HM Revenue & Customs is imposing a tough tax regime on some QROPS providers who have abused tax rules – but other more reputable offshore centres like Guernsey have been caught in the crossfire.

Now, Guernsey politicians are ready to agree a new pensions framework that focuses on meeting all HMRC’s guidelines without jeopardising the retirement savings of any investor.

The new Guernsey QROPS rules cover third party investors who keep their pensions on the island but live elsewhere.

Under the new rules, HMRC requires the tax authority for the offshore centre to offer QROPS pensions on the same terms to local residents and non-residents.

The problem for Guernsey is residents pay tax at 20% on pension payments but non-residents are taxed at 0%.

From April 6, all pension payments from a Guernsey QROPS will be paid without deducting income tax regardless of the residency of the person receiving the money.

This meets the terms of the new rules and makes all Guernsey QROPS fully compliant with HMRC’s changes. The Guernsey parliament is expected to vote the change through in March.

Now, any Guernsey QROPS investor are assured their pension will not be deemed outside the rules in April – and new investors have the confidence to transfer their pension funds to a Guernsey QROPS without any fears of instability or disruption.

President of the Guernsey Association of Pension Providers (GAPP), Stephen Ainsworth, said “We have been working very closely with the Guernsey Income Tax Office and with senior politicians to create a flexible but robust pensions system which not only meets the needs of Guernsey residents but secures the position of those former members of UK pension schemes who have trusted Guernsey QROPS with their retirement savings. I am delighted with the result, which demonstrates the importance of pensions saving within Guernsey.”

More dollars were spent on cars and trucks while companies replenished their stocks at the fastest rate for the last two years, but massive government spending cuts weighed heavily on confidence and growth.

Growth flickered in to life in the final quarter as the rate surged to 2.8%.

The US government’s commerce department played down talk of an economic recovery by explaining spending is expected to remain flat over worries about jobs, and companies will spend less on restocking as a result in the first quarter of 2012.

Consumer spending was slightly up at 2%, but wages ratcheted up just an average 0.8% in the year after six months of flatlining. Consumer spending provides around 70% of economic activity in the US.

US government spending was down 4.6% in the final quarter – mainly attributed to defence cuts, with the army losing 80,000 troops to fall to a peace time low of around 490,000 over the next few years.

Year-on-year, government spending was down 2.1%, the biggest fall since 1971.

The Federal Reserve has hinted that a full recovery is not expected for three years and interest rates will not rise until late 2014 at the earliest.

Government growth forecasts were revised down from 2.9% to 2.7%.

Federal Reserve chairman Ben Bernanke is considering another round of quantative easing to speed up the recovery, while warning the eurozone debt crisis still posed a big risk to the US and global economy.

The measure of the progress of the US economy is output is the same as 2007, but on the back of 6 million fewer workers who have lost their jobs.

Missing opportunities by selling near the bottom or buying as prices were rising added to the financial woe of investors experiencing an awful year, says a research report from fund managers Morningstar.

Key findings from the survey showed:

• Fund outflows were €114 billion – €70 billion from equity funds and €44 billion out of fixed income
• Money market funds saw the strongest inflow in December, with €4.4 billion, but flows to short-term funds were in the red for the year
• Morningstar’s EUR money market short term and EUR money market were the least popular money market categories in 2011, with more than €44 billion in outflows
• Guaranteed funds were especially unpopular in December and throughout the year
• Europe’s largest and third largest fund companies, JP Morgan and BlackRock, maintained their rankings in 2011, thanks to money market business in Sterling and US dollars.
• Franklin Templeton looks like the big winner in Europe with growth of more than 14%

“The data is showing us just what a bad year it was for the European funds industry,” said Syl Flood, Product Manager, Asset Flows, at Morningstar.

“Macroeconomic uncertainty and market volatility clearly scared investors away from all kinds of funds, with outflows seen in equities, fixed income and money market funds. Even guaranteed funds, apparently designed to outperform in any market, weren’t popular.”

Flood warned against bad timing when switching investments to avoid extra costs.

“Only allocation funds saw net positive inflows. The wash of money out of funds in the face of a difficult year for asset markets is understandable, but investors often cost themselves by selling near the bottom or buying after an asset class has risen,” he said.

“They also incur transaction costs and taxes that might otherwise be avoided. Our analysts therefore routinely caution against attempts to time the market and advocate a focus on maintaining a diversified portfolio structured to meet long-term investment goals.”

His predecessor had agreed a deficit target for 2012 of 4.4 per cent of GDP with the other leaders of the eurozone. This was on the understanding that the deficit at that time was between 6 and 7 per cent. On the basis of those supposed figures, this was optimistic. However, economists recently revealed that the current figure is 8 per cent.

When the new government took up the country’s reigns and finally got to go through the books with a fine toothed comb, they expected things to be bad, but not this bad. New governments are often surprised at what they find, with Britain’s George Osborne finding a note from his predecessor apologising that the money had all been spent.

To usher in their new tenure, the Spanish conservative government announced a programme of spending cuts and tax rises totally fifteen billion euros. That still leaves more than twenty billion euros to find behind the sofa, as there is a “gap” of thirty six billion before the sums add up.

Accordingly, Spaniards expect further misery from the next budget, due in March. There is also talk of changes to the country’s employment laws, making it easier to hire and fire in a flexible manner.

Rajoy and his colleagues debated long and hard about how to implement the current tax rises. They rejected a rise in VAT to impose a sliding increase in income tax, with a view to spreading the pain more fairly. Whether or not this will be the case remains to be seen.

Perhaps the most important impact of these measures will be the confidence they inspire in investors looking to do business in Spain. The programme seeks to demonstrate that the government has control of the situation.

In an uninspiring global review, the IMF has downgraded growth figures as the eurozone is mired in recession.

Emerging economies are doing their best to pull the rest in to line, with China expected to drop back from last year’s stupendous 9.2% growth to 8.2% and India is hothousing at 7%, while the more established markets in the US – expanding at a sluggish 1.8% – and Japan forecasting to shrink by 0.4%.

Overall, says the IMF, the world economy will grow in 2012 – by 3.25%, but the European debacle has lead to analysts revising the figure down from 4%.

The Eurozone faces a ‘mild recession’ that could well prove worse if government borrowing costs and banking problems deteriorate.

