Case Study: Mr & Mrs G (an interesting one!)
Mr G, a Brit, contacted us as he had reached age 60 and had received a letter from his former company asking for a decision on what he wanted to do with his company pension scheme as it was due to be paid to him. He was working in Singapore and aimed to be here until at least age 65. At this point he wanted to stop work and their dream plan was to retire full time to the US, where they already had a property. However, the US do not grant “retirement visas” so he thought he would have to split his time between the UK and the US. He was looking for some advice on what he should do with his UK pension scheme.
After meeting with him and reviewing his situation, this is what we did:-
- Started a comprehensive review of his UK pension scheme to understand the options open to him.
- Conducted an in-depth analysis of the tax liability on his retirement income if he retired in either the US or the UK, or if he split his time between the two.
- We looked into the US visa options open to someone looking to retire to the US.
What our research found
- His company pension gave him an adequate retirement income, but since it was coming from a “final salary scheme” the income would drop by 50% on his death for his wife, and on the last death, nothing would pass onto their children or grandchildren. Alternatively he could take a transfer of just over £1 million. This meant that on his death his wife would inherit the entire amount and on her death this would pass onto their children and grandchildren. Also by taking this into an arrangement of his own, Mr G could get access to a much greater retirement lump sum cash (an important factor later).
- Our tax research revealed that, despite US residents being subject to tax on “worldwide income”, he would actually pay less tax if he retired full time to America than in the UK, or if he split his time between the two.
- Our investigations into US Visa options uncovered the EB5 Investment Visa. This requires an investment of U$500,000 for a five year term, but grants a Green Card to the applicant and his wife. Mr & Mrs G did not currently have this amount of spare cash to tie up for 5 years.
The options now open to Mr & Mrs G
By taking a transfer of his company pension, Mr G could ensure that Mrs G would have access to much greater income should he die but also much more cash. Also by taking a transfer it enabled them to potentially pass a much greater inheritance (an additional £1 million) onto their children and grandchildren. More importantly, Mr G could potentially access around U$450,000 cash from this pension immediately.
- By being able to access U$450,000 from his pension immediately, meant that they now had the U$500,000 needed for an EB5 Investment Visa.
- The requirement is that this is invested in the US for 5 years. However, this time scale co-incided with when they were looking to retire anyway. At the end of the five year term, the investment could be liquidated and returned to them to be re-incorporated back into their retirement plan.
This enabled Mr & Mrs G to achieve their best case retirement scenario.
However, we also
- Helped them update their wills and powers of attorney
- And arranged a short term savings plan to help them save their surplus income while working in Singapore.