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Pensions Advice

UK Pension Crisis: Is There a Pension Crisis in the UK?

UK Pension Crisis: Is There a Pension Crisis in the UK?

People are asking “is there a pension crisis in the UK happening right now?” As we can see in the media, such as in the Guardian, when it  reported that a number of people in the 50s and early 60s are looking to defer their retirement, things are obviously biting at the moment. There’s the cost of living, inflation, recession, and people are starting to think they should continue saving for a little bit longer or continue working for a little bit longer before retiring.

Before we continue with this discussion, you can learn more from one of our YouTube videos about the UK pension crisis below. This video will provide you with all the insight you need to  understand what is happening with the UK pension crisis.

The Current Situation

Apart from the report above, the other problem that we have, as mentioned in the Financial Times, is that workers are looking to start cutting their contributions to their pension schemes. Workers stated that they are having difficulties providing for their family, which will continue if their salary is not increased. As such, rather than contributing 3-10% for their salary, they’re going to cut that down. 

This is certainly happening in the UK with some people thinking it’s better for them to not make such large contributions right now to enable them to have a larger take-home pay. This does create potential issues though because they are meant to be saving for the retirement. As a financial advisory firm, we can’t tell people whether they should or shouldn’t be doing that. It really comes down to someone’s independent situation.

Pension Crisis and the UK State Pension

The second point that we’re going to discuss is related to  the state pension. Obviously, the state pension is fortunately backed by the UK government, and we think the UK government will continue to ensure that people receive their state pension. However, as all of you will have seen over the past decades, the state pension age has continued to rise. One of the reasons for this is a lack of funding.

In fairness to the UK government, they never really expected people to be living to the age that they are now, and obviously, they’re having to fund people’s retirement for a much longer period of time than expected.

Pension Crisis in Defined Contribution Pension Schemes

In short, the UK pension crisis can’t really effect Defined Contribution pension schemes. Because Defined Contribution schemes are what they are. You just contribute to your Defined Contribution scheme provider, and normally, you’ll just evaluate the money that is sitting inside your pension pot. Whether it is growing or not, how much your charges are, and the net result. That’s what the Defined Contribution pension scheme is. It is that plain and simple.

Which is why, for Defined Contribution pension transfers, you don’t legally require a financial adviser. As long as there are no Defined Benefits or safeguarded assets inside your Defined Contribution pension scheme, you can transfer it yourself independently. However, we do not recommend that because doing pension transfers is an absolute nightmare. If you want to try to do it yourself, you will probably end up realising why people like our services and pay for them.

Pension Crisis in Defined Benefit Pension Schemes

Is there a pension crisis relating to Defined Benefit pension schemes? In our professional opinion, having worked in the industry for 10 years, we don’t see how it’s all going to pan out nice and smoothly for retail clients. With ageing populations, better technology, healthcare, and longer life expectancy, we do not see how it is not going to break with Defined Benefit pension schemes.

Obviously, when you started a Defined Benefit pension scheme, it would have been many years ago. There are a few Defined Benefit pension schemes left, but these are left for Senior Executives in high-powered jobs. Typically speaking, when they set up the Defined Benefit scheme, they did not expect a life expectancy to be going into the 80s or people to be living in their 90s or even reaching 100 years old. As such, the stress that is being placed on those schemes for the long-term assets that they’re going to have to pay out, is proving very difficult for them now.

What Does This Mean to You?

As a summary, if you’re reading this and thinking, what should I be doing with my pensions, there is one important thing you have to remember: financial planning always comes down to looking at the long-term and what is right for you.

Irrespective of what’s going on in the economy, the recession, the UK pension crisis, or the market’s volatility, transferring out of a Defined Benefit pension scheme actually has nothing to do with that. It has everything to do with your transfer suitability. For many people, even if the economy is flying, you still shouldn’t transfer out of a Defined Benefit pension scheme. If we’re in the middle of a recession, there are certain people that should still transfer out of the Defined Benefit pension scheme and others that shouldn’t.

It really comes down to your own individual situation. Don’t get caught up in the noise, short-term market movements, volatility, and recession discussions, because all of those things are not what’s going to impact your retirement assets. It’s the 20-30 years of portfolio growth inside your Defined Contribution pension scheme, SIPP, or QROPS that matters.

Click the button below to book yourself in for a free initial consultation with one of our regulated and qualified IFAs to understand your situation and establish what is the best financial move for you, for the long-term.

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Pensions Advice

How to Reduce Your QROPS Cost Through Transfer QROPS Back to UK

How to Reduce Your QROPS Cost Through Transfer QROPS Back to UK

If you are looking to transfer your QROPS back to the UK, then you have come to the right place. Cameron James have over 10 years experience transferring UK pensions including transfer QROPS back to UK.

Our CEO and Independent Financial Advisor, Dominic James Murray, explains how transferring QROPS back to the UK might be an ideal option for you.

Why Would You Transfer QROPS Back to UK?

Why would someone want to transfer QROPS back to UK? The first reason is, maybe when you were living abroad in Dubai, France, Spain, Holland, the US or anywhere else, you were told to hold a QROPS.

The reason is that because it’s what everyone was told to do. Back in 2010, in general, if a client lives abroad, it equals to QROPS. That was the equation back then. There wasn’t any analysis really going into it, and everyone abroad needed to have a QROPS. It was a new hot thing that everyone should have a QROPS, it was considered the best thing to do.

The UK Lifetime Allowance

With the upcoming abolition of the Lifetime Allowance (LTA) in April 2024, you might be wondering how this affects your pension planning. Previously, the LTA, capped at £1.073M, limited how much you could contribute to your pension without facing extra charges. Its removal means you now have more flexibility in how much you can save into your pension, whether that’s through a QROPS or a UK SIPP.

However, it’s crucial for you to understand the cost differences between QROPS and UK SIPPs. QROPS annual charges typically range from £800-£900 for pension pots over £100,000, while comparable UK SIPPs might only set you back £100-£200 plus VAT, or even nothing at all.

