is an input good  that  has  multiple  uses  including  transportation,  heating  and  electricity  generation,  varied petroleum products, and plastics. As well as impacting consumers indirectly, the cost of oil accounts for roughly half of the retail fuel prices in the US (Federal Reserve Bank of Dallas). 


Some argue that renewable energy is the solution to our inflationary problems. As commentators point out, oil and gas prices are subject to geopolitics and natural diminishment, subjecting the commodity to volatility. So, why not use solar, wind, and nuclear energy to avoid such issues in the future, this is a debate going on now in many governments across the globe, particularly in Europe who have a dependency on Russian oil and gas. For example, Germany which buys approximately half of its natural gas from Russia now plans to move up its 100% renewable target of 2040 to 2035 (Fast Company).

However, this does not offer a short-term solution to the problem. The short-term strategy could be to turn to alternative suppliers, such as Saudi Arabia, Azerbaijan and the US. The US has agreed to boost its shipments of liquified natural gas to Europe by 70%, aiming to supply 50 billion cubic metres per year until at least 2030. But that would still only be a third of what Europe imports from Russia, meaning other sources will be needed too.

In response to higher inflation, Central banks around the globe are now hiking interest rates to mitigate the situation, and we expect to see a continuation of hikes into the near future. Brace yourself for increased costs throughout 2022. The price of a G&T in London, at this year’s Christmas Party, will almost certainly be a record breaker!


US Inflation

The U.S. Inflation rate accelerated to a 40-year high of 7.9% in February, matching market expectations. Energy was the greatest contributor (25.6% vs 27% in January), with petrol prices surging 38% (40% in January). Food prices had it is the largest increase since July 1981, by 7.9%. Excluding energy and food categories, the CPI rose 6.4%. Inflation was expected to peak in March but amidst the Ukraine-Russia conflict, it is likely that inflation levels will remain elevated for a longer (Trading Economics).

UK Inflation

The Consumer Price Index rose by 5.5% in the 12 months up to February, an increase from 4.9% of the last twelve months in January. The greatest contributions to February’s inflation rate came from housing and household services (1.39%, predominately from electric, gas and other fuels and owner-occupier’s housing costs) and transport 1.26% (ONS).

According to the Office for Budget Responsibility (OBR), UK consumer price inflation is set to peak at close to 9% this year. The OBR published its new forecast for the Consumer Prices Index (CPI) alongside the Spring Statement at the end of the quarter. It now expects CPI to hit 8.7% in Q4 2022. Chancellor Rishi Sunak announced additional measures alongside the Spring Statement designed to support the UK consumer (Schroders).


Interest Rate Hikes - US Fed

As expected at the end of 2021, the Federal Reserve official voted for its first interest hike in three years of a quarter-point from 0.25% to 0.50% during its March 2022 meeting. Along with the hike, the Federal Open Market Committee pencilled in another increase at each six of its remaining meeting this year with a consensus pointing to 1.9% by the end of the year (CNBC), the committee sees three more hikes in 2023 and then none in the following year.

There are now some discussions between different policymakers of a 0.50% hike in the next committee meeting rather than 0.25% because of sudden inflationary pressures, but some warn this could be putting the brakes on the economy and suggest easing into rate increases. 


Interest Rate Hikes - UK BoE

Over the last quarter, rates have risen twice in effort to reduce inflationary pressures, moving to 0.50% on 03 Feb 22 and to 0.75% on the 17th March 2022. The BoE notes the change in interest rate will take time to take effect and that they expect inflation to reach around 8% this spring. However, would expect to reach the 2% over the next couple of years. The committee said that they may look to increase rates in the future months, depending on what the rate of inflation looks like and how the economy plays out (Bank of England). Commentators suggest UK interest rates could reach up to 1% by the end of the year.

For anyone familiar with CETVs, this means bad news for CETV values. Which will almost certainly be pushed further down over the coming years in the government attempt to reach 2% inflation targets.

For those of you have already completed your Defined Benefit Pension transfer, there is no concern. For those of you still considering, get your skates on and try to attain your CETV before the 5th May 2021, when we will likely see BoE interest rates rise again.


US & UK GDP Growth

The US economy continues its recovery and has performed well over the last few months. The unemployment rate is back to full employment, and labour participation rates have increased, with those who left the workforce during the pandemic starting to return to work (Deloitte).

UK economic recovery is underway and is nearly at pre-Covid levels, GDP is now 0.1% below where it was pre-COVID-19 in Q4 2019. UK GDP is estimated to have increased by 1.3% in Q4 2021, which is an improvement upon estimates of 1% in 2021 Q1. Overall GDP is estimated to have grown by 7.4% in 2021 (previously estimated to be 7.5%) (ONS). 


The Markets

US S&P 500

We saw about a 10% downwards correction in mid of February, most of the correction was following the Fed’s tighter monetary policy (Barrons). The FED has risen rates and is expected to do so several times later in the year to tackle inflation, this causes concerns for investors for future economic growth and businesses performance. The S&P 500 bounced back at the end of March and now is trading at a similar level to before this correction. This type of volatility is unusual, since 1945 on average it takes fourth months for a pullback of 10% to 20% in the S&P 500 (CNBC).

The volatility in the market is a result of uncertainty over what the impacts of the Ukraine-Russia conflict could bring with what sanctions could look like, pricing in what the price of oil will be, the effect on consumer spending and the resulting impact of higher interest rates.

The initial impact of rising rates have had the greatest negative impact on Growth stocks, while the impact on value stocks has been much smaller (NASDAQ). In Q1, the large-cap Russel 1000 value index outperformed the Russell 1000 growth index by more than 8%, while on the smaller-cap Russell 2000 Value outperformed its counterpoint by over 10%. For the large-cap indices, it is the greatest outperformance since the 2000-2002 era. It begs whether this is a turning point in Growth vs Value investing.


Energy, Metals, and Agriculture

Energy, Metals, and Agriculture Commodities Continue to Surge at a Historic Rate. S&P500 Energy sector saw a 39% increase in performance in Q1, which represents the best quarter since the inception of the index in 1989 after a period of high oil and gas prices. Utilities, saw a 5% Q1 change, as markets expect electric, gas companies to perform better with rising prices. We can see the defensive stocks were not as heavily effected, with staples 1% decline, and Financials did well considering rate changes with only 1% decline. In March’s performance, we saw the bounce back of all the sectors, but the market still remains below end of Q4 prices (NASDAQ).


Eurozone shares fell sharply in the quarter. The region has close economic ties with Ukraine and Russia, particularly when it comes to reliance on Russian oil and gas.

The invasion led to a spike in energy prices and caused some fears about security of supply. Germany suspended the approval of the Nord Stream 2 gas pipeline from Russia. The European Commission announced a plan – RePowerEU – designed to diversify sources of gas and speed up the roll-out of renewable energy. However, in the meantime there are fears that the high-energy prices will weigh on both business and consumer demand, hitting economic activity.

Over the quarter, energy was the only sector to register a positive return. The steepest declines came from the consumer discretionary and information technology sectors. Worries over consumer spending led to declines for stocks such as retailers, while the war in Ukraine also exacerbated supply chain disruption, hitting the availability of parts for a wide range of products.

In response to rising inflation, the European Central Bank (ECB) outlined plans to end bond purchases by the end of September. ECB President Christine Lagarde indicated that a first interest rate rise could potentially come this year, saying rates would rise “some time” after asset purchases had concluded. Data showed annual eurozone inflation at 7.5% in March, up from 5.9% in February.

The ongoing war in Ukraine and rising inflation led to a small pullback in forward-looking measures of economic activity. The flash eurozone composite purchasing managers’ index (PMI) slipped to 54.5 in March from 55.5 in February, though a level over 50 still represents expansion. 



UK equities were resilient as investors began to price in the additional inflationary shock of Russia’s invasion of Ukraine. Large-cap equities tracked by the FTSE 100 index rose over the quarter, driven by the oil, mining, healthcare and banking sectors. Strength in the banks reflected rising interest rate expectations. The Bank of England moved to hike rates ahead of other developed market central banks.

As the quarter progressed, some of the more traditionally defensive sectors advanced up the leaderboard. Intermittent fears of a global recession, however, drove periodic sell-off in some of these “safer” stocks too. Market volatility rose given the additional uncertainty related to the Russia/Ukraine conflict.

Consumer-focused areas underperformed, as did traditionally economically sensitive ones. Those parts of the market offering high future growth potential also lagged. These factors combined drove a poor performance from UK small and mid-cap equities.


Asia (ex Japan)

Asia ex. Japan equities experienced sharp declines in the first quarter of 2022 amid a volatile and challenging market environment as Russia launched an invasion of neighbouring Ukraine.

