London & Colonial launches EU Sipp

16 November 2009 12:42 pm | By Helen Pow

The firm says the EU Sipp is similar to self-invested pensions in Britain but allows a wider range of investments including residential property here and abroad provided that it is not used by either the Sipp member or a connected person.

Other investments that would be treated as taxable property under UK legislation are also permitted as long as neither the member nor a connected person obtains any personal use or enjoyment.

The entire fund value will be available to be paid out to beneficiaries on death with scope for tax and inheritance planning within the country of residency.

The EU Sipp allows for a tax free lump sum of 25 per cent 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 scheme imposes no restrictions on borrowing either for property purchase or other purposes compared to the 50 per cent restriction imposedunder UK Sipp rules. Loans of up to 50 per cent of the fund value are permitted to a connected company and up to 100 per cent to an unconnected company.

The EU Sipp is a Gibraltar pension scheme subject to the rules and legislation in Gibraltar and to all relevant EU directives.

Product development manager Adam Wrench 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 years, transferring to the EU Sipp will give them more flexibility to manage their retirement options and to make provision for their dependents.

“With the EU Sipp, 100 per cent is paid out on the member’s death. This provides the opportunity for estate planning to be undertaken knowing tax will not be automatically deducted from the pay-out.”

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