This significant difference in annual fees highlights an opportunity for you. If you’re currently using a QROPS, switching back to a low-cost UK SIPP could save you a considerable amount over time—estimates suggest savings of around £6,000-£7,000 over ten years are possible.

If you’re a UK resident looking to cut down on QROPS costs, considering a transfer back to domestic providers like AJ Bell could be a wise move. For expatriates, moving into FCA-regulated International SIPPs might offer a way to reduce annual fees while keeping the flexibility of a QROPS when living abroad.

Remember, though, your financial situation is unique. Always seek personalised advice to understand how these changes affect you directly. But with the LTA on its way out, it’s the perfect time for you to reevaluate whether sticking with a higher-cost QROPS still makes sense. Exploring transfers might uncover significant savings for you.

The Problems With Transfer QROPS Back to the UK

One of the biggest problems we find with people trying to transfer QROPS back to UK we had is the cost that it requires from your existing QROPS scheme. As an example, we have someone who contacting us saying that he have a £50,000 QROPS pot. The problem is, the pension pot performance has been terrible, he is locked into an eight-year term with the underlying bond, and he already lost 20%-30% of the portfolio value.

Instantly, it’s just a massive alarm bells everywhere. The advisor who put this person on the QROPS had commission-based advice. The client has been ripped off that they have exit penalties on the underlying fund and the platform. For us to even get involved in that case, we can’t even work with that client without effectively working for free or even, at worst, actually losing money. This is why, you need to be meticulous with your QROPS and understand exactly what is inside your QROPS. Keep in mind that it is very complicated to do a QROPS to a SIPP transfer.

Reasons Why UK SIPPs Providers Avoiding QROPS Transfers

Many SIPP providers in the UK will not accept transfers because they don’t want anything to do with it. Things such as frozen assets, liquid assets, structured notes, anything like that, they just don’t want it. However, International SIPP providers are normally far more open because they’re in the international market. They understand QROPS, a lot of the directors probably even formerly worked at QROPS companies. As such, they’re more favourable and allow you to transfer into an International SIPP. If you’re confused about what is the difference between a SIPP and International SIPP, click the link here.

 

Let Cameron James Help You to Transfer QROPS Back to UK

If you are trapped inside a situation where we explain above, don’t hesitate to book yourself in for a free initial consultation with us. Our IFAs will help you to provide with the best solution to your QROPS trouble. Hit the link below, and talk with one of our regulated and qualified IFAs.

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Pensions Advice

Is The UK Heading For A Recession? How to Prepare Your UK Pension for UK Recession

Is The UK Heading For A Recession? How to Prepare Your UK Pension for UK Recession

Every day and everywhere you read, regardless of where it is, you will always get caught up with the UK recession. It is the headliner in almost every media around the UK, and it’s the current short-term noise for now. With the UK recession, you might wonder how my Final Salary pension or other UK pensions will be.

This post will discuss the UK recession and what to do with your UK pension. Dominic James Murray, our CEO and Independent Financial Advisor, explains briefly in one of our YouTube videos about the UK recession, what will happen with your UK pension, and preparing your pension in the event of a UK recession.

Why You Should Ignore The Short-Term Noise

Right now, no matter what you read or where you go online, the UK recession will always be the headline. As a UK resident, you should be ignoring this short-term noise. Why? Let’s take a look at an example. With Covid-19 still massively spreading in many places, you can see that Covid-19 is just not in the media. No one cares about it. Covid-19 is boring and doesn’t sell headlines. It doesn’t sell advertising space, either.

However, when you have something fearful such as a recession, people will obviously buy into it and worry about it. If you have any concerns about your current UK pension at a time like this, don’t just read the news. It would be best if you talked to a Pension Transfer Specialist to get full knowledge of your pension and what to do best with it. Having a conversation with your IFA doesn’t mean you start a pension transfer, but talking to someone who understands the UK pension transfer industry day in and day out can help you to understand your situation better.

Don’t try to stay home and make all decisions on your own or even try to understand what’s happening in the market. You’ll confuse yourself and end up making a hurried decision.

What Most People Think Wrongly About the UK Recession

Most people attempt to time the market by changing their entire portfolio before the recession. Technically, this means before a recession, you cash in the entirety of your portfolio and let the recession happen, and then you move back to equities again after the recession has stopped. When the markets are at the bottom, you will do fantastic because you will be selling high and buying low.

However, that is what people have been trying to do for the past 50 years. Only a few asset managers have been able to do that over a consistent period of 5, 10, 15, and 20 years. Some of the asset managers we work with have managed to do that over the course of time, but the majority of active managers have actually underperformed in the market.

As such, it isn’t easy trying to time the market. When the market drops to the low point where you should be buying in, typically speaking, from what happened with our clients, they haven’t got the stomach for it. When we tell people that it is a good time to reallocate their portfolio, people don’t do it because they’re scared. What they like to see is the market bump up. Then, when the market goes up by 10%, they suddenly feel confident and want to move ahead, whereas they have already lost 10% of growth. Again, timing the market is very difficult and is almost impossible as you are up against people who have all the inside information on Wall Street.

Hence, why try to outsmart the people who are already trying to time the market for a living with your pension pot? It’s far better to keep it simple and invest in long-term equity markets in a risk profile that is correct for yourself, and in 5-20 years, we believe equity markets will continue to grow firmly in the future as we’ve seen equity markets grow in the past.

Why You Should Not Be Panicking

It would help if you did not panic about your UK pension during a period of recession. You might actually get quite excited during periods of recession because, obviously, when we do see a massive dip in the market, it can potentially be a good time to buy into the market. However, it is important to remember that pension management is always about long-term stuff. We’re not interested in what happens in the course of months or one year. We’re interested in what happens over the course of the next 20 years.

Focus on the Suitability of Your Risk Profile

In a time of recession, you might be wondering if you should stick with your Final Salary pension and current CETV value. It is essential to remember that transferring out of your Final Salary Pension scheme is not about the value of your CETV. The only thing that you should be focusing on is the suitability of the advice. Is it suitable for you to transfer to the Final Salary Pension scheme in the first place? That’s the hurdle you need to cross before then you decide to transfer or not.