Share prices in China were sharply lower in the quarter, while shares in Hong Kong and Taiwan also fell. The number of Covid-19 cases in Hong Kong and China spiked to their highest level in more than two years during the quarter, despite the Chinese government pursuing one of the world’s strictest virus elimination policies. The city of Shanghai, China’s financial capital with a population of 25 million people, went into a partial lockdown at the end of the quarter in a bid to curb a surge in Omicron Covid-19 cases, prompting fears that other parts of the country could also go into lockdown. 

Share prices in South Korea were also sharply lower in the first three months of 2022 as the Covid-19 pandemic continues to affect economic activity in many parts of the Asia-Pacific region. However, despite the index falling sharply, there were pockets of growth such as Indonesia, which achieved solid gains in share prices during the quarter. Thailand, Malaysia and the Philippines also moved higher, although gains were more muted.


Emerging Markets

Emerging market (EM) equities were firmly down in Q1 as geopolitical tensions took centre stage following Russia’s launch of a full-scale invasion of Ukraine. The US and its Western allies responded with a raft of sanctions. Commodity prices moved higher in response to the war, raising concerns over the impact on inflation, policy tightening and the outlook for growth. 

Egypt, a major wheat importer, was the weakest market in the MSCI EM index, due in part to a 14% currency devaluation relative to the US dollar. China lagged by a wide margin as daily new cases of Covid-19 spiked, and lockdowns were imposed in several cities, including Shanghai. Regulatory concerns relating to US-listed Chinese stocks also contributed to market volatility. Poland, Hungary and South Korea also underperformed. 

Conversely, the Latin American markets all generated strong gains, led higher by Brazil. Other EM net commodity exporters posted sizeable gains, including Kuwait, Qatar, the UAE, Saudi Arabia and South Africa. Russia was removed from the MSCI Emerging Markets Index on 9 March, at an effectively zero price.


Global Bonds

Bond markets were volatile over the quarter. Following news of Ukraine, there was a short-lived rise in bond  prices  as  investors  looked  to  safe-haven  assets,  but  overall,  there  is  more  concern  over inflationary pressure that is high and rising.

Government bond yields rose sharply (bond prices and yields move in opposite directions) so as prices dropped yields went up. Central Banks sentiment has been hawkish, bond markets responded correspondingly, pricing in present and future hikes. The extent of yield moves differed across markets. The US Treasury market is in the midst of one of its worst sell-off on record, but moves were less pronounced in core Europe and the UK.


The Fed’s rhetoric turned more hawkish and “lift-off” came as expected in March, with the Fed implementing a 25 basis point rate hike. Investors expect several more, at a swift pace, in 2022. The US 10-year Treasury yield increased from 1.51% to 2.35%, with the 2-year yield rising from 0.73% to 2.33%.

The UK 10-year yield rose from 0.97% to 1.61%, the 2-year from 0.68% to 1.36%. The Bank of England (BoE) raised rates a second time in February, in spite of concerns about the UK outlook and particularly cost of living pressures on households.


The European Central Bank (ECB) unexpectedly pivoted to a more hawkish stance in February. Comments from President Lagarde indicated rate rises were no longer ruled out for 2022 and the ECB confirmed a faster reduction in asset purchases.

The German 10-year yield increased from -0.18% to 0.55% and the 2-year yield from -0.64% to -0.07%. Concerns over potential tightening and monetary normalisation impacted Italian yields particularly, with the 10-year rising from 1.18% to 2.04%.

Corporate bonds saw significantly negative returns and wider spreads, underperforming government bonds. High-yield spreads widened more than investment grade, although they saw less negative total returns due to income. Investment grade bonds are the highest quality bonds as determined by a credit rating agency; high-yield bonds are more speculative, with a credit rating below investment grade.

Emerging market (EM) bond returns were negative. Local currency bonds were slightly more resilient than hard currency. Among EM currencies, Latin America performed well, the Brazilian real notably, but Asia and central and Eastern Europe fell.

Convertible bonds, as measured by the Refinitiv Global Focus Index, suffered disproportionally and shed 6.4% in US dollar terms compared to -5.2% for the MSCI World. Selective IT names within the universe  of  convertible  bond  issuers  saw  a  strong  rebound.  The  new  issuance  market  remained subdued as market volatility was high and companies were unwilling to issue convertible bonds at low stock prices. 


2022 Q1 - Cameron James

US Website Launch

We are happy to announce the launching of our USA website! The website is tailored for our US clients that details our UK Pension Transfer Advice as well as US products we service such as IRAs, 529 plans, Brokerage accounts and more. The website also features a blog page where we will be posting on a frequent basis discussing a wide range of topics from setting up IRAs, rolling over 401ks, transferring a SIPP as a US resident to many more.

We will be sending a separate email regarding the formal launch in the coming weeks and months. For those after a sneak peek, click the button below. 

UK Pension Landscape

Pension Schemes Act 2021 (An Update from 2021 Q4)

As we mentioned in our previous quarterly update, the new pension transfer system brought into power on the 1st December 2021, has given greater power to trustees to prevent pension transfers if they believe any red or amber flags arise during the transfer out process. The aim of the legislation is to reduce ‘pension scams’.

Should a red flag be raised the trustee should block a transfer, should an amber flag be raised, the individual is required to take guidance from Money Helper, the free service from Money and Pensions Service before a transfer can be approved.

There are two conditions to a transfer. The first condition is if the scheme is an authorised master trust, local government pension scheme or collective defined contribution scheme. All these are deemed low risk  and therefore, unless any major red flags are  spotted,  it  will  be  approved  without  extra  due diligence. The second condition considers if there is a risk of scam which ask various questions of the member e.g. whether they were cold called, offered financial incentives to transfer, who their adviser is and their relevant FCA registration, are the investments regulated etc., it also includes as an overseas scheme if the member can provide employment link or residency link. 

Who Wrote the Bill?

The reality, in my professional opinion, is that the bill was drafted and written by the lawyers of those select and old school pension schemes who would benefit from it and do not want things to change. You can think of the new legislation as saying Uber’s are terrible and everyone should only use Black cabs!

Even the wording of the hundred plus page article, is far beyond the level of pension knowledge I have ever come across in the various UK Government agencies over my 10+ years experience.

Moreover, it shows a complete and utter lack of understanding of anything beyond the UK. What type of bill would possibly tell French or EU residents that they must prove a residency link for a new transfer to a Maltese QROPS? This alone shows how little they understand pension transfers.

What Has Been the Impact, and What Do We Expect in the Future?

QROPS Transfers

We highlighted in our last quarterly update that we felt QROPS could be the most challenging area moving forward due to the need to prove a residency or employment link. The QROPS schemes we work with are predominately in Malta, which is acceptable for EEA and UK members to use, most clients that utilise QROPS are not a resident of Malta hence the concern over transfer hold-ups. 

Despite this, we  have  not  experienced  any  difficulties  in  moving  ahead  with  several  QROPS  cases  since  the beginning of the year, in conjunction with this legislation. In fact, we even had a few clients who were based in the UK who did not have a clear link in residency or employment, and who was able to move forward with his transfer without any issues.

This alone shows how even the UK pension trustees are not paying attention to all the updates, as they are illogical and don’t make sense. A client could easily sue the trustee for not allowing a QROPS transfer to save LTA, and subsequently footing a large tax bill.

Defined Benefit (DB Transfers)

Likewise, we have not experienced any major disruption in moving forward with DB transfers as a result of a change in the rules. The major reason for this is that while DB Transfers are complicated, the framework is already very stringent and well mapped out because of the FCA’s deep line of oversight on this area of advice, meaning the process on all sides from the trustees, to the report writers to the receiving schemes is already fine-tuned. 

Defined Contribution (DC Transfers)

With DC transfers, we did not feel an impact at the end of 2021 in December. However, trustees seem to started putting in place tougher systems to abide by the rules from the beginning of 2022. We have seen an increase in questionnaires to cover the FCA guidelines on amber and red flags, we have seen an increase in requests for documentation including wet signed and posted documents, and have had many  clients  where  they  were  required  to  speak  with  MaPS. 

As  trustees  adjust  their  rules  and procedure, it, unfortunately, delays transfer times for clients, when amendments or additional information is requested the admin teams on the receiving schemes can be slow in processing such information which holds up transfers.

More Staff and Departments

The company continues to grow at a rapid pace, with multiple hires across all departments in Q1. We trust you can see this on a daily basis with the level of service and fast turnaround times that we achieve on all requests. My goal is reinvesting as much money as possible in the company and further stretching the distance between ourselves and the competition in the UK Transfer Advice space.

We are also launching an IFA Summer Internship 2022 programme to attract the very best graduates talent from the UK and US University system.

