What best options for a UK defined contribution pension pot?

[GMill 6]

I have recently become aware of apparent post-Brexit loss of options on what non UK residents can do with any fund in a UK private pension scheme. The only option I am now offered by Standard Life in the UK is a complete cash payout in one go - there is no longer any option for UK annuity purchase, transfer to a drawdown account or anything else of that kind for non UK residents. From my research so far it seems that other UK companies are saying the same.
The amount involved for me is relatively small (well under 100K). From what I can see, the following could be my options

1. Take the cash payout in the UK with whatever tax implications (I can work out the normal UK tax due but am not sure how that works through into German tax via the double taxation agreement)
2. Transfer it to a QROPS - I have found a German company that specialises in this. Not sure the implications of this if what I really then want is some kind of immediate Sofortrente or such equivalent to a UK fixed term annuity.
3. Transfer it to an International SIPP - don't know anything much about that .. Similarly as 2) what I really want etc

 

Any comments, experiences, advice welcome

 

[optimista 5,934]

A bird in the hand... incurs no fees.

[GMill 6]

12 minutes ago, optimista said:

A bird in the hand... incurs no fees.

I was hoping for some sensible answers

[optimista 5,934]

Pardon me. You could / should perhaps have better researched TT.

 

It is anything but sensible.

 

I stand by my point however.

[GMill 6]

9 minutes ago, optimista said:

Pardon me. You could / should perhaps have better researched TT.

 

It is anything but sensible.

 

I stand by my point however.

You are not making any point at all. People have pension funds, some decision has to be made about what to do with them. If you have nothing meaningful to say then please say nothing.

 

[RedMidge 6,638]

If you go to Forum- Finance, you will see various experts who advertise their services on Insurance, investment  etc.

They would be your best route to your questions.

[almafreya 60]

1 hour ago, GMill said:

You are not making any point at all. People have pension funds, some decision has to be made about what to do with them. If you have nothing meaningful to say then please say nothing.

 

You could also try asking here:

 

https://www.reddit.com/r/germany/

[optimista 5,934]

Point 1 will incur lower fees than your other options. Clearly I was too oblique. Nobody knows your tax position so impossible to comment or compare with other options. 

 

For personalised, professional advice... Starshollow.

[john g. 37,776]

5 hours ago, almafreya said:

You could also try asking here:

 

https://www.reddit.com/r/germany/

Starshollow is now a Mayor of his town and no longer active in insurance/ financial services but hus sidelkick Paul Downes ( a Toytown forum member ) is an expert on QROPS and the pros and cons on transferring or not UK pension money.

You might wish to try his services.

 

Edit: whoops, post meant for optimista's gaze.

I am a professional independent insurance broker and authorised advertiser. Contact me.

[optimista 5,934]

 

This came ro mind... dunno why.

 

https://m.youtube.com/watch?v=sFacWGBJ_cs

 

[hamsterberlin 10]

Some information on opt 3 can be found from this provider:

 

https://www.myexpatsipp.com

[mrloop 13]

I have exactly this issue.  I started exploring QROPS with Starshollow a couple of years ago. At that to me the only fund open to me was from Alte Leipziger and the quote that I had was not very attractive.  Sadly Starshollow went quiet on me and I put my transfer plans on hold. Since then I see that another two funds have  appeared on the UK list: 

Condor Lebensversicherungs-AG Basis-Rente    Germany
Condor Lebensversicherungs-AG Sofort-Rente    Germany

 

I'm currently re-investigating so I'm interested to see if anything comes from this thread

 

[mrloop 13]

I was asking elsewhere about this topic was sent this link which gives some general information (but I know nothing about the company) https://sjb-global.com/germany/

[HEM 11,164]

2 hours ago, mrloop said:

Sadly Starshollow went quiet on me

 

Try contacting @Paul@CRCIE

[mrloop 13]

Coming back to this one. I'm in a similar situation to the OP and have a pension pot sitting in the UK which can now only be paid out in its entirety . After various discussions (including some of the usual suspects here :-) ) I've decided that the QROPS and SIPP routes are not viable for me. Hence I want to understand the tax situation both here and in the UK. I've been told by the fund holder that the first 25% is tax free in the UK and the rest taxable as income. How would the lump sum be taxed in Germany? Is it possible to extract the fund free of UK tax and have it taxed in Germany?

[PandaMunich 16,910]

>mrloop wrote: I want to understand the tax situation both here and in the UK. I've been told by the fund holder that the first 25% is tax free in the UK and the rest taxable as income. How would the lump sum be taxed in Germany?