Let Our IFA Provide You With a Clear Understanding of Your UK Pension During the UK Recession

Rather than following what the media says, it will never hurt you to always focus on long-term growth. In the last 20 years, we have seen the equity markets grow, outperforming cash equity markets and the Final Salary Pension schemes as well. Even if you have a 3-4% indexation on your DB scheme, the equity market is typically growing at 7-9% over the course of the past 30-40 years.

The point is, forget the noise, stop looking at the media, stop checking your portfolio on a daily basis, and let the markets do their thing over the course of the next 40 years. Don’t let the short noise bother your mind. Keep focusing on the long-term goal.

Preparing your UK pension by yourself for the UK recession is extremely dangerous. You should always be talking to your IFA or if you don’t have one, find the most reputable IFA that you are comfortable working with. Obviously, they will be telling you to keep a long-term view and not try to go in and out of the market or time the market. 

Put your fears aside, and let one of our IFAs help you to get through this recession period. If you want to talk more about preparing your UK pension for the UK recession, feel free to hit the button below to book a date and time for a free initial consultation with one of our IFAs. Our IFAs will provide you with comprehensive advice that is suitable for your situation as well as your risk profile.

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Pensions Advice

UK Pension Transfer Forms: What Is It and How Important It Is to Your UK Pension Transfer?

UK Pension Transfer Forms: What Is It and How Important It Is to Your UK Pension Transfer?

Before deciding to move your UK pension scheme, you must first grasp what UK transfer forms are needed and how to fill them out. Hundreds of UK pension holders make errors when filling out the UK pension forms.

Watch an explanation by Dominic James Murray, our CEO and Independent Financial Advisor, on what are the UK pension transfer forms about and how to avoid making mistakes when filling it down. Subscribe for more UK pension transfer videos and updates from the industry!

UK Pension Transfer Forms

Pension transfer forms are exactly what they sound like: a form that allows you to legally notify your UK pension scheme that you intend to transfer out. Why is this necessary? First, your UK pension scheme must do some due diligence if you wish to transfer. Typically, you will sign a paper stating that you understand the terms and conditions and wish to transfer out.

Why Do You Need a Pensions Transfer Form?

So, why do you need to fill in this form? The FCA and your pension providers will want to know where you are moving the pension to ensure it is a qualified pension transfer. But, please keep in mind that you cannot just enter your bank information and transfer it out to your bank account unless you are above the minimum retirement age of 55. 

On paper, a Final Salary pension scheme in the United Kingdom has a standard retirement age of 60 or 65. The UK government extended regulation to have a minimum age limit to 55 for all private or Defined Contribution plans, which is an important part of due diligence. Learn more about DB by reviewing our in-depth analysis here.

The transfer forms also help the UK scheme provider determine if you are sending your money to a licensing scheme that accepts UK pension transfers. This regulation will either be regulated for an International SIPP, or if you live in Europe approaching the lifetime allowance of one million, or you may transfer to a QROPS. A QROPS can be a tax-effective alternative.

How Are the Transfer Forms Filled Out?

In general, pension plans are divided into two categories: Defined Contribution and Defined Benefit pension. A Defined Contribution plan will most likely be two to ten pages long, relatively straightforward, and require only one or two signatures.

A Defined Benefit pension transfer form is significantly more complicated. Because the scheme is considerably more complex, there is far more information and detail that your financial adviser has to pull out of it to put together a report.

The Origo System

The form serves as proof that you desire to transfer your pension out right now. Over the last few years, there has been an unusual turn of events involving a system named Origo. If you were transferring to an International SIPP, for example, the majority of the best International SIPP providers now use a technology called Origo.

What Origo implies is that you may sign a transfer authority form with the foreign SIPP provider, generally online using DocuSign, which is considerably more convenient for expats than having to sign the original document from your UK plan. It also significantly speeds up the paperwork process.

Five years ago, when a financial adviser was handling a pension transfer, they would manually send the form to you wherever you were in the world, you would sign it and return it to the financial adviser, who would then countersign it in the UK, the new SIPP provider would countersign it, and it would then go to your UK scheme. A lot of trouble, and not particularly ecologically beneficial concerning global warming. So, Origo is an excellent starting point for making the transfer procedure basic for you to complete today. 

Origo Is Not Accepted by the UK Defined Benefit Pension Scheme

Unfortunately, utilizing Origo to transfer Final Salary pension papers is not an option. For Final Salary schemes, there is no Origo system. This is because Final Salary pension schemes require greater due diligence from your UK pension scheme.

They will ask you many questions about the provider you’re sending your pension to. This is because the FCA is quite strict about individuals transferring Final Salary pensions to any scheme that isn’t regulated.

Something to be aware of is that the 40-page paperwork from your DB pension transfer form is likely to be difficult to comprehend and should be completed by your financial adviser to ensure no mistakes are made.

If you make a mistake, the transfer procedure might take an extra five or ten days. For example, your UK scheme may check the form and discover that one of the digits in your national insurance number is missing. And it will be moved to the back of the line until the form is resubmitted. This can be really stressful. If something goes wrong, it will not only slow things down, but may also result in your UK scheme being blacklisted.

Pension Transfer Forms with Cameron James

Cameron James now does everything electronically, meaning that we can minimize the possibilities of misspelling. Because everything is done online, having the papers filled out correctly will save you a lot of time and trouble.

You can obtain pension transfer forms yourself. You can contact your pension scheme by phone or email, and request the information at any time as we go through the advisory process at Cameron James.

You and your financial adviser will complete a fact find and risk profile for each individual pension, as well as a letter of authority (LOA). The LOA gives your financial adviser the legal authority to email, fax, or contact your UK pension plan for more information.

The Defined Contribution (DC) pension plan is incredibly straightforward, and they seldom miss any vital information. However, DB schemes overlook a lot of information, which can slow down the transfer process.

For example, over the years, the pension scheme would have been purchased and sold by various trustees in the UK, and documents might have been lost along the way, and the paperwork they eventually provide you with is incomplete.

