Income drawdown when based abroad

Essingeviken

I have a pension pot invested in Standard Life’s Stakeholder pension fund. No contributions are now made because I live abroad. The amount is not large, but exceeds £30,000. As I am now aged 60 years, I am looking to withdraw that fund in the next few years. I decided that income drawdown was the best alternative. On contacting Standard Life however, I was told that this alternative was not available to me because Standard Life is not licensed to offer this alternative to me as an overseas resident. The alternatives available to me are the following:
1. Cash withdrawal of the entire amount – 25% of which would be tax free and the rest subject to UK emergency tax of 45%.
2. Transfer to QROPS transfer to an equivalent scheme in my country of residence.
3. Provision of an annuity. A sample annuity was provided which, unsurprisingly, appeared to be very poor.
None of the above alternatives are ideal for me and I would still like to do income drawdown. Does anyone know if other UK pension suppliers are available to offer this, or if there is some form of blanket legal bank on offering this to overseas residents? I also wonder if it is possible to take the 25% cash and the remainder at different times.

dunstonh

On contacting Standard Life however, I was told that this alternative was not available to me because Standard Life is not licensed to offer this alternative to me as an overseas resident.

This is almost certainly because your existing plan does support income drawdown. Most legacy plans do not. So, it would require the purchase of a new pension plan. And that is where it falls down for you, in respect of Standard Life (but not necessarily others).

, or if there is some form of blanket legal bank on offering this to overseas residents?

It is partly regulatory (if you are based in the EU, for example, it would need passporting permissions to be held) and partly internal compliance risk and business choices.

You dont state your country of residence.

TBC15

What stops the OP transferring to a SIPP with AJ Bell and drawing down just under the PA? (Assuming the OP has UK passport)

dunstonh

TBC15 wrote: »

What stops the OP transferring to a SIPP with AJ Bell and drawing down just under the PA? (Assuming the OP has UK passport)

I don't know what AJ Bells questions are but residency for tax purposes is usually asked by providers.

TBC15

dunstonh wrote: »

I don't know what AJ Bells questions are but residency for tax purposes is usually asked by providers.

They were happy to take mine with full disclosure.

Edit OP may hold Swedish passport so not same same.

xylophone

https://harrisonbrook.co.uk/sipp-for-non-uk-residents-uk-expats/

You might try above?

Or enquire of AJ Bell or Hargreaves Lansdown?

bostonerimus

Local taxes must also be considered. These will be determined by the relevant tax treaty with the UK and local tax law. As an example other countries might not recognize the UK's 25% tax free lump sum and they might treat income drawdown differently than an annuity. In the worst case even the transfer to a SIPP might been taxable. So the UK tax is only half of the matter, how your country of residence treats these pension changes must be understood too.

Essingeviken

I have dual Swedish/UK Nationality but ordinarily resident in Sweden where I am taxed. The amount of money isn't really enough to make it worth while paying expensive third parties.

I don't think my policy is a legacy policy which prevents income drawdown. Standard life were very careful about sending me a brochure with all the options detailed, including income drawdown. It was only when I said I was a foreign national that they said they are not licensed to offer this. They were also careful about emphasising my right to get other annuity quotations. QROPS isn't a very good solution for me as I am quite near needing the cash and anywhere, there are few QROPS schemes approved with Swedish suppliers for some reason.

Essingeviken

"So the UK tax is only half of the matter, how your country of residence treats these pension changes must be understood too."

Yes, I realise that....effectively everything is income in Sweden and any tax paid in the UK can be offset against your local tax bill. However, if you have paid more tax in the UK you can't reclaim it.

bostonerimus

Essingeviken wrote: »

"So the UK tax is only half of the matter, how your country of residence treats these pension changes must be understood too."

Yes, I realise that....effectively everything is income in Sweden and any tax paid in the UK can be offset against your local tax bill. However, if you have paid more tax in the UK you can't reclaim it.

OK, sometimes your primary local tax authority want's to be paid first, it will depend on the type of income, domestic law and the terms of the treaty. Good luck

sandsy

I see no reason you can't use drawdown. Drawdown is just a feature of a personal pension so if you can have a pension, you can have drawdown.

Ask more about this so-called license issue. Ask them to point out to you where you can find the details of it that prevent them from doing this for you. Basically, throw it back at them. It sounds nonsensical to me.