Interestingly, the number of applicants reaching out directly to Cameron James and cutting out the job websites has significantly increased. With many graduates now seeking to work in a smaller niche companies, compared to working in the big investment banks in London or NYC, who are struggling to attract and retain high calibre staff.

Recent YouTube Videos

Our YouTube channel continues to grow with success, with many of our new enquiries having originally found us through the channel. The channel helps create strong relationships with clients, as they can educate themselves on complex and niche topics.

Such as the growing problem of Final Salary Pension Deficits in the UK with an ageing population and stressed pension scheme assets.

Completing their homework and due diligence, before reaching out to Cameron James for their Free Initial Appointment with myself or one of our advisors. We will be continuing to invest our time and energy in the channel, and it is one of the best places to have updates from the company.

Such as the ‘myth’ that DB Pensions Values Are Rocketing,  when  in-fact  people  need  to  take action now to attain the best CETVs.

If you have not done so already, be sure to subscribe to the channel for our latest news and updates.

Closing Remarks

It’s seems with each passing quarter that my analysis becomes longer. One thing that is for certain, is that the chapters in the history books will be packed from this recent period. We have seen an unprecedented situation is occurring globally from both an economic and political perspective.

My goal, at Cameron James, is to continue re-investing heavily in the company, ensuring we maintain our high level of initial and ongoing service, and putting further room between ourselves and the competition in the UK Pension Transfer market.

Should you ever wish to speak with me directly, please do just drop me an email or a WhatsApp message (+447870817830) and I will be happy to chat.

Take care and let’s hope for a slight less dramatic remainder of the year!

Dominic James Murray

CEO & Founder

Cameron James

Pensions Advice

How Long Does it Take to Transfer Your Final Salary Pension?

How Long Does A Final Salary Pension Transfer Take?

Your initial advisory process will affect the entire Final Salary pension transfer process. At this stage, you and your financial adviser will discuss your current pension plan and choose the best choice for your DB pension.

When new clients came in for initial advice with us at Cameron James, the first question they tend to ask is how long the Final Salary pension transfer will take and how much the pension transfer will cost. 

We can reasonably assume that in late 2021, the quickest you could get a DB transfer done was around three months or two months at a push. When we highlighted ‘the quickest’, we presumed you were participating in the entire process, from discussing with you to completing your fact-finding, writing your report, submitting it to the UK ceding scheme, the UK ceding scheme undertaking their due diligence, and sending it to your new SIPP provider.

Learn the complete Final Salary Pension Transfer process at Cameron James in the video below. Don’t hesitate to hit the subscribe button to get the latest and most updated information about the UK Pension Transfer.

Is Transferring Final Salary Pension Easy?

Final Salary pension transfer has complex processes in place. The Final Salary transfer takes 3-4 months to process, but in some instances, it can take even longer. Also, worth knowing is that the Final Salary pensions CETV tends to be harder to obtain and is only guaranteed for 3 months. After this deadline, you either need to ask for a new CETV and pay additional fees for it to be produced, or you need to wait until next year once the 1st free CETV per year is available again.

Why Is My Final Salary Pension Transfer Taking So Long?

There are a few additional things you should investigate. If you deal with a financial adviser who isn’t particularly skilled with Final Salary schemes, your procedure may take much longer. They will make mistakes on the paperwork, they will be unfamiliar with the ceding scheme, and they will be unaware of scheme specifics, such as that this specific ceding scheme requires a copy of your birth certificate, for example.

So, picking the reckless alternative in the industry can sometimes result in a loss of money since your pension funds might be trapped in a transfer procedure for up to nine months instead of being invested in the markets.

We have a database for every single transfer we’ve ever done at Cameron James. Once we get a new client, we reflect on this to see how we can best speed up the transfer process. This is significant since your CETV gets fixed all at once. If you have a million pounds on your CETV and your transfer takes six months instead of four, there are two months of growth that you’ve missed out on.

How To Find A Good Independent Financial Advisor UK?

To identify the best financial advisers on the market, we always suggest you look into their background, cost, experience, and qualifications. The following check will help clarify whether or not you can trust the company and advice you are going to receive.

Pension Transfer Charges

We believe that while doing a Final Salary pension transfer, it is critical to consider a confluence of issues, including cost. Check to see if the company you’re working with is upfront about their pricing. Are you aware of all the charges involved, such as three thousand pounds for the report plus a two percent transfer fee? Are there any additional setup costs? Is there anything else hidden?

At Cameron James, we make sure to include everything at the start while moving quickly. Of course, the cost is crucial since no one wants to spend more money than necessary, as long as you’re getting decent market pricing, which is what we give at Cameron James.

IFA Qualification

Check the experience of your Final Salary pension transfer adviser; ask them challenging questions like, “Have you transferred a mercer pension before?” When was the last time you completed a Final Salary pension transfer? Do you know anyone involved in the scheme?

If they answer, ‘No, I haven’t moved one of these pensions before, or I transferred one twelve months ago,’. It’s unlikely that they’ll be capable of completing it quickly. 

IFA Administrator

Also, ask them challenging questions such as, “What is your administrative support?” How many administrators are working on these schemes? Cameron James has a full-time administrative staff. They primarily serve for the sake of chasing. 

The team consists of four members and is known as the UK Scheme. They work every day from Monday through Friday, from 8 a.m. to 6 p.m. Normally, we contact one provider; we have five customers that we need to discuss with that one provider, and they find dealing with a firm that has a higher number of clients more efficient than dealing with one-off people.

Why Trusting Your Final Salary Pension Transfer with Cameron James

Cameron James provides UK qualified and EU MiFID II regulated advice for Expats to make more informed decisions. Cameron James Finance has existing clients in 23 countries across 6 continents. The company is growing rapidly as more expats make us their trusted adviser every month. 

Cameron James guides our clients with EU MiFID regulated advice from an RDR UK qualified adviser experienced in advising expats globally. Our Costs are transparent, so you know exactly how much you are paying for our advice in advance. No surprises. No last-minute add-ons. This allows you to make more informed decisions on you and your family’s future. Hit the button below for a free initial consultation with one of our regulated and experienced IFAs.

Pensions Advice

5 Best Options To Use Your DC Pension Pot

5 Best Options To Use Your DC Pension Pot

Whether you want to retire completely, progressively reduce your hours, or continue working for longer, you have numerous options to choose from regarding when and how you take funds from your Defined Contribution pension pot. You may even decide when to stop contributing to it — to fit in with your retirement goals.

When determining which choice or combination would give you and your dependents a consistent and tax-efficient income during your retirement, there are several factors to consider. As a result, it’s essential to understand your options, as your choices now will affect your retirement income in the future.

You can combine any of the choices described below, utilising various sections of the same pension pot as well as separate or merged pots. However, even if your pension scheme or provider does provide every choice, you should take the time to find the most suitable option.

Leaving Your DC Pot Untouched

You might be able to postpone receiving your pension until later. Your pension fund may grow tax-free until you need it. When you start taking money out, this may possibly give you more income.

If you wish to increase the amount in your pension pot, you may continue to get tax deductions on:

  • Pension savings of up to £40,000 per year, or 
  • 100% of your earnings if you earn under £40,000 until you reach the age of 75.

This is referred to as the annual allowance. You may have a reduced allowance if you are a high earner or have already taken money from a DC pension pot.

Using Your Pot To Buy an Annuity

In retirement, an annuity offers you a steady stream of guaranteed income. You can purchase an annuity with either a portion or all your pension pot. It provides income for life or for a certain number of years.

If you want to use the fund from your pension pot to purchase an annuity, there is a chance for you to withdraw up to 25% of the amount as tax-free cash. The rest can then be used to purchase the annuity, with the income taxed as earnings.

Using Your DC Pension Pot To Provide Pension Drawdown

Pension drawdown, also known as flexi-access drawdown, is a method of withdrawing funds from your pension plan to live on in retirement. It might provide you with greater control and flexibility over how and when you get your pension funds.

Normally, you can withdraw up to 25% of the total as a tax-free lump sum. The rest is still invested, with the possibility for future development. You may then select whether you want a consistent income or whether you want to get payments as and when you need them. However, because the value of your investment pot might go down as well as up, the income is not guaranteed.

Withdraw Some Lump Sums From Your Pot

You can keep your money in your pension plan and withdraw lump sums as needed. You can do this until your money runs out or until you decide to choose another alternative. This is also known as the Uncrystallised Funds Pension Lump Sum (UFPLS) option. When you accept a lump sum of money, 25% of it is tax-free, and the rest of your fund will be taxed as earnings.

The rest of the pension pot is invested. This implies that the value of the fund and future withdrawals are not guaranteed. Maintaining the fund’s investment offers the possibility of growth, although investments might go up or down. There may be fees for each lump sum withdrawal, as well as limits on how many withdrawals you can take every year.