“The current environment provides fertile ground for self-perpetuating pessimism,” says the IMF.

The IMF is urging eurozone governments to act decisively to end the continuing economic problems, something the heads of state have been unable to do despite months of behind the scenes wrangling, summits and grandiose strategy announcements.

The IMF fears Greece will have to withdraw from the euro as the country’s black hole of crippling debt implodes.

Withdrawing from the euro will allow the government to devalue and reset the economy, a move that is closed while remaining inside the eurozone.

Spain and Italy are also slowly but surely being pulled in to the economic grinder and the government’s face more tough decisions to stave off disaster, the IMF said.

Markets across Europe fell back slightly on the announcement.

As a glimmer of hope, emerging economies are performing better than their first world counterparts – so much so Indonesia’s credit rating has been upgraded to ‘investment status’ by Fitch Ratings and Moody’s.

A deal must be reached before the deadline of March 20, when the ailing country is due to receive another bailout from the IMF and make some substantial payments.

Most Greek sovereign debt is held by European banks, who may face collapse if Greece has a “disorderly” default. It seems that the difference between orderly and disorderly in this case is whether the default has been agreed, or notified and consulted on, in advance.

This is where the talks keep faltering. Greece is trying to broker a restructuring deal that would cut its debt by 100 billion euros. However, its creditors have already taken a significant haircut – some by up to 50%. Greek Prime Minister Lucas Papademos has warned that, unless a deal can be reached quickly, the inevitable default will be the worst case scenario all round.

A new deal is not just important to prevent default on March 20: being able to demonstrate that their affairs are in better shape means that Greece may qualify for more hand outs.

Austerity measures have been ill received by the public, who consider themselves to have been failed by their domestic and European governments. Creditors are also tired of debts being restructured every few months – in a world where they are not going to get back all of their money, they can be forgiven for wanting to know exactly how little of it they will receive.

In the meantime, Germany’s Angela Merkel will have Greece pulling at her apron strings for months, if not years to come, as Greece is desperate for the shelter of the euro.

Some investors might suggest that despite the sophisticated research that backs fund managers shifting tother people’s millions around the markets, their best work is no more or less the same as putting money on a horse race.

Most bookies have odds on some of the major issues dominating the headlines – and here’s a look at what William Hill reckons as the likely results.

The odds are set by working out the outcome probability of an event – which is much the same assessment a fund manager makes about the likely rise or fall of a share.

William Hill has a number of political bets open – and here are the details of four:

Will the Euro cease to be the main currency used in Greece by the end of 2012?

The big question everyone would like answered. The odds -

• 4/9 on Greece continuing to use the Euro
• 13/8 on Greece to stop using the Euro to return to the Drachma

The current Euro to cease as a currency beyond the end of 2012?

• 1/7 No
• 4/1 Yes

The country to leave the Eurozone first?

Some surprising odds here – as few politicians are speculating that Germany and France may go and only half the Eurozone countries are picking up bets.

• 1/4 Greece
• 7/2 Italy
• 10/1 Portugal, Germany
• 12/1 Spain
• 20/1 Ireland, France
• 25/1 Belgium

Will the UK have a referendum on the EU Treaty or membership before the next election?

• 1/9 No
• 5/1 Yes

Of course, no one suggest investors should make important financial decisions based on odds set by bookies and these selections are just a bit of fun … but then again, bookies do have a reputation for calling it right when other seemingly more experienced pundits slip up.

Anyone moving from the UK to Israel received pension payments gross from the UK and paid typical 10% income tax in Israel as the result of a generous double taxation treaty with the UK.

This benefit was overturned when the Israeli government decided UK pension income was tax exempt – switching the income tax burden back to the UK, where income tax is charged at 20% for basic rate taxpayers, 40% for those on the higher rate or 50% for top-rated earners.

Switching a UK pension offshore to a qualified recognised overseas pension scheme (QROPS) may offer a safe tax haven for investors – but HM Revenue and Customs in the UK may require offshore tax jurisdictions hosting a QROPS to deduct a withholding tax from April. This change is currently under consultation, but HMRC have given notice that this is likely to become law from April 6.

This leaves a problem for former UK retirement savers living in Israel with a QROPS based in a third country as Israel has no recognised QROPS providers.

Dealing with the problem is a matter of urgency as Israeli residents receiving UK pension payments may already be building a tax liability.

As with all QROPS offshore pensions, each retirement saver needs tailored financial advice that meets their own personal requirements – especially those with pension funds of less than £100,000 who need a scheme with a charging structure that makes the solution cost-effective for an Israel resident.

QROPS.net advisers will help you to match up the most efficient QROPS juridication and scheme for Israel residents. Due to our size and strength we can advise on any scheme in any location around the world, giving you the very best possible solution. Contact QROPS.net today

The firm claims the UK is in ‘technical recession’ and likely to stay mired in low or no growth until the end of summer.

On the bright side, the UK’s financial problems are more of a stall than a plunge in to full recession and no serious double-dip is forecast.

That’s about the only flicker of hope in the dark predictions for the world economy in 2012 from Ernst and Young.

Looking overseas, the Eurozone debt crisis has led to many firms putting spending and recruitment on hold, while the emerging market white knights from the east led by China are unlikely to pull the west out of doldrums as their own growth falters.

Commodity growth is generally a beacon in the blackness of low global growth, but Ernst and Young sees little relief in the markets.

“This silver lining is now looking very tarnished,” said the ITEM Club report from the firm. “Although other commodity prices are adjusting, the oil price has been kept up by social and political tensions and a showdown with Iran would threaten much higher energy prices.

“The current resilience of the US and many other overseas markets and the strength of large company finances mean we do not envisage a serious double dip.”

Meanwhile, Chancellor George Osbourne’s attempts to mediate closer economic ties between Britain and China may not show any tangible results for the economy for many years.

The two governments have reached an understanding, based on China’s plan to establish the yuan as a new currency standard separate from the US dollar and Britain’s need to look for financial business to fuel the City away from dependance on the struggling eurozone.

The move has attractions for both sides, but the yuan amounts to little in trade and global transactions worldwide – just 0.29% of all payments in November and just under 10% of all China’s international trading activity.

Of course, Washington is talking the deal down – they would as the country with the most to lose from a switch from the dollar to the yuan as the world’s major currency.