Solution for Your Pension Transfer Form

It’s preferable to have everything done for you. As previously said, we can complete all the paperwork digitally in Cameron James, but you must still approve everything. You need to review all the documentation to ensure that everything is correct, and no one can do anything with your pension until you sign that form. So, there’s no danger of your pension being compromised if you leave it to someone else.

If you want to contact Cameron James directly to discuss your pension transfer needs, please make an appointment using the calendar link below. You may also visit our website if you want to have a brief conversation. All initial consultation with us is always provided at free.

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Pensions Advice

UK Pension Scams – Important Tips to Avoid Getting Scammed

UK Pension Scams – Important Tips to Avoid Getting Scammed

Pension savings can provide financial security for many people during retirement and for the rest of their lives. For others, a pension can help to support their career choices and provide for those who are most important to them. 

Pensions are one of the most important and valuable assets that people have. Unfortunately, pensions, like any valuable asset, can become the target of fraudulent, inappropriate, or scam-related activities.

Our CEO and Independent Financial Advisor, Dominic James Murray, explains the top tips to spot a UK pension scam and how to avoid getting scammed in one of our YouTube videos below. Subscribe for more UK pension transfer tips and updates from the industry!

Strengthening Trustee’s Duties

The UK government is aware of the urgency of preventing people from becoming victims of UK pension scams, which can harm people’s future as well as their financial situation. The creation of new regulations is one of the government’s progressive actions.

The FCA strengthened the trustee role with the new regulations that went into effect in November 2021 in order to be more proactive in preventing the UK pension scam. The pension administrator is now legally bound to look for signs of a UK pension scam whenever a transfer is requested. 

This could be a pension transfer banning an arrangement that allows benefits to be paid out before the age of 55 (the earliest age at which pension benefits can generally be accessed) or a promise to pay out a tax-free lump sum greater than what HMRC allows after the age of 55.

Some companies offer members the opportunity to cash out their pension benefits early by transferring their pension savings to them. People are also being enticed with pension loans or cash incentives. They may also propose investing the transfer payment in to very high-risk investments or promising rates of return on investments that are highly unlikely to be realised. Such information can be extremely misleading and, in some cases, fraudulent and illegal. 

Another example is that, while many transfers to SIPPs are legal and require appropriate advice, the pension administrator would also warn you about a growing trend of SIPPs being used to lure pension scheme members into scams, since transferring to a Self-Invested Personal Pension (SIPP) requires extreme caution.

The pension administrator will advise you to consider whether the funds in which you intend to invest are regulated by the Financial Conduct Authority (FCA). The regulator, the ombudsman, or government compensation schemes do not protect unregulated investment funds.

How to Spot a UK Pension Scam?

Remember that UK pension scams can take many forms and frequently appear to be legitimate investment opportunities. Pension scammers, on the other hand, are astute and know all the ploys to entice you to hand over your savings. Aside from the increased regulation, you can also take proactive steps to avoid becoming a victim of a UK pension scam.

The following warning signs can help you spot a UK pension scam: 

  1. Have you been contacted unexpectedly? Ignore any contact, whether by phone, email, social media, text, letter, or even on your doorstep! Any unexpected phone calls, emails, or text messages should be avoided. Even if the person appears to know some basic information about you, don’t believe them. Cold calling in relation to pensions is now prohibited by the government and should be reported to the Information Commissioner’s Office (ICO).
  2. Offers or mentions of one-time investments, time-limited offers, upfront cash incentives, free pension reviews, legal loopholes, or government initiatives are all signs of a UK pension scam.
  3. Recommendations for making a single overseas investment that will yield 6-8 percent per year or more is a sign of a scam. Remember that investments can go up as well as down, and if something seems too good to be true, it most likely is!
  4. The scam is the promise to give you access to your pension before the age of 55. In fact, accessing your pension before reaching the age of 55 is only permitted in very limited circumstances, such as illness.
  5. There may be genuine-looking websites and marketing materials, but these can be cloned from legitimate businesses. They may also pretend to be from legitimate organisations. However, the right pension service will never contact you without first obtaining your permission. 
  6. Just because someone claims to be a regulated adviser and can show some official documentation does not mean that they are – and one of the hallmarks of recent scams has been individuals being given a false sense of security about the status of advisers.

How to Avoid UK Pension Scams?

Depending on what stage of a scam you believe you are in, you may need to take different steps. To assist you in this process, we have outlined two different scenarios below. If you believe you have been targeted and have recently agreed to transfer your pension, you should do the following as soon as possible:

  • STEP 1. Contact your pension provider immediately. They may be able to stop the transfer if it has not already gone through.
  • STEP 2. Contact Action Fraud on 0300 123 2040 and report the scam. Action Fraud will collect the information and issue you with a police crime reference number. Reporting your experience of action fraud may provide vital intelligence that prevents others from falling victim. 
  • STEP 3. You can report a regulated financial adviser or unauthorised adviser to the FCA by contacting their Consumer Helpline on 0800 111 6768 or by using this link

If your money was transferred a while ago and you haven’t been able to contact the organisation or find out where your money is, or if you haven’t received any paperwork in a while and if you believe you have been a victim of a scam, you should:

  • STEP 1: Report it to Action Fraud at 0300 123 2040. Action Fraud will collect the information and provide you with a police crime reference number. Reporting your experience with action fraud may provide vital information that prevents others from becoming victims.
  • STEP 2: Call The Pensions Advisory Service (TPAS) and request a Pension Loss Appointment if you’ve transferred your pension money and are concerned that you can’t find it or that you’ve been scammed. 

Cameron James, Expat Financial Planning – Your Trustworthy Pension Transfer Specialist

Cameron James Expat Financial Planning is the preferred independent financial adviser for Final Salary pension and SIPP transfers. With over ten years’ experience in pension transfers, Cameron James is now servicing clients in 26 countries. 

We have the qualifications and technical knowledge required to help you transfer to an international SIPP as an expat as well as US resident. Our mission is to bring regulated and transparent advice to our clients. As such, our clients know how much their advice will cost in advance, with no hidden fees.

Cameron James Expat Financial Planning has a sophisticated cash flow management system in place. Our senior management team has a decade of experience in serving expats and is committed to serving the requirements of expats for decades to come.

