London and Colonial has today announced the launch of the EU SIPP, for individuals resident outside the UK.
The EU SIPP is similar to UK SIPP but enables a wider range of investments including residential property in both the UK and EU, provided they are not used by either the SIPP member or a connected person.
It allows for a tax free lump sum of 25% of the fund value to be taken from the age of 55, with the remainder providing income, which can be paid monthly, quarterly or annually. There is the additional option to receive ad hoc payments during the year.
The SIPP is primarily aimed at ex-patriot individuals who have been living outside the UK for five tax years or more.
Adam Wrench, Product Development Manager at London & Colonial, says: "When investors move abroad they typically leave their pension behind in the UK or transfer to a QROPS.
"Once they have been resident overseas for at least five tax years, transferring to the EU SIPP will give them more flexibility to manage their retirement options and to make provision for their dependents."
The EU SIPP pays out 100% to beneficiaries on the member's death, whereas in the UK, tax rules means up to 82% of an individual's pension fund is lost on death, even if the member is a non UK resident at the time.
Adam Wrench adds "This provides the opportunity for estate planning to be undertaken knowing tax will not be automatically deducted from the pay-out."
"Quite often where a husband and wife have emigrated together, in the event of the death of one of them the surviving spouse will return to the UK. With the EU SIPP the non-residency status of the scheme is locked in."
Additional features of the scheme include no restrictions on borrowing either for the purchase of commercial or residential property or for other purposes, compared to a 50% restriction under UK SIPP rules.
Slow progress in improving diversity
Share purchase deal with assets of £28m
Came into effect in January
Three examples of compensation rule issues
Buying in baskets