How We Invest

Why Do People Transfer?

People transfer a pension to either an offshore scheme or a private scheme within the UK for many reasons. It is common for people to move from a DC pension to another DC pension to pursue better performance, better service and lower fees.

DB Scheme to DC Scheme

TThe most common reasons for moving from a DB scheme to a DC scheme may include:

  • Earlier access to the funds
  • Increased drawdown flexibility
  • Increased inheritance planning options
  • Potential for more growth

DB Scheme to another DC Scheme

The most common reasons for moving from one DC scheme to another DC scheme may include:

  • The amalgamation of multiple pension pots into one for easier administration
  • Improved service from the pension administrators
  • Improved investment options
  • Potential to reduce fees

Defined Benefit

SIPP

Normal Retirement Age (The age at which the funds can be accessed)

  • Typically age 60 or 65 depending on the scheme
  • Early access usually results in an early retirement factor being applied
  • Access from 55

Lump Sum Options

  • One time only at the start of your pension
  • A commutation factor may apply reducing the future income level
  • Normally you can give up a maximum of 25% of your annual income in exchange for a lump sum
  • In some cases this may be an additional benefit and separate to the annual income
  • Multiple lump sums can be taken during retirement
  • These can be spread across numerous years to maximise tax efficiency

Drawdown

  • Set income level
  • Typically based on years of service, accrual rate and final salary
  • You have the flexibility to choose how much income to take out at any time
  • The rest can stay in your investment account with the aim to grow the capital over time

Investment Flexibility

  • No flexibility or control over the investment strategy
  • Flexibility to invest the funds as you would like
  • Typically, an investment strategy is created by an advisor of your choice

Taxation

  • You may be able to take a tax-free pension commencement lump sum (PCLS)
  • UK income tax is applied as you drawdown
  • You may be able to take a tax-free pension commencement lump sum (PCLS)
  • UK income tax is applied if you are a resident of the UK
  • If you are abroad, you may have the option to pay tax where you are resident

Death Benefits

  • Typically, 50% or 66% is paid to your spouse
  • A child’s pension may be available depending on your scheme
  • You can choose to leave your pension to who you wish
  • If you pass away under the age of 75, there may be no tax payable
  • If you pass away over the age of 75, beneficiaries may be charged at their marginal rate of tax

Currency Options

  • Normally, the only option is to be paid in GBP
  • This is subject to currency risk if GBP is not your base currency
  • The pension can be held in multiple currencies
  • This may be beneficial if you are planning on retiring outside of the UK

Risk

  • Considered low risk as schemes have cautious investment strategies and income is ‘Guaranteed’
  • A scheme may not be able to meet its liabilities and be in a ‘deficit’, meaning it can not provide the incomes it has promised
  • The risk depends on your investment strategy
  • Could be increased exposure to market volatility
  • Easy for advisors to charge high fees or provide poor advice

Understanding Pension Fees

Third-party companies charge most offshore financial advisors to manage your assets, and these charges and commissions may be hidden.

You could be paying at least 4% or 5% per annum before any growth is achieved. Brite Advisors USA do not receive any commissions from any other firm.

Our fee* is 1% per annum, plus trustee fees and an annual fund cost generally ranging from 0.07% – .0.20%. For more information, please refer to our ADV Part 2A.

* If entering the Brite platform with a UK pension, there is a one-off SIPP account set-up charge, ranging from £2,000 to £40,000, depending on fund size, deducted from the asset value within the transfer arrangement.

* The total expense ratios of the portfolios range on average from 0.07% to 0.20%. The maximum total expense ratio of any underlying holding within the portfolios is 0.64% on GBP, and 0.45% on USD, however the weighted total expense ratios of the entire portfolio will not exceed 0.20%.

The Transfer Process

Management of your investment takes place on our platform in a portfolio suited to your investment goals, time horizon and risk tolerance. We take care of asset allocation, trading, and periodic rebalancing giving you a state-of-the-art solution that maximises returns.

Diversification is used to lower volatility (and risk) while rebalancing is used to lower volatility and improve returns – a process that sells assets that have become more expensive while buying assets that have become cheaper.

When investing with Brite  you get access to highly experienced and professional asset managers that will determine the best way to invest your assets and maximise value over time.

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