Transferring a DB or DC pension into a SIPP plan for expats is not a simple decision. Before deciding, many details and procedures must be thoroughly understood. Without this knowledge, the benefit could turn into a potential loss.

It is essential to seek competent advice from a qualified financial adviser to verify that your profile matches the options available and to ensure that your choice meets both the UK and US regulations. Meet one of our dedicated advisers to get a full understanding of your UK pension.

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Pensions Advice

How To Avoid Missing CETV Transfer Expiry With Your Final Salary Pension Transfer Deadline?

How To Avoid Missing CETV Transfer Expiry With Your Final Salary Pension Transfer Deadline?

A CETV is a Cash Equivalent Transfer Value that you receive from your Defined Benefit or Final Salary Scheme. This CETV transfer has an expiry date of three months from the date in which it was produced. This means you have to submit all the required paperwork within a strict deadline to secure the transfer value.

Watch a video below from our CEO and Independent Financial Adviser, Dominic James Murray, explaining how to avoid CETV transfer expiry dates and how to handle your CETV in the most efficient way.

An Example of Missing CETV from Our Clients

In 2022, we’ve actually had two instances of clients not attaining their CETV transfer expiry dates, although to clarify, neither of those clients were working with us originally. In the six years we have been working in the UK Pension Transfer industry, we have never had a client start the advice process with us from the beginning and not attain or secure their CETV transfer value. This means we have a 100% ratio of securing our clients pension transfers at their current CETV transfer value.

Why were these CETV transfers missed? How did it happen? Essentially, what happened was they started the advice process themselves. One client had multiple DB schemes, and was contacting the ceding schemes himself to request his Cash Equivalent Transfer Values.

He was based in the Isle of Man. He requested his Cash Equivalent Transfer Value from three different schemes in December. By the time he came to us in January, he had already lost four to six weeks on these CETVs. He emailed us over the CETVs after he decided that we were a credible firm, and he wanted to work with us.

When we started looking through his CETVs, we realised that he didn’t even have a CETV for one of the schemes.  Instead, it was a letter stating they will be sending  a CETV, but our client said he never received it. We then needed to put the Letter of Authority (LOA) on file which took 10 to 15 working days. At this point, we were up to seven or eight weeks into the CETV expiry date.

Furthermore, we contacted the ceding scheme, and they said they had already sent out the CETV via the post. They will now have to produce another one, which will take them 10 to 15 working days to get it produced. The problem is, we need to have a minimum of four weeks on any CETV for us to put together the report. A crucial report which outlines whether you should transfer your DB scheme or whether you should retain it. 

As such, the client had three different schemes, and they  were all completing their administration and paperwork at different speeds. In the end, during the advisory process, one of the CETVs expired. Straight away, we said to the client, you need to get a new CETV transfer. This means the client had to pay £300 extra to have a second CETV within a 12-month period. Then we were only left with two CETVs that we could work on at that point in time.

All of this trouble happened because he started the process himself. It is good for the client, and well done for him for wanting to do things independently, however, if you’re not a pension transfer specialist, we highly recommend you don’t do this.

What Is the Best Way To Avoid CETV Transfer Expiry?

If you would like to have your CETV transfer completed properly, the best way to do it is to go through an Independent Financial Adviser. It will be completed effectively and you will avoid all the stress. A regulated IFA can discuss your situation with you and talk about your CETVs before you request them from your ceding scheme.

However, before choosing the best Independent Financial Adviser, there are certain things that you should consider:

  1. Find out who you feel comfortable working with
  2. Find out who you trust
  3. Finally, request your CETV transfer

Let Our Regulated IFA Help You With Your CETV Transfer

Cameron James is a regulated Independent Financial Advisory firm based in the UK. We have been in the UK Pension Industry for over 6 years, helping clients in multiple countries including Europe and the USA. Our regulated IFAs will gladly help you and take care of your CETV transfer. Book a free initial consultation with us through the button below at a time and date convenient to you.

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Pensions Advice

Non Dom Status and What It Means to Your UK Pension

Non Dom Status and What It Means to Your UK Pension

Everyone is born with a domicile. The domicile of an individual at birth is determined by his father’s domicile. Surprisingly, the mother’s domicile is only taken into account if a child is born outside of marriage. 

Non-domiciled individuals are UK residents who have their permanent home outside the country and may not be required to pay UK tax on foreign income or capital gains. The exemption dates back to 1799, when the income tax was first implemented. It was designed to safeguard colonial investments by allowing UK residents to be taxed only on money brought into the country.

A UK resident can be non-domiciled if their domicile is considered to be abroad. Non-doms must usually self-report their non-dom status to HM Revenue & Customs by checking a box on their tax return. People have the option of not claiming their non-dom status in any given year. If this is the case, they will be required to pay UK tax on their worldwide wealth.

However, some aspects of the non-dom legislation are misleading. The legislation can be used, or abused, by foreigners or British citizens to avoid paying taxes entirely. While they are required to pay tax in the countries where they earn their income, the fact that they live in the UK makes it easier for them to arrange their affairs and pay little or no tax at all.

As a result, many of the wealthiest families in the UK do not contribute to direct taxation in the UK. According to the claim, the system is still useful because these people contribute indirectly by employing a small army of servants and service providers who pay income tax. Non-doms may also be required to pay VAT on expensive goods and services purchased in the UK.

UK Domicile vs. UK Residents

In general, your domicile is the permanent location where you live, whereas your country of domicile is the permanent country where you live. In essence, domicile is a legal construct that determines where you vote for the government, file lawsuits, pay taxes, claim benefits, and owe the government.

If you live in the UK, you are usually taxed on an originating basis, which means that all of your worldwide income and gains are taxable in the UK. As a result, even if your foreign income and gains have already been taxed in another country, they will still be taxable in the UK, and you must declare all of your foreign income and gains on your tax return if the UK and the country of residence have a double tax treaty.

A residence is a home you intend to live in for a limited time, whereas a domicile is a home you intend to live in indefinitely. Your residence can be anywhere you own property or live for a set period of time. However, your domicile can only be the one location where you intend to make your permanent home and stay indefinitely. As a result, you can have multiple residences, but only one domicile in one planned location.