The Chinese government has put a toe in the water through Hong Kong to see how promoting the yuan would play out. In a short time, Hong Kong has banked £100 billion of cash, but this is loose change when compared to the rest of the country’s earnings.

The celebrated World Economic Forum claims the gap between the world’s wealthy and those living in poverty and government finances teetering on the brink of collapse are the most important economics threats.

The forum has published the claims in a 60-page report due for discussion at the celebrated forum in Davos, Switzerland.

Confidence in developing a global market place for business is faltering as the haves and have nots face conflict, says the report.

The Occupy movement in Wall Street and outside St Paul’s Cathedral, London, and the Arab Spring uprisings are examples highlighting this disparity, reckons the report.

The forum also cites the growing awareness that the next generation may not be wealthier than the last for the first time in decades is undermining economic growth worldwide.

“This needs immediate political attention, otherwise the political rhetoric that responds to this social unease will involve nationalism, protectionism and rolling back the globalization process,” said WEF managing director Lee Howell.

Previous unsustainable sovereign debt in many countries had already been disclosed as a prime financial threat in two WEF risk reports, but fiscal deficits remains centre stage.

“We’re seeing governments kicking the can down the road and not trying to get their hands on it,” Howell said.

The failing market economy that has seen governments topple in Eire, Italy and Spain and the USA and nine eurozone countries lose their triple A credit ratings is a major concern for the WEF.

Discussions at the summit are predicted to focus on whether capitalism really works – and if not, what economic system will take its place.

As the world’s economy increasingly moves online, the forum will also debate the affects of hacking and cybercrime on international finances.

The move had been prophesied for some months by commentators and even by the French government themselves, who downplayed the possibility. But the fact that it has actually happened has sent shock waves through financial markets.

News of the downgrade initially broke in Germany, which is now the only Eurozone country that can boast the AAA rating. Germany has also got the upper hand in terms of the clear financial superiority in Eurozone negotiations, although it will also end up writing more of the cheques.

The real economic consequences of the downgrade are yet to be felt in France, where growth(such that it is) continues to be slow and the deficit is still very large. Whilst French ministers have claimed that the move was not a catastrophe, share prices were sent spinning and the euro plummeted against the dollar (although the other Eurozone countries whose ratings were downgraded can take some of the “credit” for that).

With less than 100 days until French elections, the political repercussions of the downgrade may be grave for President Sarkozy, who had described the treble A label as the “Holy Grail”. Having based his image on being the man who has the power to steer France through these challenging economic times, the decision could not have come at a worse time. Millions of French citizens are unemployed and millions more are finding it tough to meet rising living costs.

What has led to the downgrade? Austerity measures taken by the French government to cure that nation’s problems have failed to make much of a dent in its deficit. But the country’s persistence in standing shoulder to shoulder with its euro buddies has also cost the nation dear.

The Frenchman on the street can expect to see the effect trickle down through the various layers of society. Local government organisations, for example, are reputed to have taken out large loans which will become more expensive, as will borrowings for French businesses.

The trade deficit showed the widest gap since the early summer at $47.8 billion, according to the latest figures for November issued by the Commerce Department.

Wall Street had predicted a $45 billion gap and the figures were up on October’s figure of 443.3 billion.

Imports showed the biggest increase since May – up 1.3% to $225.6 billion, with most of the spending on industrial supplies and oil.

For economist, a widening trade gap indicates consumers are buying more products and services from overseas, which reduces the market for home produced goods and brings down the gross national product.

As imports increased, exports fell back 0.9% to $177.8 billion.

Together, the figures speculate that global demand is slipping back but home consumer demand is rising.

For politicians the trade race between the US and China is the key economic indicator.

The trade deficit narrowed to $26.9 billion as US exports to China jumped to $9.9 billion – the highest level for a year.

Despite the general opinion that supports sluggish economic growth for the US in 2012, the real issue is collapse of European markets.

Unemployment and lack of production that under utilises resources is holding growth in Europe back.

Consumer confidence in the leading economies has taken a considerable knock from the triple effects of job losses, falling house prices and less spending power.

The fear is unless consumers in the US and Europe are encouraged to start spending, both markets will be mired in stagnant growth and may slip back in to recession.

The trade figures revealed US exports to eurozone countries were in deficit by 20.8% at $8.36 billion.

Shortfalls with other trading partners also increased – Canada leapt by around a third to $2.98 billion, Mexico by 4.8% to $5.51 billion and Japan by 0.1% to $6.21 billion.

The European Central Bank (ECB) has left interest rates set at 1% after cutting rates for two months in a row.

ECB rates have not dropped below 1% in the 13 years since the bank took over rate setting in the eurozone, but many analysts are predicting they will have to lower during the next few months.

Announcing the rate, ECB president Mario Draghi said the eurozone economy was facing “high uncertainty and substantial downside risks.”

At the same time, the Bank of England announced an unchanged base rate of 0.5%, a record low maintained for 34 consecutive months and one which is unlikely to change in the near future.

The flagging economies of Italy and Spain perked up on news from a round of bond auctions.

The yield on Italian 12-month bills fell to 2.735% from the near 6% paid to sell one-year paper just before Christmas and marked the lowest rate level since June 2011.

Rates for Spanish bonds also dropped by 1%, relieving the pressure on the new government and widely acknowledged as a response to the latest round of austerity cuts.

The good news may be short lived as the decreasing yields may be the result of a work round rather than a solution.

The ECB ‘financed’ the auctions by releasing almost 500 billion euros of loans to European banks, who in turn spent most of the cash buying the bonds to make a profit on the margin – the loans are at a far lower rate than the bond returns.

The ECB constitution does not allow the bank to directly lend money to eurozone countries.

The question for French President Sarkozy and German Chancellor Merkel is whether this paperchase will stand the test of time with investors who have already started to flee European markets to seek a safe haven for their funds.

Offshore workers who want to keep their retirement options open often favour a SiPP (self invested pension plan) over other pensions because of the wider investment opportunities.

Research by investment provider Skandia shows this could be a false economy as fund and administration charges are much higher in a SiPP than other pensions – but few savers take up the more flexible investment options to make paying the extra charges worthwhile.