Please read this: https://www.toytowngermany.com/forum/topic/393271-starting-with-2024-foreign-currency-accounts-usd-gbp-make-your-german-tax-return-a-nightmare/#comment-3954258

[mrloop 13]

@PandaMunich Thanks for that - a very interesting thread touching on several other areas that will impact me. So for the pension fund question, if I understand correctly, I need to check the contributions amount and tax relief status, then determine the growth. If it is taxed in Germany I can get any tax deducted in the UK returned (eventually...). If not taxable in Germany then the growth amount needs to go towards progression.

BTW I am over 60 and have not made any payments into the fund for about 20 years.

[PandaMunich 16,910]

Yes, you have understood everything correctly :-)

Use the ECB exchange rates to convert the GBP into € for dates back to January 1999 (they also have a CSV file at the bottom of the page with the exchange rates): https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/index.en.html

For older exchange rates (1998 to 1949), go on the Bundesbank website:
and get the DM to GBP exchange rates "Devisenkurse der Frankfurter Börse / 1 GBP = ... DEM / Vereinigtes Königreich": https://www.bundesbank.de/dynamic/action/de/statistiken/zeitreihen-datenbanken/zeitreihen-datenbank/759778/759778?listId=www_sdks_b01011_3
Click on "Hinzufügen" at the right, then click on the "Datenkorb" logo at the very bottom beneath the table, then on "Download" and then on "BBEX3.D.GBP.DEM.AA.AC.000: Devisenkurse der Frankfurter Börse / 1 GBP = ... DEM / Vereinigtes Königreich" to actually download it (yes, I know, it's a bit of a trek).

Don't forget to convert the DM you get into €, by dividing the DM amount by 1.95583 (since 1€ is fixed at 1.95583 DM).

[GMill 6]

I'm coming back in on my thread here because I am still very much in the middle of these things. Condor by the way have just suddenly in the middle of QROPS transfer application decided that they are no longer going to allow full withdrawal from the fund after transfer - thanks for the advice above, I will read it carefully too.

I have another related issue about a defined benefit pension that I'm already getting from a UK company. Both the Finanzamt and my Steuerberater have put this down under the Progressionsvorbehalt only as if it were not taxable in Germany. This seems to me to be nonsense - in fact the Finanzamt had already stamped a form that I sent to UK HMRC to get myself a NT tax code in the UK.

Now I'm in the strange position of trying to persuade the FA that they should be taxing me. I had put the income in the R-AUS section §33 that covers "Lebenslange Leibrente aus einer ausländischen betriebliechen Altersvorsorgeeinrightung soweit diese auf im Inland NICHT geförderten Beiträgen berüht" .. which my Buhl tax software then taxes at 22% only by Ertragsanteil .. Does anyone know whether this is correct .. and if not where is the right place to enter it .. I would like to be able to clarify this with both the FA and my Steuerberater - If I am correct the it seems quite favourable to me

Thanks in advance for any help on that

[PandaMunich 16,910]

>GMill wrote: "Lebenslange Leibrente aus einer ausländischen betriebliechen Altersvorsorgeeinrightung soweit diese auf im Inland NICHT geförderten Beiträgen berüht" .. which my Buhl tax software then taxes at 22% only by Ertragsanteil .. Does anyone know whether this is correct 

Yes, it's correct.
Why?
Since Germany did not hand out any tax advantages when you paid in those pension contributions (the UK did, though evidently not for more than 15 years, or the UK would have received the taxation rights on it, according to article 17 (3) of the double taxation agreement), Germany then "pretends" that you only paid already taxed money into it and only makes you tax the "growth".

In case of a lifelong pension, this "growth" is estimated to be the Ertragsanteil (= growth part) of the lifelong pension.

This is laid down in § 22 Nr. 5 Satz 2 Buchstabe a) EStG: https://dejure.org/gesetze/EStG/22.html
which points you up to the start of § 22 EStG, to "Nr. 1 Satz 3 Buchstabe a", and since it is not a social security pension (in UK-speak, not a "State Pension"), but a private pension, you end up in bb.), i.e. if you first received that private pension at age 60 or 61, then that table in bb.) states that the Ertragsanteil is 22%.

It's the same reasoning as with US pension plans for which Germany hadn't given any tax breaks, see the BFH ruling of 28. October 2020, X R 29/18 here: https://www.bundesfinanzhof.de/de/entscheidung/entscheidungen-online/detail/STRE202110086/