Non-Dom Status Legislation Reform

In 2015, the system was reformed and became more complicated. Non-dominance is now limited to 15 years. The reforms significantly reduced the number of people claiming non-domestic status. Only the very wealthy do so anymore. Many people leave the UK after 15 years for five years, then return and claim another 15 years of non-domicile status.

To maintain non-dom status, someone must have lived in the UK for seven of the previous nine tax years and pay a fee of £30,000. The fee is £60,000 after 12 of the previous 14 tax years. And after 15 years in the UK, a person becomes automatically domiciled.

A Case Study

One of our clients in Dubai recently asked us if he could obtain non-dom status so that he could transfer his UK-regulated pension scheme into an offshore bond as instructed by his financial advisor. We are convinced that this was completely incorrect. Leaving the regulated UK pension scheme, which is protected by the FCA and guaranteed by the TPO Ombudsman, and investing in an unregulated offshore bond would result in pension scams.

The reason for this is that when you leave a UK-regulated pension scheme that is highly protected by consumer protection, investing it in an offshore bond where your money is not as well protected as it was in the UK pension scheme will result in high commissions, risky investments, and, in the worst-case scenario, you will most likely lose your money.

The other reason is that obtaining non-dom status is extremely difficult and complicated. It is not as simple as declaring that you were born outside of the United Kingdom and obtaining non-dom status. In reality, 70.000 people apply for non-dom status in the UK, including the wealthiest, who have lawyers and accountants on their side, and not all of them are successful.

Actually, a very interesting statistic that we saw in the financial times was that only about 2000 people have managed to maintain their non-dom status for a period of seven years or more, which is only about two thousand people out of the entire population of the United Kingdom.

So, if you think you can just magically become a non-dom and avoid all sorts of tax on your pension pot in the UK; if you retire there and it’ll be fine to have it invested in offshore bonds and you won’t have to pay any income from those offshore bonds in your retirement, you’re mistaken. We believe it is wishful thinking.

Our Advice

A complicated set of requirements must be satisfied in order to apply for non-dom status, and even if you are granted the status, the cost is high. We advise you to be even more cautious with the advice of any independent financial advisor who suggests that you apply for non-domicile status in order to transfer your UK pension scheme to an offshore bond.

The best course of action is to consult both your tax advisor and an independent financial advisor. Simply put, if something seems too good to be true, it probably is. Do not follow the trend.

Cameron James – Your Trustworthy Pension Transfer Specialist

Cameron James Expat Financial Planning is the preferred independent financial adviser for final salary pension and SIPP transfers. With over ten years of experience transferring pensions, Cameron James is now servicing clients in 26 countries. 

We have the qualifications and technical knowledge required to help you transfer to an international SIPP as an expat and a US resident. Our mission is to bring regulated and transparent advice to our clients. As such, our clients know how much their advice will cost in advance, with no hidden fees.

Cameron James Expat Financial Planning has a sophisticated cash flow management system in place. Our senior management team has a decade of experience in serving expats and is committed to serving the requirements of expats for decades to come.

Transferring a Final Salary Pension or Defined Contribution Pension into a SIPP pension scheme for expats is not a simple decision. Before deciding, many details and procedures must be thoroughly understood. Without this knowledge, the benefit will turn into a potential loss.

It is essential to seek competent advice from a qualified financial adviser to verify that your profile matches the suitable options and to ensure that your choice meets the UK and US regulations. Meet one of our dedicated advisers to get a full understanding of SIPPs.

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Pensions Advice

Defined Contribution Pension Transfer: Should I Combine My Pensions?

Defined Contribution Pension Transfer: Should I Combine My Pensions?

As time passes, you may have moved to a better job with a higher salary, or you may have changed jobs from one company to another. While changing jobs you will leave your DC or workplace pension there. Any pension that you stop contributing to is considered an old pension. Most people have many old pensions that are left in limbo once they leave a job and cease contributing.

However, is it possible to transfer your pension from your previous employer to your new employer? Most likely, if you are reading this article, you have probably worked for another company previously and are now interested in how to transfer your pension from your old company to your new company. Before deciding to transfer your old pension scheme to the new pension scheme, you should ask yourself an analytical question such as: should you consolidate everything into your workplace pension? Is that pension plan better compared to an independent SIPP?

Dominic James Murray, Founder, CEO, and Independent Financial Adviser (IFA) at Cameron James answers the question as well as other perspectives you need to understand workplace pension, UK pension transfer, and SIPP.  Watch the video to know the possibilities and implications as explained by the Pension Transfer Specialist with over 10 years of experience (including the USA and non-UK residents).

Defined Contribution Default Funds

It is important to note that your Defined Contribution scheme that you have from employer were given by default. Typically speaking, these schemes might be something like Zurich, Aviva, Scottish Widows, etc. You were given these default funds from your employer because they have a relationship with your ceding scheme to put the pension scheme together for you.

By default, you have no choice over the options of funds. If you now went to market and did your own independent research, would that pension scheme be better or worse compared to the tier-one SIPP such as AJ Bell or Fidelity. 

Why You Should Consolidate Your DC Schemes Into a SIPP

Throughout your career, you might have built up Defined Contribution schemes from 10, 15, 20, or even 25 years ago that you would like to consolidate down into your existing scheme. Consolidating all of your pension pots and put it in one place is a logical thought. As it provides you with more simplicity and easier of access over your pension assets.

Your employer with a Defined Contribution scheme has a number of limitations compared to a SIPP, where you have better advantages. Notably, in DC pension, typically you will be enrolled in default funds, whereas in SIPP, you have the flexibility of choosing funds from the market which is suitable to your risk profile. You can watch the video here to learn more about the disadvantages of Defined Contribution scheme.

