United Kingdom is one of the most regulated jurisdictions which has progressed over the years with the introduction of new regulators. There are many regulators like the Financial Conduct Authority(FCA), the Pensions Regulator(TPR), the Prudential Regulation Authority(PRA) who all play their own part in regulating the UK pensions industry.
The Financial Conduct Authority was established in April 2013 and it is their responsibility to promote the safety and appropriateness of the firms they regulate. The FCA currently service around 56,000 financial service firms.
Heritage Pensions Limited are authorised and regulated by the Financial Conduct Authority, registration number 4758096. They are the scheme administrator and provider of our self-invested personal pension (SIPP’s) and are the asset trustee to the Heritage SIPP, which the International Expat SIPP and IVCM Heritage SIPP are part of.
In 2012, the UK Government implemented ‘Auto enrolment’ which has meant that every employer in the UK must enrol its eligible employees into a workplace pension scheme and make a minimum employer contribution. This has significantly increased the number of people in the UK paying into a pension scheme, and it is now estimated that 5.4 million workers have been enrolled so far.
Generally speaking, there are two types of pension schemes in the UK;
Defined Benefit scheme or sometimes known as a Final Salary scheme. A Defined Benefit scheme normally offers you an income in retirement based on a proportion of your ‘final salary’, although other factors can be taken into account, and is calculated is based on your earnings and length of membership in the scheme. Benefits at retirement may be provided as an income or as a tax-free cash lump sum and an income.
Defined Contribution scheme or sometimes known as money purchase scheme. In a Defined Contribution scheme, each member of the scheme builds up their own pot. The benefits on retirement are based on the amount of money that has been paid in to the scheme, and the investment growth on the contributions. In most instances, each member may be able to decide how their pot is invested, and can decide how they draw benefits, which may be a combination of income and tax-free cash lump sums.