Skandia discovered 90% of SiPPs retirement savers held their cash in a unit trust or OEIC (open ended investment company) that was available on the same terms in platform pensions that charged less for fund administration.

The firm argues the access to more complex investments is the real attraction of a SiPP, but believes mosts savers do not want the extra features.

As part of the research, Skandia also asked independent financial advisers how many of their clients benefitted from the additional investment features of a SiPP over cheaper plans, and 46% replied that less than 10% of their clients would be better off.

Skandia’s Nick Dixon said: “Since the introduction of SIPPs their popularity has grown significantly and are sometimes positioned as the only pension worth having. This is not in the best interests of the majority of people and there is a danger that many SIPP customers are in the wrong product.

“While a SIPP can offer a wide investment choice and flexibility, our research suggests that many investors aren’t fully utilising the investment flexibility that SIPPs offer and would instead be better off with a platform pension.

“As platform pensions continue to evolve – with the range of assets available and income flexibility increasing – we would expect platform pensions to increasingly replace the need for SIPPs.”

HM Revenue and Customs and the Treasury is set to turn the screws on the wealthy, according to Deputy Prime Minister Nick Clegg.

He has confirmed the 50p income tax charge will stay until at least April 2015.

Speaking to the BBC Radio 4 programme Today, he said: “I am determined to target the wealthy elite that can pay an army of tax accountants that can get out of paying their fair share of tax.

“They treat paying tax as an optional extra in which they can pick and choose the taxes they pay in a way that angers millions of hardworking families.”

He predicted the next Budget, in the spring, will include a general avoidance rule designed to outlaw schemes that are contrived just to help the wealthy pay less tax.

The Treasury had received a report, said Clegg, showing a general anti-avoidance rule was feasible, adding: “I am not going to write George Osborne’s budget, but I very much hope we can make progress on that.”

The last Labour Government introduced the 50p tax rate in 2010. The levy affects around the 300,000 highest earners in the UK.

Only those earning more than £150,000 a year with the aim of raising an extra £2.4 billion during 2011.

A report on the effectiveness of the tax is expected to be delivered to the Treasury within a few weeks.

Prime Minister David Cameron and Clegg have hinted several times that they have debated scrapping the tax – with Clegg arguing in favour of keeping the 50p rate.

The Lib Dems are known to prefer increasing tax allowances for low earners while pressurising the wealthy to pay a larger share of tax.

Whilst the Great Recession may be over, or nearly over, a severe lack of confidence holds most developed economies tightly in the grip of the credit crunch.

Financial commentators and pundits are predicting more tumultuous times for the eurozone, with opinion divided on whether Greece will still be in the euro by Christmas 2012. Despite these rumblings however, European leaders continue to pledge their loyalty to their Greek cousins.

The continent finally came together to act in agreeing and implementing austerity measures, but these may have been too little, too late. In any event, European economies may be too dependent on a cycle that starts with government spending for the private sector to be able to step up and fill the jobs gap caused by public sector cuts. And what if the cuts do not work? The danger of countries defaulting on their debts is not bandied around as often as it was in the summer of 2011, but the possibility is still out there.

What will be the effect of all this on the real lives of Europeans? At the threshold of 2012, the austerity measures have not truly bitten the peoples of the Eurozone. But as month after month ticks by with cuts deepening, there is likely to be widespread civil unrest in the places that are hardest hit like Portugal, Greece and Spain.

The United States faces a presidential election in 2013, so 2012 will no doubt see posturing and promises that candidates claiming that they are literally going to save the world from the global economic crisis. However, the uncertainty surrounded who will be elected, or whether Obama will be re-elected, may in itself cause paralysis in the financial world until the issue is settled.

In spite of all this uncertainty in Europe and the US, one thing is for sure: China and other emerging markets are unlikely to rescue them.

Even in countries with weaker economies, ex pats have more earning power, according to the research by HSBC Bank.

Top of the league for 2011 are Saudi Arabia, Singapore and Egypt.

Each country employs high numbers of ex pats – mostly in banking or financial services (36%, 35% and 33%).

Career prospects were the main reason for ex pats taking their post (85%, 62%, 57%).

Ex pats told the bank study that building wealth and financial security were the key factors in their decision to leave their homes for Saudi Arabia. Those in Singapore were seeking a better environment for personal development rather than personal wealth.

Ex pats living in Saudi Arabia and Singapore felt their new homes had strong economies and good prospects to improve over 2012. Ex pats in Egypt were more concerned about the economy and political stability following the fall of President Mubarak and social changes sparked by the Arab Spring.

Nevertheless, around one in three ex pats in each country is considering a move.

Many ex pats also feel their personal finances have become more complicated after their move, the survey also disclosed – especially in Middle Eastern countries.

Seven out of 10 expressed problems managing their finances arising from moving money between countries, country exchange fluctuations and complex personal tax arrangements.

The countries where ex pats have the most financial problems are the USA (82%), Germany (82%), Switzerland (81%), India (81%) and Brazil (81%).

Coincidentally, with the exception of Brazil, ex pats in these countries are the least likely to hold an offshore bank account.

Ex pats in Thailand (88%) South Africa (85%) and Vietnam (80%) are most likely to hold offshore accounts and are less likely to return to their home country.

Even returns on investment can vary hugely between different plans offered by the same providers, claims research by Money Management magazine.

The study looked at the true impact of fund charges on pension funds over a number of investment scenarios.

The results add fuel to accusations by consumer champions and trade bodies, like the National Association of Pension Funds, who are accusing pension providers of masking their costs by quoting them as percentage deductions rather than amounts on statements.

The study found someone saving £200 a month for 25 years on commission-free terms with an Aviva balanced managed fund ended with a £146,863 pension pot, but Axa’s Elevate plan charged£31,705 in extra fees on the same terms, resulting in a fund of £115,158.

Axa banks the extra £31,705 as fees.

Aegon was rated top provider for investing £500 a month over 25 years. A retirement saver would end up with a £370,599 fund – while Axa’s Elevate again came last with £290,082 after deducting an addition £71,517 in fees over the Aegon plan.

A single contribution of £50,000 over 25 years growing in a balanced managed fund at 7% per year would generate £211,354, says Money Management.

Axa Retirement Wealth paid out £36,646 more, while the negative impact of charges by Axa Elevate, saw the fund shrink by £46,096 – amounting to 21.8% of the fund – leaving a retirement saver with just £165,258 if they picked the wrong plan from the provider.