In contrary to your DC pension scheme, a pension wrapper such as SIPP can provide you with multiple benefits both in short and long term. Here are some of the benefits you can have:

  • Pension Acts and Freedom (Early Withdrawal from the Age 55 or 57)
  • Tier one SIPP (AJ Bell, Fidelity, etc.)
  • Larger range of funds (2000-3000 options of funds)

Your DC schemes of your employer might have a very limited fund range of 20, 30, or maybe even 40 funds. Normally speaking, these funds that you were enrolled in default have much higher fees and charges than what you would pay if you went and bought them independently yourself through a pension wrapper such as SIPP. Now the question is, why wouldn’t you consolidate your DC pensions down into a single SIPP given the benefits above?

Our Advice

If you’re looking to transfer your old employer pensions, consolidate them down into a SIPP and keep your existing workplace pension with your current employer. When you finish the employment, then you can transfer it down into your existing SIPP.

Over the course of your career, in this day and age, people move around. It’s not like the older days of our grandparents, who work for one company or two companies their entire lives. You will have many different pension pots over the course of your employment with multiple employers. It is a good idea to set yourself up with a SIPP? 

Basically, you could set up a SIPP by yourself independently, if you have a lot of experience in investment. If you are not experienced in managing your assets, then you should be working with an FCA-regulated Independent Financial Advisor (IFA). What we mean by lot of experience here is, over the course of your career time, you deposit your old DC pension pots into the SIPP every time you leave your employer. This means inside the SIPP, you can ensure that your pension asset has been managed correctly or at least it has professional oversight from yourself if you’re a professional investor.

As such, you can review the charges and the costs on an annual basis or every a bi-annual basis. You can compare whether is it still the best SIPP in the market. If you don’t feel that way, you can move around to attain the best costs and best portfolio performance and gain more growth on your assets.

All things considered, if you have questions about your Defined Contribution schemes, or consolidating your DC schemes into a SIPP, get in touch with one of our FCA-regulated Independent Financial Advisor. Click the button below and get a free initial consultation with us.

Cameron James Expat Financial Planning is the preferred expats financial planning firm for DC to SIPP transfers. With over 10 years of experience in transferring UK pensions, Cameron James is now servicing clients in 26 countries, including the USA.

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Pensions Advice

What Is Pension Auto Enrolment and How Beneficial It Is for Your Retirement?

What Is Pension Auto Enrolment and How Beneficial It Is for Your Retirement?

Pension Auto Enrolment is when a worker is automatically put into a workplace pension scheme by their employer. Pension Auto Enrolment is typically enforced through government legislation, with the intention to increase people’s private savings and improve their standard of living in retirement. 

There has been an increasing adoption of Pension Auto Enrolment in developed countries, where we are generally seeing an increase in life expectancies and ageing populations. This is no coincidence and is in place to help reduce the burden on the state as the life expectancy of pensioners continues to increase.

For instance, in the UK, approximately 19% of the population was aged 65 or over. There has been a 23% rise in this age group over the last 10 years, and over this time the UK population also grew by 7%.  Furthermore, it has been recognized in behavioural studies that even when people had the option to join workplace schemes, many employees would not join. However, if people are automatically opted in and have to opt out, a significantly higher percentage of people will remain in their workplace schemes.

What Is Pension Auto Enrolment UK?

Auto Enrolment Pension was brought in under The Pension Act of 2008, which reformed workplace pensions. The law became effective from 1 April 2012. The law states that all employers must offer all eligible jobholders a qualifying workplace pension and that the employer must pay a minimum contribution on behalf of their employees.

Pension Auto Enrolment was slowly phased in to ensure that it did not cause disruption to how firms functioned. The largest employers were the first to lead the way, naturally followed by medium, small and micro employers. By February 2018, all employers had been phased in. The size of the employer was determined by the number of workers on the company’s PAYE records held by HMRC. The Pensions Regulator wrote to each employer 18 months before the enforcement date of their requirements for Auto Enrolment Pension.

Who Is Eligible for Auto Enrolment UK?

Essentially, every employee is eligible for Pension Auto Enrolment in a scheme, with the following exceptions:

  • A worker who has opted out or ceased active membership of a qualifying scheme;
  • A worker who has given notice or been given notice of the end of their employment;
  • A worker where the employer has reasonable grounds to believe the worker is protected from tax;
  • A worker with charges on their pension savings under HMRC’s primary, enhanced, fixed or individual protection;
  • A worker who holds the office of a director of the employer;
  • A worker who is a member (partner) of a limited liability partnership (LLP) and is not treated for income take purposes as being employed by that LLP;
  • A worker who has been paid a winding up lump sum payment while in the employment of the employer and during the 12-month period that started on the date the payment was made;
  • A worked who ceased employment with the employer after the payment has been paid, and was subsequently re-employed by the same employer;
  • A worker who meets the definition of a ‘qualifying person’ for the purposes of separate UK legislation;
  • A worker on occupational pension schemes and cross-border activities within the European Union (EU).

To be automatically enrolled, you must also earn above the trigger amount which is currently £10,000 and you must be between the age of 22 and the State Pension Age. If you fall within the qualifying earnings band, which is higher than the lower level but does not exceed the upper level, barring other factors, you should qualify for pension contributions. If you are between the lower level and earnings trigger, you may have to opt-in to the company pension. Refer to the table below for the detail.

Pay reference period 2022-2023

When Did Pension Auto Enrolment Start?

As the name suggests, you do not actually have to do anything to be signed up for your workplace pension scheme. As part of the legislation, the eligible jobholder must not be required to provide any information to join the scheme or remain a member. It is the employer’s responsibility to pass all relevant information to the scheme trustees, managers, and/or provider.

The employer has a six-week window from the employee’s start date to auto enrol the individual. The employer will take the following steps: 

  1. Give the pension scheme information about the eligible jobholder
  2. Give the eligible jobholder enrolment information.
  3. Make arrangements for the eligible jobholder to become an active member by the Pension Auto Enrolment date.

How Often Is a Pension Re-Enrolment?

Further to the initial enrolment, employers are also required to re-enrol eligible jobholders into their schemes on a regular basis. Currently, jobholders must be re-enrolled every three years. There is also the possibility of immediate re-enrolment for a few reasons:

  1. The employer caused membership to cease through an act or omission
  2. The scheme ceased to be a qualifying scheme through an employer act or omission
  3. The scheme trustees, managers, or another third party have caused membership to cease
  4. The jobholder ceased to be working or ordinarily working in the UK
  5. The jobholder ceased to have qualifying earnings in the pay reference period
  6. The employer and the worker agree that notice to terminate employment, retirement, dismissal, or resignation have been withdrawn.

