The latest QROPS news

For the thousands of ex UK residents, be they UK citizens or not, who are now living abroad, there is a massive opportunity to transfer what is referred to as preserved pension benefits or accumulated benefits.
Many people who have worked in the UK at one point or another have built up pension funds, be these either company schemes or private. Large amounts or more modest. So long as they have not taken an annuity to provide income they have what appears to be an amazing opportunity to move these funds to far more beneficial QROPS (Qualifying recognised overseas pension scheme) arrangement.

We have been speaking to David McCowan of International Financial Adviser Rochester International. David says, “The main benefits are that pension holders can take slightly more tax free cash than would otherwise be allowed, avoid a potential 55% pension tax charge and then further remove the fund from being subject to Inheritance tax.. When asked what the downside is, David said, “There isn’t really, anyone who qualifies would be crazy not to consider it. They just need to make sure they get good advice as there are some non qualifying schemes which could ultimately involve the customer in a 55% tax charge.”

So, who does qualify for this type of scheme? The key consideration is that you must be looking to either leave the UK or if you are already living abroad, not be considering coming back. Although, it is still worth doing if you are on the fence about coming back, just in case you don’t. You can not have bought an annuity with your pension fund and this does not apply to the state pension.

A couple of examples Mr McCowan gave of typical clients was one of an Indian gentleman who had worked as a Doctor in the UK for over 20 years. He then moved back to India to work leading up to retirement. He had an NHS pension with a transfer value of around £450,000 as well as some private pensions from his private practice. “We helped the client gather together all the transfer values from his various pension sources and transfer them to an HMRC approved offshore scheme.”

Another customer had worked part of his career in the UK for a large oil company built up many years service with his employer and had quite a considerable amount invested in a UK SIPP ( Self invested personal pension ) . Having been working overseas latterly he had come to the conclusion he did not want to return to be resident in the UK. “He urgently wanted to ensure that his family would not see over half his fund disappear if anything was to happen to him, and due to other assets, he was also in the Inheritance tax bracket. This is applicable because it is based on domicile.” “We ensured he got an urgent transfer to a QROPS trust specifically tailored to his individual investment needs.”

QROPS overseas pensions certainly seem to be the buzz word at the moment for many Ex-Pats and it seems long may they continue as the stampede to protect pension benefits and funds goes on. One caveat of warning however is that potential movers need to ensure the jurisdiction and trust scheme are approved by HMRC. Secondly, anyone taking advice needs to ensure that the adviser has appropriate UK pension qualifications. Do not be afraid to ask to see the adviser’s certificate of G60 pensions qualification (This is the highest level achievable and anyone advising on pensions transfers needs to have this) When it comes to investment portfolio, it is also helpful to know your adviser has the appropriate investment qualification. If they cannot provide these then go elsewhere, chances are you are dealing with a non qualified salesman.