A recent report to the Treasury accused pension providers of taking an average 3.2% in pension fund charges – which totals earnings of more than £62 billion a year, regardless of investment performance.

The strict rules require companies to guarantee pensions by depositing more cash in to their funds.

The amount needed has been estimated at between £300 billion and a £1 trillion – the lowest comes from the National Association of Pension Funds, the trade body for thousands of schemes, while the highest figure was calculated by a team of specialists at JLT Pension Capital Strategies.

The ring fencing of company pensions demands employers to up their contribution efforts at the same time as most firms are struggling with economic problems and lack of capital for investment.

Joanne Segars, NAPF chief executive, said: “The overall objective to make European pensions more secure is one which we support. The introduction of solvency rules will have the opposite effect.

“Faced with extra funding demands, many employers will revisit their pension arrangements. We are likely to see is the closure of more final salary pensions.

“During these difficult economic times, Europe should focus on fostering growth and job creation. Solvency rules would not only put additional pressure on companies that are struggling for survival, but would also force them to divert money away from investment and new jobs.”

Charles Cowling, managing director of JLT Pension Capital Strategies, said that forcing employers to make additional pension contributions of up to £1trillion would be “disastrous for our economy”.

Other pension firms and financial organisations have joined Pensions Minister Steve Webb in rubbishing the solvency proposals. He called the plan a ‘nightmare scenario’.

Financial experts have warned the move could herald the end of direct benefit pensions and solvency rules designed to regulate insurance companies do not apply to pension providers.

Audit firm Ernst & Young predicts the Eurozone is facing a ‘bleak’ winter. with recession in the first half of next year and a standstill of economic growth for the rest of the year. The firm also reckons unemployment rate would remain above 10% until 2015.

Eurozone annual inflation remained unchanged at 3.0% in November. A year earlier the rate was 1.9%, while monthly inflation was 0.1% in November 2011, according to the latest Eurostat figures.

A survey of purchasing managers by Markit Economics has released findings that show the Eurozone economy contracted in this quarter – despite some growth in Germany.

Markit says output from factories and service companies across the Eurozone contracted and economic levels have retreated to those of Spring 2009.

The economy in Italy is already in recession, according to the government.

“December’s PMI figures paint a bleak picture,” said Ben May, an economist at Capital Economics. “This, coupled with the fact that the latest plans to save the euro already appear to be unraveling, suggests that 2012 will be a tough year for the region.”

Business and consumer confidence is already reeling across Europe as purchasing decisions are postponed to see how the Eurozone debt crisis is resolved.

In the UK, mortgage lenders have already warned funding for next year is unlikely to top this year’s £138 billion due to volatility in the markets.

On top of this, offshore pension investors face a great deal of uncertainty over their QROPS transfers.

Not only do several schemes seem in jeopardy under proposed tax pension rule changes announced by the UK government, but the underlying investments are also subject to unpredictable performance.

The likelihood is, as the great Christmas and New Year getaway approaches, no decisions or respite is likely until the economic gears are jerked back in to motion in January.

Neither side is prepared to back down as ministers dig in their heels over proposals that will see public sector workers’ contribution rise. 29 unions joined together to strike on 30 November, but it is feared that this level of co-operation between workers’ groups may not continue as they take different approaches to the negotiations.

The UK government claims that public sector pension schemes should have retirement ages that are linked to the state retirement age. With growing life expectancy, the schemes can no longer make payments to public sector retirees for decades in a system that was designed to provide a comfortable lifestyle for just a few years.

Other sticking points include the levels of contributions required, and whether final pay outs should be based on the old final salary schemes or worked out on a career average basis.

The Public and Commercial Services Union is proving to be more militant than most. It claimed that the Government threatened to withdraw the concessions on the table which give protection to those within 10 years from retirement unless it recommended the deal to its members. Given that the union has described the proposals as a tax on civil servants, this is unlikely.

The unions generally (and very reluctantly) accept that the schemes need to be made more affordable, but it is also the pace of the implementation of the changes that is under hot debate. Some union leaders are holding out for a delay in contribution increases until 2014, but the government is seeking an incremental increase as early as next year.

MPs are only too aware of the sense of injustice felt by the private sector, whose taxes pay for what is considered to be a cushy deal. It had always been assumed that public sector workers got better pension deals because they were paid less, but Lord Hutton’s recent report found this was not the case and that public and private sector wages are comparable.

Looking at the figures, the situations in both countries are comparable. The unemployment figures for 2011 are 9.8% for France and 7.9% for the United Kingdom – both uncomfortably high. The UK has a bigger deficit and slightly worse inflation figures. Both governments have unveiled austerity measures – although France has done this more recently.

Last week Fitch Ratings did not change its rating of France, but nevertheless downgraded its outlook to “negative”. So Sarkozy has kept his triple A, but the question is: how much longer can he cling onto it for? His Finance Minister and Governor of the Bank of France have both said publicly that it would be monstrously unfair if France were to suffer a downgrade before Britain. However, Finance Minister Francois Baroin was at least gracious enough to admit that France had no lessons to give on the subject.

British Deputy Prime Minister Nick Clegg claimed that the French politician’s comments were “unacceptable” and that the rhetoric should be turned down a notch. However, students of European history will note that the Franco British relations have been changeable for several hundred years.

The recent relationship is of course still sore after Prime Minister David Cameron used the United Kingdom’s veto to block closer fiscal union. Sarkozy was clearly furious and it will be a long time before the leaders kiss and make up.

However, there is more at stake for Sarkozy than a Christmas card from Cameron. With elections looming, he is no doubt keen to prove that he is an effective crisis manager and a safe pair of hands for France’s economy. One thing is certain: If France is downgraded before the election, the consequences for him could be severe.

The British Prime Minister claimed that he had no choice but to stand against the chorus of European voices that were calling for deeper financial integration of all member states (whether in the eurozone or not), to avoid the break-up of the euro.

Until the summit, European leaders had given the impression that they were muddling through the crisis, reacting to events as they unfolded rather than offering a coherent plan of action. But in a long awaited show of strategic direction, France’s President Sarkozy and Germany’s Chancellor Merkel asked their fellow leaders to surrender some economic control to central European bodies, who would supposedly step in and prevent future crises and cure the current one.