What Are the Minimum Pension Contributions Under Auto Enrolment?

Under Pension Auto Enrolment, using standard qualifying tests, the employer is required to contribute at least 3%  of the employee’s qualifying earnings annually, the employee must contribute at least 4% of their qualifying earnings, and with tax relief on employee contributions adding to 1%, the total minimum contribution level is 8% of an employee’s qualifying earnings. 

The minimum contribution applies to anything over £6240 and up to a limit of £50,270 for 2022 to 2023. Some employers apply your pension percentage contribution, this would be something you would need to discuss with your employer.

Qualifying Auto Enrolment Schemes

The employer must ensure that the scheme in place continues to be suitable and meet legal requirements. This will include regular reviews to ensure it is of good quality. Employers often decide to utilise existing schemes, you can, however, start new schemes as long as they meet requirements. Trust-based occupational schemes are commonly used such as the National Employment Savings Trust (NEST), there are also master trust or contract-based money purchase schemes. 

Final Salary Pension Schemes and Pension Auto Enrolment

Due to the nature of Defined Benefit schemes, it is unlikely that these will meet the requirements for Pension Auto Enrolment. In particular, there is a waiting period before an employee can join, which contradicts the purpose of the legislation. However, employers can set up a scheme for the initial waiting period.

If a Defined Benefit scheme is used, it must also provide benefits that are equal to or better than a set of specifications, which we have outlined below:

  1. Pension age of 66 (rising in line with state pension age)
  2. Annual pension of 1/120th of average qualifying earnings in the three tax years before the end of the pensionable service to a maximum of 40 years
  3. Revaluation in deferment/accrued benefits by a specified method
  4. Statutory increases to pensions in payment

Should You Opt-In or Opt-Out of Your Auto Enrolment UK?

Whether you prefer to stay or to transfer out your Pension Auto Enrolment, a thorough analysis of your risk profile, financial situation, and financial goals is paramount. At Cameron James, we helped multiple clients with the best financial advice concerning their UK pension assets. Book yourself in for a free initial consultation with one of our IFAs to ensure any decision concerning your UK pension assets is in your best interest through the button below.

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Pensions Advice

SERPS Pension Scheme Explained

SERPS Pension Scheme Explained

What Is a SERPS Pension?

SERPS stands for State Earnings-Related Pension Scheme, which was a scheme introduced by the government to replace the graduated scheme. The purpose of the scheme was to provide additional earnings to people’s basic state pension. For this reason, it’s also known as the Additional State Pension. It operated between 1978 and 2002, and those who paid Class 1 National Insurance Contributions (NIC) during this period accrued SERPS benefits.

How Is the SERPS Paid Out?

The amount that you will receive from your SERPS is dependant on a few factors:

  • How many years you paid National Insurance for;
  • Your earnings;
  • Whether you’ve contracted out of the scheme;
  • Whether you topped up your basic state pension (this was only possible between 12 October 2015 and 5 April 2017).

If you earned over the Lower Earnings Limit (LEL) you were eligible for the SERPS. The benefit was calculated based on an individual’s earnings between the LEL and the Upper Earnings Limit (UEL). If you had retired before 6 April 1999, your maximum entitlement was 25% of the revalued UEL. 

The benefit level was seen to be too high, and in 1988 it was announced the maximum benefit would be reduced to 20%, and rather than being calculated based on the best 20 years, an individual’s revalued working life earnings would be used to determine the benefits. 

Can I Get Money Back From SERPS?

You can no longer pay into the SERPS pension scheme as it stopped running in 2002, when it was replaced by the S2P (State Second Pension), which operated in a similar way. In 2016, it was replaced by the new state pension and there is no longer an Additional State Pension in place, which largely simplified the system.

What Pension Will I Get if I Opted Out of SERPS?

You may have decided or automatically been taken out of your SERPS pension scheme, in what is called contracting out. You could only contract out of your SERPS, if your employer ran a contracted-out pension scheme. This meant you paid lower National Insurance Contributions, or they were diverted into the alternative scheme.

If you’re contracted out of your SERPS, then your state pension will typically be lower depending on when you retired. You would usually have contracted out for a value of benefits equal to or higher than what was inside the Additional State Pension, in most cases into a Defined Contribution scheme. Therefore, having greater choices in how you received the pot and without being limited to taking the pension as an annuity.

You can check if you were contracted out by checking an old payslip, calling your pension provider, or lastly you can use the HMRC’s Pension Tracing Service, if you have lost the pension provider’s details. After 6 April 2016, when new pension legislation was introduced, it was no longer possible to contract out of your SERPS pension scheme.

Maximum SERPS Pension You Can Inherit

The maximum you can inherit depends on when your spouse or civil partner died. If they died before 6 October 2002, you can inherit up to 100 percent of their SERPS pension scheme. If they died on or after 6 October 2002, the maximum SERPS pension scheme and state pension you can inherit depends on their date of birth. Refer to the table below for the details.

SERPS Maximum Inheritance

How Do I Find Out What Happened to My SERPS?

Some people are unaware they had a SERPS pension scheme and may no longer have any paperwork or connection to the firm that ran their scheme. If this sounds familiar, you can try to track down old pensions using the government’s tracker tool, see the government page here.

Can I Cash in My SERPS?

You cannot cash in your SERPS pension scheme. It is treated in the same way as the State Pension and can only be deferred to when you take the annuity that it gives, and will be paid out at the same time.

Get in Touch With Us for Your SERPS Pension Scheme

If you have a SERPS pension scheme or are not sure if you do and would like to discuss it with an adviser, please do get in touch. We at Cameron James speak with many clients who have a SERPS pension scheme, have contracted out of the scheme, or who didn’t even know they had one. We will be able to help you understand your pension assets and how to maximize them. Click the button below to start a free initial consultation with one of our IFAs.