Withdraw the Entire Amount of Your DC Pension Pot as a Lump Sum

If you want to choose, you can close your pension pot and withdraw the entire sum at once. However, you should be aware that taking the whole amount in your pension pot would not provide you with a stable retirement income.

Normally, the first 25% of income is tax-free. The remaining amount will be taxed as income. Withdrawing your whole pot has a number of disadvantages. For example, it’s very probable that you’ll be hit with a huge tax bill. Furthermore, it will not provide you or your dependents with a consistent income throughout your retirement.

You might run out of money and have nothing to live on in retirement if you don’t plan carefully. So, if you are considering this, you should consult a pension specialist.

Which One Is the Best for You?

When deciding how to withdraw money from your pension, you are not required to select just one option. Combining your options might provide you with the flexibility to meet diverse needs at various periods during your retirement. For example, you might utilise one option at the start of your retirement, such as a flexible retirement income. You can also use another alternative, such as an annuity, to obtain a guaranteed income later on.

If you have a large pot, you may be able to split it to offer some guaranteed income while leaving some invested. If you have more than one pension fund, you may want to select different options for each one. You can also continue to save for a pension and receive tax deductions until the age of 75. Several providers offer products that combine two or more options.

When you understand your options, you may wish to consult with a financial expert who can advise you on which option is right for you. However, finding a great financial expert that fits your needs is not an easy thing. You need to find one that is experienced and well-regulated. 

Cameron James has a comprehensive cash flow management system. Our senior management team has a decade of experience serving expats and is committed to serving the requirements of expats for many decades to come.

As a financial advice expert, Cameron James is regulated by the FCA, SEC, FSC, and CySEC. We are also subject to EU MiFID II regulations. The Markets in Financial Instruments Directive – (MiFID II) is a European Union legislative framework designed to effectively regulate financial markets and improve investor protections and results. Get in touch with us through the button below for a free initial consultation.

Pensions Advice

Top 5 Reasons Not To Transfer Your UK DB Pension

Top 5 Reasons Not To Transfer Your UK DB Pension

As a company that offers financial services, one of Cameron James’ jobs is to provide clients with financial advice regarding their DB Pension transfer. It can be said that this is one of the most important services offered by our company. So, reading the title above, you might think that we are providing information that contradicts our work to help clients with their DB pension transfers.

However, during the several years of providing DB pension transfer services, we have found many clients who may not be suitable for DB pension transfers. As a trusted financial service, we try to educate our clients as much as possible and provide other perspectives to understand so that they do not experience losses or difficulties due to this DB pension transfer.

Transfer decisions cannot be reversed. Thus, it is important for you to make sure that you make the right choice. Giving up the guarantee of an income for life is not a decision to be taken lightly. Before come to the top 5 reasons not to transfer your UK defined benefit pension, you can watch a thorough video explanation by our CEO and Senior Independent Financial Advisor, Dominic James Murray.

Don’t Transfer if It Is a Significant Asset for You

You should not transfer your defined benefit pension if it is makes up a large percentage of your net worth. It is a risky choice to move from a defined benefit guaranteed income index linking pension to a self pension, such as a SIPP or even a QROPS if you are still living in Europe and when the DB pot makes up most of your wealth. You’ve given up guaranteed income, when you have no other significant assets to fall back on, if the transferred assets do not perform as you would like.

If you are a member of a defined benefit pension scheme, the ups and downs of the stock market have no impact on the amount of pension you get – the scheme must still pay your pension and the employer must take the investment risk. When you transfer your pension, you are shifting investing risk onto your own shoulders, and the amount of money you have to live on will be determined by the investments you make.

Don’t Transfer if You Need Guaranteed Annuity for Life

Defined benefit pensions are required by law to provide its members with a fixed income until they die. If you switch to a defined contribution pension, you lose this guarantee.

So, if you have done any research so far on your UK pension scheme, you will understand that from your normal retirement age of 60 or 65 (sometimes 67), you will get that guaranteed annuity from your UK pension scheme until the end of your life.

A lot of clients of Cameron James think this is extremely valuable for them. They don’t want to take any risks. They want to have that guaranteed annuity , and they understand exactly how much money they are going to have during their retirement.

So, if you need that annuity , and you would not like the idea of it going up or down over the course of the years, then it is a red flag for a defined benefit pension transfer.

Don’t Transfer if You Have a Very Cautious Risk Profile

If you have an extremely cautious risk profile and want to transfer your pension, the returns on that portfolio will be pretty low, maybe 1-3% per annum.

When you look at the costs of financial advice, for example, as you can see from our cost section on our website, our ongoing annual management charge is 1%. Most financial advisors in the US come around another 0.5-1% higher than we charge.

It means that if you have a between 1-3% return, minus off our charges, there will not really be a huge amount of growth inside your pot. You may have well just kept your pension with your UK scheme in the UK, which will be index-linked. It means that it will keep up with inflation in the UK which is typically running around 2%.

So, if you have a cautious risk profile and you want to transfer your pension, the benefit of transferring away is not that great because you are not going to be able to achieve much growth, as such it may be more suitable just to keep your pension pot where it is in the UK.

Don’t Transfer if You Feel Uncertain

Final salary pension transfers are not a case of just doing it overnight. It is a process where you are going to have to invest your time and energy in research. You have to make sure the company you are working with is regulated.

If you are living in the US, you need to work with an FEC-regulated company. You need to read through their google reviews and testimonials or possibly reach out to some of their existing clients to really check if your financial advisor is genuine. This takes time and energy.

Some people are very busy; maybe you are too. So, if you feel uncertain about doing this research or you don’t trust yourself to do this research, it is a good idea for you to stick with your pension where it is.

Don’t Transfer if You Have a Poor CETV

The final point, even if you did not cover off any of the above points, but you still want to transfer your defined benefit pension, you have to make sure that you don’t have a poor CETV.

Your UK pension scheme may offer you a very bad deal. For example, they are offering you 10,000 pounds an annuity for your retirement from the age of 65. If you were to live until 83, you would have around just under 20 years of income.

If they are offering you, for example, 100,000 or 150,000 as a CETV lump sum, this is also clearly a bad deal. You may as well continue to keep your annual pension because you’re likely to get more money over the course of your lifetime.

So, if you have a poor CETV or if your UK scheme is offering you a very bad deal, it is recommended for you not to transfer away your UK defined benefit pension.

Still Uncertain? Give Us a Call!

Those are the top 5 reasons not to transfer your UK defined benefit pension. If you are ticking 2 or 3 of those 5 reasons, continue to do your research, to ensure that a DB transfer is in your best interest. One of the IFAs of Cameron James will be more than happy to have a call with you to look further at your situation and give you the best advice, to give you a thorough understanding and more detail.

You can arrange a free initial direct one-on-one session by clicking the brown button below. 

Pensions Advice

LTA: Lifetime Allowance Explained

LTA: Lifetime Allowance Explained

A pension is a tax-advantaged vehicle for your savings. If you invest through a pension, you will pay less tax than if you did not use a pension scheme. These tax breaks are intended to encourage us to save enough for our retirements rather than rely on the government in our old age. The UK government, on the other hand, restricts the tax-efficient benefits that one may have in their pension shelter. This limit is therefore referred to as the Lifetime Allowance.

Our CEO and Independent Financial Advisor, Dominic James Murray, explained a bit about LTA in one of our YouTube videos below.

UK Pension Lifetime Allowance

What is the Lifetime Pension Allowance? If your pension fund has reached or is projected to exceed the lifetime allowance by the time you wish to take money from your pension or when you’re 75, whichever comes first, you may face charges. This is due to the Pension Lifetime Allowance, which limits the total amount you may save for retirement while still receiving full tax advantages. This applies to the value of all your pensions, except for your state pension.

As we all know, the Lifetime Allowance (LTA) is the total amount of tax-favoured pension funds that a member of a personal pension scheme can accumulate throughout their lifetime before incurring a Lifetime Allowance tax charge. When a test is performed, if the entire amount of your pension benefits exceeds the Lifetime Allowance, you are required to pay tax on the surplus.

If the value of the benefits when they are accepted exceeds the lifetime allowance, the difference is subject to the lifetime allowance charge. The lifetime allowance charge can be charged in one of two ways, or a mix of both, depending on how the value of the excess benefit beyond the lifetime allowance is received; the charge is 55% if received as a lump sum, or 25% if received as income.

For example, when you withdraw a lump sum or income from your pension fund, transfer internationally, or reach age 75 with unused pension benefits, you’ll usually have to pay a tax charge on the excess. The excess can be paid in a lump sum at a tax rate of 55 percent, or it can be kept in your pension fund for income at a rate of 25 percent.