In real terms they were asking other European nations to open the doors – or, more accurately, accounting books – of their Treasury departments. In effect, the proposal equates to a resurrection of the stability pact that was one of the conditions for the euro member countries to join – which was widely ignored.

One of the reasons that Cameron gave for rejecting the proposal was the perceived fetter on the City, where the current “light touch” approach to regulation is what makes it an attractive marketplace for worldwide investors.

But the reaction to Cameron’s decision back in the UK has been mixed. Some applaud the “bulldog spirit” he showed in standing up to the majority. Others however claim that the move has left Britain isolated from its major trading partner and has forced the country to veer into the slow lane in a two speed Europe.

France’s President Sarkozy and Germany’s Merkel are coming up for re-election soon. It remains to be seen whether their electorates will congratulate them for effectively committing their taxes to further bailouts, or punish them for it.

Bringing the action, furious trades unions had argued that the historic use of RPI meant that the precedent could not be broken. They claimed that workers were entitled to RPI linked pension increases forever.

But why does this matter so much to public sector retirees?

Far from being a mere technicality, this decision will hit the pockets of millions. The Office for Budget Responsibility predicts that the annual difference between the two indices will be around 1.4 percentage points. In real terms, this could mean that certain public sector pensions will pay out 18% less.

Under pensions legislation the government must index public sector pensions to reflect the rise in the cost of living. Part of the discrepancy between the two indices is due to the different categories of items that are counted. For example, when economists crunch their numbers, the Retail Price Index includes the cost of housing, but the Consumer Price Index does not.

The Trades Union Congress, who (alongside other unions) challenged the government’s move away from RPI point out that the CPI reflects consumer habits, rather than the movement in prices of particular goods. So where consumers may have shopped around for cheaper versions of the original product, the CPI records that the price has gone down (because the consumer has purchased a less expensive alternative), when the price of the original item will have gone up.

Government lawyers claim that the change from RPI will save at least £6 billion per annum in public sector pension costs. With figures like these being bandied about, the recent strikes are going to become commonplace.

Proposed laws aimed at stamping out QROPS pension tax avoidance have been announced because retirement savers and advisers are manipulating current rules “in ways they are not intended to work,” says HMRC.

The draft legislation is open for consultation until January 31, 2012, with a view to starting a tougher QROPS regime with less loopholes from April 6, 2012.

This guide looks at the new rules step-by-step and how they may affect QROPS investors.

Tax recognition

The country where a QROPS is based must recognise the scheme for tax purposes.

CHANGE: This should not present any major change to any QROPS as this is already an HMRC requirement.

Extended reporting period

QROPS providers must report any payment to investors for 10 years after funds are transferred out of a UK pension scheme.

If the QROPS investor is UK resident or has been UK resident at any time during the 10 full tax years before a payment is made out of the funds transferred to the QROPS, they could be subject to UK tax rules that apply to similar payments made by UK registered pension schemes.

CHANGE: This doubles the current five year reporting period and effectively means any payment of lump sums, benefits on onward transfers to another QROPS must be reported to HMRC.

Importantly, QROPS payments are reported annually, but from April 2012, providers will have to report each payment within 60 days. Under current rules, the report could take up to 21 months to filter through to HMRC.

Acceptance of terms

A new rule that requires every QROPS investor to sign a form acknowledging they understand the tax implications of transferring a UK pension fund in to a QROPS. The form must be filed with HMRC within 30 days of the transfer.

Limit on tax-free payments

QROPS tax-free payments are limited to 70% of the fund, but some providers try to bust these limits by offering up to 100% drawdowns.

CHANGE: HMRC will impose a strict 30% cap on tax-free drawdowns – the draft legislation is not clear whether this means 30% of the fund transferred in or 30% of the fund after additional contributions and investment growth.

The inference is this means the latter – which puts some New Zealand QROPS outside the pension rules but is likely to keep Isle of Man 50c schemes in.

Tighter QROPS registration

QROPS means qualifying recognised overseas pension scheme. ‘Qualifying’ applies to the scheme meeting certain pension rules laid down by the UK government.

Providers must certify that their pension meets these rules for acceptance on the HMRC list of QROPS schemes. If a scheme is not listed, UK pension funds cannot sanction any funds transfer.

CHANGE: Providers must comply with tighter registration requirements before their QROPS is accepted by HMRC

Tax residence

QROPS were introduced to simplify pension arrangements for UK tax residents or international workers with UK pension rights who had left the UK to permanently live overseas.

In some cases, taxpayers who are still in the UK but intend to leave within six months can also set up a QROPS.

CHANGE: Tougher compliance for taxpayers who have left the UK, start a QROPS scheme and subsequently return to the UK.

Special income tax treatment for QROPS investors

A new pension tax rule that is the most controversial clause of the draft QROPS legislation.

HMRC want QROPS investors to face the same income tax rules as other taxpayers in the country where the scheme is based.

HMRC insists these countries may no longer offer pension concessions to QROPS investors. The UK government is not imposing tax rules on these countries, but ensuring QROPS investors pay the same income tax on pension benefits as any other taxpayer in that country.

Most QROPS providers pay benefits gross – without withholding income tax – on the assumption that the saver receiving the benefit will settle any tax liability in the country where they live.

One important point about a QROPS is the scheme and the investor can live in different tax jurisdictions.

The likely result is the jurisdiction hosting the QROPS will issue a certificate of tax paid to the investor, who then declares this to the tax authority in the country where they live. Tax paid is set off against tax owed so the taxpayer does not have double liability on the same income.

The problem comes for taxpayers living in a country charging income tax at 0% or a lower rate than income tax is charged in the QROPS host country, because they will have no set off tax to balance the withholding tax.

For example, Guernsey is a popular host country for QROPS providers. Pension payments to QROPS investors living outside Guernsey are paid gross, but those paid to Guernsey residents are taxed at 20%.

This puts all Guernsey QROPS outside the new rule.

Tax authorities and QROPS providers in Guernsey and other offshore centres facing a similar problem have three likely solutions:

Lobby – Try to persuade the UK government to revise or withdraw this rule

Legislate – The tax authority can amend pension rules to meet the new HMRC requirement

Withhold tax – An unfavourable option for QROPS providers because pension benefits paid gross encourages investors to shift their funds to ‘safe’ offshore jurisdictions that trade on their reliability as financial centres. The new rules give a leg up to low tax jurisdictions.

