QROPS Pakistan
A UK pension can be transferred to Pakistan via a QROPS, however there is now a 25% Overseas Transfer Charge (OTC) for residents living in Pakistan. There is no overseas transfer charge on a pension transfer to an International SIPP.
Over 47,000 Brits are resident in Pakistan according to a BBC survey.
The Pakistani rupee, abbreviated PKR, is the national currency of Pakistan. The Pakistani rupee is made up of 100 paise and is represented locally by the symbol Rp or Rs. The PKR is often referred to as rupees, rupaya, or rupaye.
The word Rupee originates from the Sanskrit word rup or rupa, which means “silver” in many Indo-Aryan dialects.
As of July 2021, US $1 is worth roughly 160 PKR.
In 2015 there were around 8.7 ATMs per 100,000 adults in Pakistan. This is a low ratio by international standards. But if you’re in a city centre, you should be able to find one and get some cash out. If you’re heading out of the city, it’s definitely worth taking money out before you do so.
Click here for more information on ATM fees & ATM locator in Pakistan.
International SIPP in Pakistan
There is no Overseas Transfer Charge for International SIPPs as a resident in Pakistan. A UK pension can be transferred to an International SIPP in the Isle of Man into US Dollars, GBP or EUR.
You will be able to draw your pension from a bank account of your choice. This can be an offshore account or a local bank in Pakistan where you can withdraw Pakistani Rupees from the ATM with your Visa card from your offshore bank account. The other option is to transfer money online from your offshore bank account (for example in USD) to your local bank account in Pakistan in Pakistani Rupees.
International SIPP for Residents in Pakistan
If you live or work overseas in Pakistan, you can transfer your UK pension to an International SIPP in GBP, EUR or USD.
You can then draw your retirement income from a local bank in Pakistan or from an international bank of your choice.
Benefits of an International SIPP
- Transfer a UK pension to an International SIPP in the Isle of Man
- Transfer from GBP to EUR, USD or leave it in GBP
- Invest in a professionally managed insurance wrapper for security of assets
- Invest in discretionary managed funds, ETFs or direct shares
- Invest in fixed interest securities such as government and corporate bonds
- Invest in commodities such as gold or commodity funds
- Invest in REITs (Real Estate Investment Trusts) (USD only)
- Invest in mutual funds (USD only)
- An international SIPP can provide a regular or variable income and there is no obligation to purchase an annuity
- Provides greater choice and flexibility regarding investments, tax benefits and currency choice
- Where you have your main home will determine the tax treatment of contributions into the pension scheme
- The UK has negotiated double taxation agreements (DTAs) with many other countries. A DTA may serve a number of purposes including moderating taxation, so for example tax is not paid twice (only once in each country).
- Consolidations of all pensions into one place where it can be easily managed
- SIPP holders can begin taking benefits at any time between age 55 and 75.
- Any residual fund can be passed to your beneficiaries’ tax free on your demise up to the age of 75. After that time, they will pay tax at their marginal rate of income tax.
Risks of Investing in a SIPP
Most of the risk of investing in an international SIPP comes from mismanagement of funds. You need to speak to a qualified financial advisor in Pakistan and ask for professionally managed funds.
You need to read through all the terms and conditions carefully, especially if you want to invest in unregulated funds.
A good financial adviser in Asia will set up a portfolio which is managed professionally.
Why Not Invest in a UK SIPP instead?
If you move to Pakistan or overseas, you will no longer be able to add money to your SIPP with most UK SIPP providers.
You will still be able to take benefits or transfer your SIPP to another provider. UK SIPPs will only be able to make payments to a UK bank account for SIPP withdrawals. There are also other limitations.
Why Invest in an International SIPP instead?
You can add assets to an International SIPP and make payments to an overseas bank account. You can withdraw money from your overseas bank account.
Can I Move My UK SIPP Offshore?
You can transfer your UK pension plan overseas to an International SIPP or a Qualifying Recognised Overseas Pension Scheme (QROPS).
An International SIPP has no Overseas Transfer Charge (OTC). A QROPS has a 25% OTC for residents in Pakistan.
It’s important that you check with the administrator of the scheme you want to transfer to that they will accept the transfer.
Can I Move My QROPS to a SIPP?
Yes, you can move a QROPS to a SIPP, but you may lose any benefits you had from holding a QROPS.
In terms of suitability, a QROPS is generally more appropriate for those with larger pension pots. A QROPS can also help protect against future tax liabilities for those nearing the UK Lifetime Allowance (currently £1,055,000). Most QROPS face no tax upon death as long as you reside overseas.
There is no Overseas Tax Charge on a QROPS if you move your UK pension to a QROPS in the EEA, Australia or New Zealand.
An International SIPP is now the preferred option for anyone resident outside of the EEA (European Economic Area) who wish to transfer their UK pension overseas. This is due to the 25% Overseas Tax Charge for members outside the EEA, Australia or NZ.
What is the Lifetime Allowance (LTA)?
The Lifetime Allowance is the maximum value of your pensions before a 25% tax is imposed by UK tax authorities. At present this tax is levied on the excess over £1,073,100 (2020/2021) when benefits are crystallised. There are strategies available which can help reduce tax liability, including applying for individual or fixed protection. It should be noted that these options do not remain open forever. For those with funds approaching the LTA limit, it is important to consider your options as soon as possible.
Income options and Tax Treatment in Pakistan
25% of a SIPP can be withdrawn as a Pension Commencement Lump Sum (PCLS) tax-free. The residual fund would then provide an income in Pakistan and is eligible to be taxed locally.
SIPP holders can begin taking benefits at any time between age 55 and 75. Any residual fund can be passed to your beneficiaries’ tax free on your demise up to the age of 75. After that time, they will pay tax at their marginal rate of income tax (in the UK).
How Do I Transfer My UK Pension to an International SIPP?
Residents in Pakistan can transfer their UK pension to an International SIPP.
You will need to ask your current pension scheme provider for a Cash Equivalent Transfer Value (CETV). You should also find out what benefits you stand to lose if you transfer out of your current pension scheme in the UK. These facts can help you establish whether a pension transfer into a SIPP is suitable for your individual circumstances.
Transfers to International SIPPs are a lot quicker than transfers to QROPS. The transfer shouldn’t take more than a month or two if the paperwork is correct. You need to contact a financial advisor who is authorised to carry out pension transfers on your behalf.
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