Lifetime Allowance Calculator

Regularly reviewing the value of your pensions is the best way to keep track of whether you could exceed the lifetime allowance. When you reach the age of 75, your pension value is automatically evaluated. You may anticipate how the value of your pensions will fluctuate over time and prepare appropriately to see whether it exceeds the lifetime allowance.

The way your pensions are evaluated though, is determined by the sort of plan you’re a part of. Defined Contribution pensions, which provide you with a retirement income based on your and your employer’s contributions, are assessed based on the value of your pension fund as a whole. Defined Benefit plans, which offer a retirement income depending on your salary and length of service with your company, are more complicated.

There is a common formula for calculating the overall pension value for lifetime allowances for these pensions: multiply your estimated yearly pension by 20 and add this figure to the amount of any tax-free cash lump payment from that pension.

If you reach the age of 75 with unused pension benefits or pension assets in drawdown, your pension value will be tested against the lifetime allowance automatically. If the test determines that your pension benefits exceed the lifetime allowance, you will be required to pay taxes, which we already previously showed you.

Members of the pension scheme use up a portion of their LTA when they collect benefits from HMRC registered pension schemes. If the individual takes extra benefits later, the new benefits are assessed against the member’s remaining LTA percentage. The common calculation for determining LTA usage, according to the Finance Act 219, requires the previous crystallized amount to be indexed at the same rate as the normal LTA. This is accomplished using the following formula:

Relevant Untaxed Amount x (Current Standard Lifetime Allowance/Previous Standard Lifetime Allowance)

Relevant Untaxed Amount, is the prior BCE amount, Current Standard Lifetime Allowance is Standard LTA today, and Previous Standard Lifetime Allowance is LTA at the time of the previous BCE.

Pension Lifetime Allowance 2021/22

From the tax year 2018/19 to 2020/21, the LTA was increased annually by the Consumer Prices Index (CPI), however from 2021/22 to 2025/26, the government has suspended the increases. The lifetime allowance has stayed at £1.073m and is now set to remain fixed until 2026.


Beneficiary Pension Lifetime Allowance

If you pass away before the age of 75, you will be subjected to the same automated test. In this circumstance, your beneficiaries can decide how they want to take the pension money, and their option will decide the tax rate that will be levied. Regardless of the amount of your pension plan, your beneficiaries are responsible for paying the levy to HMRC.

Why Do You Need To Get Advice From A Financial Advisor?

It’s not as simple as keeping your lifetime limit below 1.073 million. It’s a proportion of your lifetime allotment that you’ve spent over your lifetime. If you had half a million in your pension pot and drew out a hundred thousand pounds, that amount would be tested against your lifetime allowance at that time.

As your pension fund grows, you’ll be tested on a regular basis when the benefit crystallization events occur or you reach the age of 75. Unfortunately, remaining below that number isn’t enough. It’s about how much of your lifetime allowance you’ve used up.

Of course, measuring your pension worth, keeping it in the best choice available, and valuing your pension pot if it exceeds the lifetime allowance are not simple calculations; in fact, it can take 10 to 18 excel sheets to read.

As a result, it is understandable if some people become frustrated with their pension fund. In this scenario, an independent financial adviser can help. If you’re unsure, it’s a good idea to get advice from one of Cameron James’s professional and experienced IFAs if you’re reaching the age of 55 or older to help you understand the best and most reliable retirement options available to you.

Pensions Advice

Defined Contribution Plans: Participation & Distribution in the US vs the UK

Defined Contribution Plans: Participation & Distribution in the US vs the UK

In the United States, A 401(k) plan, named after the tax code section that provides the plan’s tax-deferred nature, is the most common type of employer-sponsored defined contribution plans. A 401(k) defined contribution plan is based on employee contributions, profit-sharing contributions, and employer matching contributions, all of which are generally tax-deferred at the time of contribution and invested in accounts over which the employee has investment control.

In the UK, occupational defined contribution plans, group personal pension plans, and master trusts are the most common types of employer-sponsored defined contribution plans. 

Contributions made by employees and employers to these plans are tax-favoured. Therefore, investments can grow free of capital gains and income tax while inside the scheme. In addition, employees will typically have a variety of investment options to choose from. Here, we’ll talk about how participation and distribution of defined contribution retirement plans are enrolled and managed in the US and the US.


Employers and policymakers have identified that broad participation is critical to the success of defined contribution plans, as they are funded in part (or entirely) by employee contributions. The US and the UK have approached this issue in similar ways but with different enforcement procedures.

The United States

In the US, auto-enrollment is a popular method of encouraging participation in defined contribution plans. Under this strategy, newly recruited employees are automatically enrolled in the plan and are considered to elect deferrals at a specified percentage (e.g., 3% of pay) unless they opt out. However, because of the power of inertia, many employees simply accept the contribution percentage.

A variation on this strategy is to auto-enrol all employees, including current employees, excluding those already participating, at a predetermined rate, usually. In addition, some employers have implemented auto-escalation, in which an automatically enrolled employee’s contribution percentage is automatically increased each year by a specified percentage up to a maxed amount unless the employee opt-out.

Both auto-enrollment and auto-escalation are not required by law. Employers, on the other hand, have an incentive to apply these features. The US tax code needs 401(k) plans to meet annual contribution testing. This testing, known as the “ADP test,” requires that, as a condition of tax-favoured treatment, the highly compensated employees cannot contribute significantly more than the non-highly compensated employees.

Because the most highly compensated employees are likely to prefer to maximise contributions to the plan, employers are driven to find methods to encourage broad and meaningful employee participation. Employers, of course, want their employees to participate in 401(k) plans because it is in their best interests.

Although many employers have implemented auto-enrollment and auto-escalation methods, some may be uncertain because an operational error in applying these rules can lead to significant adverse tax consequences for them.

The United Kingdom

The UK has identified the value of auto-enrolment, but it has gone a step further by automatically requiring all employers to enrol eligible employees in a qualified pension plan. The plan must satisfy minimum quality standards, including a minimum rate of employer contributions. The rules were phased in, first with the largest employers and gradually expanding to include smaller employers. In this case, employers are also obligated to automatically re-enrol employees who have opted out and continue to fulfil the eligibility requirements every three years.

Although auto-escalation is legal in the UK, it is not required and is seldom practised. However, as employers become more concerned about employees in defined contribution plans having enough funds to retire, this feature may become more frequent to use.


The effectiveness of a defined contribution plan as a retirement vehicle is heavily reliant on how employees withdraw their account balances. Early and fast distributions might result in insufficient retirement savings and poor financial decisions.

As an outcome, employers and policymakers in the US have set up mechanisms to support long-term, intentional distribution patterns in defined contribution plans. As a result, in the US, savers have had more control over how they utilise their retirement assets stored in defined contribution plans since 2014.

The United States

401(k) plans in the US usually provide distribution in a lump payment upon cessation of employment. The lump sum can be withdrawn as taxable cash or moved tax-free into an individual retirement account (commonly known as an IRA). You have a flexible income drawdown once transferred to an IRA. Some 401(k) plans also allow for instalment payouts and, in rare cases, purchasing an annuity with the account balance.

Some employers have been discouraged from giving any forms of payment other than lump-sum due to the expense, additional administration, and fiduciary risk of supplying items like instalments and annuity purchases. As a result, the US government has taken certain regulatory steps in an attempt to persuade 401(k) defined contribution plans sponsors to provide these distribution options. One measure was intended to decrease the fiduciary risk associated with selecting an annuity product to offer through the plan.

Another step was designed to smooth the way for the introduction of a new annuity product known as a qualified longevity annuity. This product is intended to be purchased with a portion of the employee’s account balance and provides an annuity benefit only if the employee lives to a specific age. This protects against the possibility that the employee may use up their account balance too quickly. 

Although this product has not yet been widely adopted due to concerns about administration and portability, among other things, it may become an appealing way to offer employees the best of both worlds, a controllable account balance and protection in the event they outlive their 401k defined contribution assets.

The United Kingdom

Generally speaking, employees in the UK can access their defined contribution plan funds without penalty at the age of 55 (increasing to 57 by 2028) or sooner if they are unwell. They also have had far greater control over distributions from their pension pot.

Savers may withdraw up to 25% of their savings as tax-free cash, and then with the remaining 75%, they can take an annuity or have a flexible income drawdown.

In the past, employees that took more than 25% of their savings as cash would have to pay a 55% tax penalty on the excess, above 25%. As a result, only a small number of people performed this step.

Furthermore, systematic withdrawal alternatives were only available to those with substantial pension funds. However, substantial modifications to the tax regulations were enacted in April 2015’s Pension Scheme Act, which means that:

As savers reach the age of 55 and begin to make decisions regarding the distribution of their pension funds, the decline in the predominance of annuity distributions needs more support and knowledge. Providers are also considering the possibility of offering default decumulation alternatives for those who do not make a decision for any reason.