This proposal also seeks to close the door on shifting funds to other overseas pension schemes to avoid withholding tax, like a QNUPS (qualifying non-recognised UK pension) or ROPS (recognised overseas pension).

With the rapid changing of rules you need to speak to the leaders in QROPS transfers. Contact QROPS.net now for further information and we can show you how we can help you.

Despite 42% of affluent investors telling the firm that they aimed to improve or at least maintain their standard of living in retirement, only 46% will have the funds to pay for their current lifestyle.

Schroders benchmarked the current investment performance of 1,400 customer portfolios – and then asked the same clients how much money they expected to receive on retirement.

Based on how much money investors said they would like to live on in retirement, a target pot of €645,000 would be realistic minimum target.

Most expected to receive around 62% of their current income – but the real performance of their pension funds fall well short of their expectations by an average €475,862.

These expectations were:

• Swedish investors expect retirement income equivalent to 77% of their current income, but their pension forecast gives a retirement income of just 45% of their current income.
• British investors predict a pension that would give them the highest retirement income across Europe relative to their current income (52%)
• In five of the nine countries surveyed – Spain, France, Belgium, the Netherlands and Italy – investors predict a pension that would gives less than 40% of their current income level, even though investors in four of these countries said they wanted a retirement standard of living of 65% to 75% of their current income.

Alan Brown, Chief Investment Officer at Schroders, said: “With defined benefit pensions now a rarity, individuals are increasingly being made responsible for their own retirement provision. While many factors influence the amount of money people need to accumulate to enjoy a comfortable retirement, these latest findings suggest many investors are calling it short.

“There is a yawning gap between retirement income needs and the size of individual savings pools. Unless this gap is bridged quickly we risk a retirement tragedy where individuals have to work longer, retire poorer or both. The role of an independent financial adviser is therefore even more important in ensuring investors are working to a target retirement fund that is realistic and aligned to their lifestyle goals for the future.”

Tough new rules designed to reestablish a QROPS as a retirement savings plan rather than back-door access to release pension cash early.

The main change for QROPS investors is the doubling of the reporting period from five to 10 years.

From April 2012, HMRC proposes that if a QROPS investor is UK resident or has been UK resident at any time during the 10 full tax years before a payment is made out of the funds transferred to the QROPS, the individual will be subject to the UK tax rules that would apply to similar payments made by UK registered pension schemes.

If the payment made by the QROPS relates to taxable property, tax charges will apply in the same way that they would apply to a registered pension scheme. The reporting period does not apply to taxable property transaction but lasts for the life of the QROPS.

Other rules will give QROPS investors and providers stricter guidelines, including:

• Revision of QROPS qualifying conditions
• Investors must sign up to a tax promise detailing penalties if QROPS rules are broken
• Pension providers must speed up reports notifying transfers of funds

HMRC suggests that the changes have no cost implications for taxpayers, QROPS investors or providers – but the new rules will affect around 5,000 ex pats each year.

The announcement makes up part of the Finance Act 2012 and the revisions are expected to become law in April 2012.

Draft legislation posted with the announcement does not include any retrospective provisions, which means any QROPS transactions carried out under the current rules will not be affe ted by the rule change.

“The government has found that QROPS are being marketed extensively as a way of paying amounts or enabling the payment of amounts that are not allowed under UK rules, in particular 100% lump sums, once the UK tax rules no longer apply,” said an HMRC spokesman.

“The government is publishing changes to the QROPS regime for consultation on whether they achieve the intended effect. The changes are intended to make the QROPS regime operate in line with the policy intention.

“The government will continue to keep the QROPS system under review to ensure that it is used in a manner consistent with the principle for which tax relief on pensions is provided.”

Get the latest information from the leaders in QROPS transfers, contact QROPS.net today

The purposed changes will effect the reporting requirements and conditions that a QROPS scheme needs to meet to be recognised as a QROPS.

New Zealand schemes have specific amendments affecting the tax exemption clause.

The tax exemption clause is utilised by a number of jurisdictions, if the draft legislation is passed in April 2012, the exemption clause may only occur if available to both residents and non-residents of the country where the scheme is held.

After the consultation period, the draft legislation may be amended, and will be in effect from 6th April 2012

To stay up to date with the latest news and developments, contact QROPS.net today.

QROPS.net are the leaders in QROPS advice, due to our size and strength we can offer you the very best independent advice in plain English.

Demand only the best advice for your QROPS transfer, speak to us today.

QROPS pension investors now have to wait an extra 12 months for the simplified rules that will show whether an ex pat is tax resident in Britain.

The new rules were expected as part of the draft Finance Bill 2012, due to pass in to law for April – but the statutory residency section is excluded from the 300-page volume.

Other new rules include:

• Reform of the taxation of non-domiciled individuals
• Updating the status of charitable donations for inheritance tax
• Revamped controlled foreign companies legislation

The government spent most of the summer consulting on the new residency test that aims to remove any ambiguity from the existing rules.

The change follows a number of high-profile court cases won by HM Revenue and Customs but resulting in widespread criticism from judges about tax guidance offered to ex pats.

Exchequer secretary to the Treasury David Gauke confirmed the new residency test will not start until April 2013.

“The consultation on tax residence raised a number of detailed issues which will require careful consideration to ensure the legislation achieves its important aim of providing certainty for individuals and businesses,” he said.

“The government will legislate the statutory residency test in Finance Bill 2013 to take effect from April 2013 rather than April 2012. It will introduce any reforms to ordinary residence at the same time. This will give time to consult thoroughly on the detail of these changes well in advance of implementation.”

The test is important for QROPS investors as the offshore pension packages are only open to permanent non-UK residents or international workers who have UK pension rights but have left Britain to live overseas.

Barings Asset Management looked at how UK fund managers were handling asset allocation.

Two-thirds of fund managers revealed they had changed their asset allocation strategy – up from half last year.

The number investing in multi-assets has also almost doubled from 38% to 65%.

The reasoning was to minimise volatility and an effort to cut the correlation of assets and to better match assets to liabilities.