To summarise, the US and the UK confront comparable issues regarding the essential role of defined contribution plans in retirement planning. Some similar remedies have been applied by the countries, while the methods have been extremely diverse in other situations. Employers and policymakers in each jurisdiction would benefit from learning about the trials, successes, and challenges that each country has faced in this area.

Looking To Transfer Your UK DC Pension to the US? Talk to the Experts at Cameron James.

The Cameron James team hopes you found this article helpful. To learn the basics of the Defined Contribution Pension Plan for US Residents or more information about your UK DC pension transfer to the US, you can explore our in-depth article here or talk to one of our IFA for free through the button below. To know more about other pension transfer options and their advantages and disadvantages, kindly have a look at our other articles. 

Using the social buttons below, you can share this article with any expat colleagues or friends. Click the link below to speak confidentially with an Experienced Financial Adviser about your DC pension needs.

Pensions Advice

What Happens To UK Pension When Someone Dies?

What Happens To UK Pension When Someone Dies?

When discussing our client’s pension plan, we acknowledge that death is not easy to talk about. But, on the other hand, Cameron James believes that understanding the death benefit and the details obtained will help you know exactly where you stand, what you can inherit, and what your rights are if you died or were left by a loved one.

UK Pension Death Benefits

The death benefit is the amount of money that your UK pension provider promises to pay out if your spouse or civil partner dies, and vice versa. Having your affairs in order can help your dependents claim these benefits and reduce the financial concerns they may experience after your death. 

A guaranteed death benefit is a benefit term that ensures if the annuitant dies before the annuity begins paying payments, the beneficiary designated in the contract will receive a death benefit. The amount of funds you or your designated beneficiary will receive is dependent on the type of pension, the age of the deceased, and the beneficiaries as to how much money may be claimed as a death benefit.

Basic State Pension Benefit after Death

The Old State Pension: SERPS and SP2

The SERPs pension scheme ran between  1978-2002 and was replaced by the State Second Pension (SP2) in 2002. The SP2 then ended in 2016 and was replaced by the new State Pension. Now you can only contribute to the new State Pension; there is no additional state pension. 


For the SP2 pension, the maximum a spouse can inherit is up to 50% upon their death.


Under certain conditions, a widow, widower, or surviving civil partner is entitled to inherit their late partner’s State-Earning Related Pension Scheme (SERPs), also commonly known as a state second pension or additional state pension pot. To be eligible for the benefits, the Standard Pension Allowance (SPA) has to be attained, and the proportion of the inheritance is dependent on the gender and the date of birth of their late spouses. 

The SERPS scheme allowed you to increase your state pension depending on your work earnings, almost like a state-run workplace pension scheme. Although some individuals would contract out of the SERPS, a primary reason to do so was to put more earnings into their workplace pension scheme instead.

As a result of contracting out, a portion of their NI contributions would be transferred to an alternative pension plan, commonly referred to as a ‘protected rights pension’. If you contracted out of the scheme, then you would not receive any inheritance benefits from SERPS.

The table below will help you understand the payable amount you or your partner can accrue from SERPS.

Government Support for Bereavement

The government has merged payments intended to offer support after a bereavement into a single benefit called the Bereavement Support Payment. If a spouse or civil partner dies on or after 6 April 2017, this may be payable.

To be eligible, the deceased spouse or civil partner must have paid NICs for at least 25 weeks or died due to a work-related accident or illness. The recipient must be covered by SPA and reside in the UK or another country that provides bereavement benefits. The surviving spouse or civil partner is also eligible for Child Benefit for at least one child, and if the late husband, wife, or civil partner was their parent.

Depending on the conditions of the surviving spouse or civil partner, the amount received differs. If the surviving spouse or civil partner has children or is pregnant they will receive the first payment of £3,500 and a payment of £350 for up to 18 months. If the surviving spouse or civilian partner does not have children then they will be paid the first payment of £2,500 followed by payments up to a maximum of £100 up to 18 months.

Defined Contribution Pension Death Benefits

Inheriting a defined contribution pension is easier than inheriting a defined benefit pension. Suppose your loved one is a Defined Contribution member. In that case, as the beneficiary, you can inherit any unused drawdown funds or uncrystallized money purchase funds and have a flexible option on how to withdraw those funds. The Financial Times says options include a drawdown pension, lump-sum death benefit, or purchasing a lifetime annuity. 

Who Can Inherit Death Pension UK?

Profiles of those who can inherit a death benefit under a Defined Benefit plan are strictly regulated. Any benefit for the lump sum can only be paid to the dependant, any member of the nominated beneficiary, any beneficiary selected by the scheme administrator, or a successor following the death of a dependant or nominated beneficiary. In summary, benefits from the annuity can only be paid to the dependant or a chosen beneficiary.

You would also qualify  as a beneficiary for the following reasons:

Profiles of those who can inherit a death benefit under a Defined Benefit plan are strictly regulated. Any benefit for the lump sum can only be paid to the dependant, any member of the nominated beneficiary, any beneficiary selected by the scheme administrator, or a successor following the death of a dependant or nominated beneficiary. In summary, benefits from the annuity can only be paid to the dependant or a chosen beneficiary.

You would also qualify  as a beneficiary for the following reasons:

Are Pension Death Benefits Taxable?

The taxes regulations will change depending on whether the deceased died before or beyond the age of 75. In the case of a member’s death in service, schemes may pay a lump sum to the member’s beneficiaries. The lump sum would be tax-free, except for the LTA tax charge of 55% for lump sums paid over the LTA if the member died before the age of 75.

What Happens to My Pension if I Die Before 75?

If the deceased died before the age of 75, any lump sum paid within two years is deemed tax-free. On the contrary, any lump amount received after two years of the event of the death is taxed at the recipient’s marginal rate. Note the LTA charge will apply if the deceased died before 75 and are exceeding the allowance. 

If the deceased owned an annuity, all payments would be stopped as soon as the death was confirmed. However, if the annuity has a guaranteed period, the annuity will be paid to the named beneficiary until the end of the time agreed upon by the deceased. This annuity is solely paid to the recipient and is taxed at the recipient’s marginal rate.

If the deceased earned income from a  joint-life annuity, the income will be distributed to the surviving partner, and this joint income is paid tax-free until their death.

If the deceased had a Flexi-access drawdown, any money paid within two years will incur no income tax and be tested against the deceased LTA. Any money paid after two years of the deceased’s death, on the other hand, will be taxed at the marginal rate and will not be tested against LTA.

What Happens to My Pension if I Die After 75?

If the deceased died beyond the age of 75, any lump sum provided to the beneficiary is taxed at the recipient’s marginal rate and is not tested against LTA. If the deceased had Flexi-access, the amount paid to the beneficiary is taxed at the recipient’s marginal rate.

Defined Benefit Pension Death Benefits

A spouse’s, civil partner’s (if civil partnership began before April 2016), or dependant’s pension is frequently provided in addition to any lump sum granted to individuals who die in service. Benefits may include a lump sum death benefit and/or a dependant’s plan pension.

The plan regulations will specify how these benefits are determined, which is generally as a percentage of the member’s benefit. It is customary for 50% of the member’s pension pot to be due.

What Happens to My Pension if I Die Before 75?

Regarding death in service, a defined benefit (DB) lump-sum death benefit is provided to the members’ beneficiaries. The lump-sum would be tax-free for members under the age of 75 at the time of death, and the benefits would be paid out within two years. If the lump sum was greater than the LTA, a tax of 55% is charged on the amount paid over the LTA. 

Benefits that are specified, A lump sum death benefit (DBLSDB), is a lump sum paid under a defined benefit agreement. This benefit is often only provided if death before retirement. The sum paid may be a fixed amount guaranteed by the program, be related to the member’s income at the time of death, or be based on some other criterion, but it cannot be dependent on the value of funds available to give the benefit. Otherwise, this is not a defined benefit scheme. 

If you were to die after your retirement age and the member has started taking benefits, your spouse would typically receive a reduced annual income from the defined benefit scheme. This would be calculated depending on the scheme rules, how many years the holder had been retired etc., but usually would annuals be worth up to 50%. 

A universal credit or pension credit is also available to those individuals on a low-income who have reached state pension age.

What Happens to My Pension if I Die After 75?

For members above the age of 75, the amount will be taxed at the recipient’s marginal rate. Remember that a crystallization event will have occurred by the age of 75.

The regulations of an occupational pension system will specify what benefits are due and who qualifies as a dependent or beneficiary. Individuals that can be identified as dependents under a Defined Benefits plan include:

The DB scheme member’s widow, widower, or surviving civil partner at the time of death.

  1. A child of the deceased who is under the age of 23.
  2. Concerning the death of a DB pension plan member, a child of the deceased who, in the assessment of the pension administrator, is dependent on the pension member due to physical and mental disability.

DB Transfer Death Benefits

In most DB plans, a spouse, civil partner, or dependant is entitled to a pension if the member dies before or after retirement. These safe and guaranteed benefits will be lost upon transfer.

However, this will not be an issue for a single transferee with no dependents. There is unlikely to be a lump sum death benefit if the person is a deferred member of a DB scheme. Contributions may be refunded under the plan, but it may be a more appealing alternative to transfer benefits to a money purchase plan that allows the whole fund’s worth to be paid out in the case of death.

Talk to Our IFAs About Your Pension Scheme’s Death Benefits

You can safeguard your family by choosing the beneficiary upon your death via your UK pension plan. These benefits will provide them with the financial help they may need after you pass away. Your pension plan’s death benefit assures you of the future of your spouse, civil partner, child, or other designated beneficiary. 

Cameron James Expat Financial Planning is a qualified transfer specialist with extensive pension transfer experience in 23 countries. We are regulated by the Securities and Exchange Commission in the United States and the Financial Conduct Authority in the United Kingdom. We also have a method licence to conduct business in Europe.

Cameron James provides our clients with EU MiFID regulated advice from an RDR UK certified Adviser with worldwide ex-pats experience. Our costs are transparent, so you know precisely how much you will pay for our advice upfront, with no last-minute additions. This enables you to make better decisions about you and your family’s future. Book for a free initial consultation with one of our IFAs through the button below.

Pensions Advice

Should I Transfer My Final Salary Pension?

Should I Transfer My Final Salary Pension?

Should I transfer my Final Salary Pension is the number one question we receive from our prospective clients. As such, we have completed this article to try to directly answer this question or at least provide people with a baseline understanding of whether a transfer may be suitable for them or not.

If you have found this article, then you will likely already know that Final Salary Pensions or Defined Benefit Pensions are dubbed ‘gold-plated’ due to their safeguarded benefits. These types of pension schemes are one of the most valuable pensions in the UK, in comparison to their close relative, Defined Contribution Pensions (DC schemes) which have no safe guarded benefits.

There are numerous important factors to consider when it comes to transferring your Final Salary Pension. 

UK Defined Benefit Pension Transfer

A Final Salary Pension Transfer involves numerous factors, making it difficult to make a quick decision whether to complete a DB pension transfer. As mentioned above, one of the main reasons is that everyone has different circumstances and needs.

For instance, a UK resident retired in the US may wish to hold their pension assets in the currency of their planned retirement (e.g. USD). As such, considering an International SIPP, that would allow both GBP and USD in the portfolio, can allow them to mitigate currency risk during their retirement. Unlike their UK final salary scheme, which can only be based and paid in GBP.

While very rationale, this point alone would not satisfy the TPR and FCA’s pension transfer guidelines for a pension transfer to be suitable. Kindly remember that the FCA ask us and all IFAs to start from the default base point that a Final Salary Pension Transfer is not in the best interests of the client.

Is a Transfer Suitable for Me?

Warning: Transferring your final salary, or Defined Benefit pension (DB), is something not to be taken lightly. It will have a direct impact on your retirement. For some, a transfer may be suitable and would improve their retirement goals and objectives. While for others, transferring your Final Salary Pension could be a detrimental decision that leads to financial instability during retirement.

Camp Suitable Vs Worst Decision

A DB transfer may be appropriate if it constitutes a proportion (or even better, a small proportion) of your overall assets, and you are not solely reliant on it for your income needs in retirement. You may wish to achieve a higher level of growth than the indexation offered by your UK ceding scheme and feel comfortable with investment risk and taking advice from an IFA or even managing it yourself. 

A transfer could be the worst decision of your lifetime if the Defined Benefit Pension is one of or your sole sources of income during your retirement, and you are not comfortable with investment risk and prefer a defined and guaranteed income for life from your DB scheme.

Below, we have compiled a few significant reasons of why you should and should not consider transferring your Final Salary Pension. The list is not exhaustive, it will give you a glance of what should be considered before you even embark on a lengthy and costly Authorised DB Advice process.

Keep in mind that this list does not necessarily represent your situation, we strongly recommend that you take qualified and experienced advice from an IFA to understand the implications of a DB pension transfer to your life.

Why You Should NOT Transfer Your Defined Benefit Pension

These points below represent some key reasons individuals may be better off retaining their UK DB Scheme and when transferring Final Salary Pension scheme might not be in their best interests.

Guaranteed Income (Scheme Pension/Annuity)

As above, a Defined Benefit Pension is often referred to as a “gold-plated” pension. It is called this as it gives you a defined amount of income for life during your retirement. This specific amount of income is effectively an annuity, which is also called a scheme pension and is typically payable to you from your Normal Retirement Age (NRA) of 60 or 65.

The value of your DB pension annuity is calculated based on your scheme rules which are typically numbers of years of service, your final salary, and the scheme accrual rate (1/60th or 1/80th). Its ongoing annual value is influenced by several factors, including inflation and interest rates.

One of the advantages of the DB Scheme Pension is that it is index-linked with the inflation rate. As such, your pension will still have the same purchasing power throughout retirement, therefore it is effectively inflation-proof. 

This is why transferring a Final Salary Pension Scheme is not a simple decision. If you have the desire to transfer, it would mean you would be foregoing this inflation-linked annuity, which can provide a level of protection against the rise in the cost of living. Although inflation over the last 20 years which can rise by varying amounts depending on inflation pressures.


Let’s take an example of an annuity. At your normal retirement age, your pension provider may give you an income of saying £15,000/p.a in January each year. Many people may see this as a great advantage since they do not have to worry any more about their income because they are guaranteed to have this annual arrangement of income until the time of their death.

Death Benefits

Another significant benefit of Final Salary Pensions is their death benefits. A death benefits means a certain percentage of your pension can be passed to your spouse or beneficiaries in the event of your death.

Commonly, the pension provider will arrange up to 50% of your pension income to be given to your spouse or beneficiaries. Remember that the 50% amount is still influenced by a few aspects such as income tax and inheritance tax, which you should check with your pension provider.

A spouse is easy to understand. However, who constitutes a beneficiary? A beneficiary can typically be the person(s) who are your dependants. A beneficiary can be your son, or daughter (if they are still your dependants).

In the event of your death before withdrawing your DB pension benefits, usually the widower will be paid a Final Salary Pension Lump Sum. This amount is calculated from the annuity amount multiplied by a given rate.

Possible Reasons Why You SHOULD Transfer Your Defined Benefit Pension

At this point, you have understood that there are significant benefits in retaining your Final Salary Pension. Below, we discuss three of the top benefits you could gain from transferring your Final Salary Pension; CETV rates, International SIPP and QROPS drawdown flexibility, and currency risk. 

CETV Rates

A CETV (Cash Equivalent Transfer Value) is the cash value of your Final Salary Pension if you choose to transfer it out as a one-off lump sum  into a SIPP, International SIPP or a QROPS.

As you will likely know, CETVs have an inverse relationship with interest rates. Since the Financial Crisis of 2008, we have been living in an artificially low-interest rate environments as governments try to stimulate consumer spending instead of saving. In 2020, we were again hit by the Global Pandemic, with global economies facing another economic crisis. As such, interest rates have remained at record lows.

Whether you agree with this economic policy or not, low-interest rates and thus gilt rates, have significant impact on the CETV of your Final Salary Pension. Record high CETVs have been across this period, with some multiple reaching x50.

One of the crucial factors in the calculation of your CETV is interest rates. This is because your defined benefit scheme calculates your CETV using the current interest rate by discounting your estimated pension value at retirement. Therefore, when interest rates are lower, the discount is smaller, which will boost your CETV higher. This has created urgency for many people to transfer their DB pension before interest rates go up and their CETV value falls.

With global economy having already now recovered from the Pandemic lows, it is highly likely that we will see interests rates in the coming quarters which will negatively affect CETV rates.

Flexibility with SIPP and QROPS

International SIPP and QROPS are both personal pension products. Despite their differences, both offer similar advantages when transferring your Final Salary Pension.

If a Final Salary Pension transfer into international SIPP or QROPS is suitable for you, then you could benefit from a number of advantages. Particularly, if you are a living abroad (beyond the UK) and looking to withdraw your pension in the currency of your retirement needs (USD, EUR etc) an International SIPP or QROPS could be the right solution for you.

Some top benefits you can gain from an International SIPP are: pension pot consolidations, wide range of investment options, total control of your pension, and flexibility upon the percentage of death benefits, which you can decide with your pension provider. These are just a few of the many advantages which you can discover comprehensively via reading our dedicated International SIPP and QROPS pages.

Some benefits mentioned above (such as investment control) contrast sharply with your Final Salary Pension scheme, where you will have no control over the investments. For some clients, this is helpful as they prefer not to take an investment risk while for other clients, this may mean limiting their returns.

Currency Risk

Your Final Salary Pension will, by default, be paid in pounds sterling (GBP). If you are working in the UK, this is ideal, and you will be able to withdraw your pension in GBP. Your pension income will thus match your retirement income needs.

However, what happens if you live abroad? What would happen to the value of the pound sterling if Scotland left the UK or a further round of Brexit backlash from the EU? Pound sterling can experience currency fluctuations and for anyone living in Europe and the US for some time, you will remember when GBP was €1.6 and even $2 in the USA.  

In short, your pension pot value will be less relative and its value will be decreased when imposed to other currencies. Obviously, this will be problematic if you are planning to retire abroad because your pension will be lower in value than you expect before.

With transferring to SIPP or QROPS, you have the freedom to choose which currency you prefer, and you would like to invest in. Moreover, you can choose to withdraw your pension in your preferred currency. For instance, if you decide to retire in the US, you would prefer your pension pot in USD rather than GBP. International SIPP and QROPS are capable of realizing this.

What Should I Look for When Transferring My Final Salary Pension?

Now that you have understood the benefits and drawbacks of a Final Salary Pension transfer, we would like to give you some tips on what you should look out for when you are choosing the right IFA for you.

This recommendation is to minimize the chance of getting the wrong IFA as well as pension scammers getting to you. The list below is the significant things to look out for an IFA or expat financial advisers.

Cameron James’ Tips on How To Find the Right IFA for Your Final Salary Pension Transfer.

IFA Regulated – (FCA, SEC, CySEC, FSC, EU MiFID)

The first, is to check the regulation of the IFA or the firm. Are they FCA regulated? Most importantly, if you are residing outside the UK, check their regulations to see whether they are regulated to give advice in the country you reside in. You can check our regulations here.


If they are regulated, the next thing you need to check is their qualifications. Are they qualified to give you advice? From time to time, IFAs are required to do examinations to improve their knowledge and qualifications to give the most updated advice tailored to your conditions. You can check one of our IFA’s qualification here.

Reviews and Client Testimonials

Word of mouths are the best advertising. Luckily, in this digital era, you can check a firm’s experience with their past clients by looking at their testimonials. You can find the testimonials on their website or other trusted business profile such as Google. Check our Google Reviews to see how our past clients’ experience with us.

Highly Regarded

Then, check their reputations in the industry. Are they highly regarded or not? How many experiences do they have? What others says about them? This will give you a better look of the IFA or firm that you are working with.

In one of our YouTube video, our experienced IFA and CEO, Dominic James Murray answering the question “Should I Transfer My Final Salary Pension?”. Please refer below to go to the video in our YouTube channel, and you can subscribe for more high-quality content videos about UK pension transfer.

Talk to a Final Salary Pension Transfer Specialist

Defined benefit pension transfer is not something you have to take lightly. First, you have to understand the deals that you are getting from transferring your pension. Is it a good deal for you or not? Is it in your best interest? What benefits will you give up? You have to fully observe it since every transfer will be based on your circumstances.

This is why talking to a regulated independent financial advisers at Cameron James will help you to make the correct decision that you will not regret. Initial consultation with Cameron James is always free of charge. Book your convenience date through the button below and let Cameron James help you with your final salary pension transfer process.

Pensions Advice

DB Pension Transfer Process at Cameron James for Non-UK Residents

DB Pension Transfer Process at Cameron James for Non-UK Residents

At Cameron James, we find many clients take DB transfer seriously. This certainly makes us excited to help them.

One of our client who lives in France once came to us to inquire about the transfer process for the UK DB pension at Cameron James. We explained everything he needed to know to understand better the mechanism put in place by the FCA and the role of UK-based independent consultants specialized in DB pension transfers such as PAS.

After some explanation, this client also had a better understanding of the role of Novia Global as an IT tool provider and Novia Financial as trustee of the International SIPP, also the risks and benefits of transferring a DB “gold-plated” scheme into an International SIPP or QROPS.

To get further understanding, our client chose to do his homework first. This includes defining financial goals in retirement, estimating his expenses, identifying all sources of income in retirement (e.g., French & UK state pensions, French company pension, possible consultancy assignments that he could get, etc.), saving pots that he has in France (Assurances Vie, Schneider Electric shares), etc.

Therefore, he needed an estimated cost of setting up and running an International SIPP to include it in his DIY cash flow model.

How DB Pension Transfer is Done at Cameron James for Non-UK Residents

There are several stages involved in the DB pension transfer process at Cameron James. First, the DB Transfer is done under a “Two-Adviser Model.” Second, since the client we are talking about is a non-UK Resident, he required EU Regulated Transfer Advice (which a UK FCA DB Pension Transfer Specialist does not have).

In this scenario, PAS can run the DB Report and advise him on whether or not to transfer. However, PAS can not actually facilitate the transfer itself. They need a correctly regulated financial adviser with permissions in the jurisdiction of where the client is located. PAS does the report. Then, we take over from there, and the advice all goes through our EU licence.

The liability for the advice is therefore shared between PAS and ourselves. PAS effectively takes on the responsibility of whether moving from the scheme was the right advice. However, we take on the ongoing commitment of ensuring that the funds are invested as per the initial advice and remain suitable for the client.

So, those are all considerations you need to take on board, as does the Pension Transfer Specialist when they do their report. But, the primary concern is really whether you foresee having a guaranteed payment coming into your bank account each month from Age 65 as really necessary, and whether having the flexibility to invest it into equity markets, be able to have more control of when and how much of the money you access, and then being able to pass it on 100% to your beneficiaries is of more significant benefit.

With CETV’s being so high at the moment, the investment growth required to mimic the DB Scheme benefits via an annuity at age 65 (known as the critical yield) isn’t exceptionally high.

It is also essential to know that DB Report writers advise most clients not to transfer unless they have significant other assets. The annuity is just going to be heavily taxed and then stuck in a bank account each month because the client has more than enough funds from other sources to meet their income needs in retirement.

Cameron James' Fees Explained

At Cameron James, we don’t use any funds with initial fees. Instead, 80% of our portfolios are low-cost index funds (iShares and Vanguard), with 20% low-cost Active funds like Baillie Gifford. Our Ongoing fees are all taken directly from the SIPP itself, and there are no other charges provided to Cameron James.

The Initial DB Report fee is the only fee clients have to pay if they decide to start the advice process. So, the costs for Cameron James are only owed when clients choose to do the transfer.

Furthermore, as part of our initial advice process, another key to note is that we put together a Pre-Advice Confirmation, a type of unofficial suitability report that highlights all the regulations, options, and SIPP providers, investment portfolio, fees etc. The report is provided before clients even sign up to get the initial DB Report, so they have a complete, transparent snapshot of the whole process and what would happen if they are advised to transfer and wish to proceed.

Why Cameron James?

Cameron James is not a Discretionary Fund Manager (DFM). All of our investment advice and portfolio management must be approved first by the client. We do not refer to white labels or use any internal Cameron James products of ‘model portfolios’. We buy funds at cost price and pass them onto our clients without entry fees, loading fees, or exit penalties. 

At Cameron James, we are only reimbursed from our clients, which removes any bias or conflict of interest when selecting our partners like PAS, Novia, and your underlying funds. The likes of Baillie Gifford and Scottish Mortgage are typically for active and iShares, Vanguard, and BlackRock for passive.

Our only form of remuneration comes from our clients, and our fees are only deducted once the job is done and your portfolio has arrived at your SIPP. No advice is paid in advance, and you also have the option for us to pay your FCA DB fee and for it to be deducted from your eventual transfer value should you wish. This is the most tax-efficient option and is popular with clients.

Our Main Objective

The main objective at Cameron James is long-term client relationships and referrals. If we can double our clients’ portfolio over ten years, we believe our clients will not leave us and will likely refer to us. Referrals makeup 35% of our new business and are the most valuable source of new clients we can have. In addition, it is far lower cost to look after our clients than it is to pay for Google Ads.

Clients often say double sounds like wishful thinking, but we benchmark ourselves against the global markets, and the S&P 500 returns are more than 10% per year over the past ten years (CV19 included) and 10% per year over the long term (including 2001 and 2008). Obviously, for more conservative clients, this may not be possible. However, most DB holders with £1-2M in UK pensions can afford to invest for long-term equity growth.

All in all, if you want to discuss another case related to DB transfer and Cameron James as a firm, choose a convenient date below and begin speaking with our regulated independent financial experts to address all of your pension transfer inquiries.