The least popular reason for changing the asset allocation was to achieve greater returns.

Andrew Benton, Head of UK and International Institutional Sales at Barings, said: “This research clearly shows that the concerns of UK pension fund managers centre on the need to manage volatility and protect against extreme losses; achieving greater returns is secondary given the current turmoil and ongoing situation in Europe.

“That said, the changes that are being made to pension funds demonstrate a desire among managers to have a more dynamically managed portfolio. The increase in allocation to multi-asset and diversified growth strategies suggests pension professionals are looking for equity-like returns without the levels of risk.”

Pension professionals are favouring Emerging Asia for changing future asset allocations.

The survey highlighted 62% of fund managers felt Emerging Asia has the biggest potential for equity gains over the next decade.

Lagging Emerging Asia by a good distance, but next in terms of regions with potential were Emerging Europe, Africa and Latin America. Each region collared about 10% of the vote.

Rising stars include Mexico, Indonesia and Nigeria. The US is little mentioned as an investment choice of late, but Clare Hart of JP Morgan Asset management notes: “US publicly traded companies, bolstered by record profits and significant cash hoards, are increasing their dividends at the fastest pace in seven years.

“So far this year, 226 companies have upped their dividends, while only four have cut theirs. On a dollar basis, corporations added USD 39.8 billion to dividends in the past three quarters. That’s 50% above the USD 26.5 billion added for all of 2010.”

In real terms, the banks have wound back the economic clock to the 1950s as the Institute for Fiscal Studies predicts a fall in income of 7.4% in household net earnings by the end of the next financial year.

The fact is, everyone is poorer. The pound in our pockets doesn’t buy that much anymore, few have enough disposable income to sink in to retirement savings and this is about as good as it gets for a few years.

The IFS reckons everyone will climb back to a pre-credit crisis level of wealth by 2016.

That means in 2016, you will have the same financial clout as you had in 2004, says the IFS, and even if you are earning more, spending power is blunted by inflation.

In reality, no one’s treading water financially, they are slowly drowning.

UK pensions will be ravaged by slow growth, low interest rates and inflation. The Office of Budget Responsibility reckons sluggish corporate growth will batter investment income with low dividend returns.

Average earnings – down 4.3% this year are expected to tumble another 1.3% before slowly bubbling up by 0.2% in 2013, 1.2% in 2014 and 0.9% in 2015.

Investors have some tough decisions.

Paying down debt seems more prudent than saving with inflation and low interest rates nullifying investment.

For those with the means of escaping overseas to live permanently, at least taking control of investments in a QROPS presents a safe haven away from the UK pension system.

A QROPS won’t work miracles, but at least gives investors more options to grow their cash away from the clawing fingers of the UK government bent on pulling the rug from under retirement savers.

If investors can, taking control is perhaps one of the better financial options – after all, they can no longer bank on the banks for help.

The single euro currency was a noble effort aimed at levelling the economies in Europe.

The policymakers should have been more careful what they wished for.

They have certainly levelled the euro playing field – but pulled the strongest economies down to the lowest level rather than promoting the weakest to a higher level of performance.

Wrangling, indecision and horse-trading that is the European way has also come home to roost as the markets are finally about to give up the ghost on the PIGS – Portugal, Ireland, Italy, Greece and Spain.

The problems are well-documented -

Germany point blank refuses to let the European Central Bank print money for quantative easing because of fears of inflation

The politicians can’t or won’t agree the way forward

The weaker economies can’t devalue to rebalance their economies

The End of Days or E-Day has now been set – December 10. If EU leaders cannot agree a strategy at the preceeding summit, then expect the markets to pull the rug away.

“We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union,” Economic and Monetary Affairs Commissioner Olli Rehn said as EU finance ministers met.

The world’s major central banks have acted to provide cheaper dollar liquidity to European banks facing collapse as the eurozone’s sovereign debt crisis threatens disaster.

The euro and shares climbed as a result of the move, but eurozone finance ministers acknowledged they may have to turn to the International Monetary Fund and outside economies for more help.

The problem is buying European government debt pretty much has a junk bond status.

For the markets, even if the governments and banks do come to a consensus for moving forward, the big doubt is whether any of them really know what they are doing because they certainly have not demonstrated any fiscal ability so far.

The Seed Enterprise Investment Scheme (SEIS) takes over where the old Enterprise Investment Scheme left off as a new and expanded way for wealthy backers to reduce the risk of investing in new businesses.

From April, investments of up to £100,000 in qualifying businesses will attract 50% tax relief, regardless of the rate the investor pays income tax.

The finer details of SEIS need fleshing out, but the Chancellor wants wealthy individuals and companies to back the scheme to trigger investment in entrepreneurs and businesses that would generally find cash difficult to find.

The chancellor also hinted SEIS investors will be offered capital gains tax roll-overs on assets that are sold with the proceeds reinvested in the 2012-13 tax year.

“We’ve supported enterprise by increasing the generosity on the Enterprise Investment Scheme,” said Osborne.

“We are extending this scheme specifically to help new start-up businesses get the seed investment they need. Even at the best of times they can struggle to get the finance they need – and in the current credit conditions that struggle too often ends in failure.”

Details of how a business qualifies for investment and whether the directors or shareholders can invest in their own venture while claiming relief are not yet clear.

For many investors, the tax relief on a EIS is more attractive than relief on pension contributions which are limited to £50,000 for 50% taxpayers, while businesses see the cash invested by a Dragon doubled thanks to tax gains.

Many business finance experts expect to see interest in investing up to £100,000 in a SEIS for the short-term, with any returns switched in to pensions.

As the cost of borrowing surges to record levels for Italy, even Silvio Berlusconi’s promise to quit office as prime minister has failed to pull back the teetering economy from the brink of bankruptcy.

The key to the crisis is Italy’s interest rate on 10-year bonds hitting 7.5% – the rate that tipped the balance for Greece and Ireland.

The trouble with the Eurozone is the monetary union is now a marriage of two mismatched halfs – with the northern European countries and France motoring on but their bed partners in the south collapsing like dominos.

While Italy looks likely to go cap in hand for a bail out, the Greeks are punch drunk with disaster while Spain, Portugal and Ireland are clearly happy the debt searchlight has moved off them.

Meanwhile, as the rest of the world wonders if Germany has the stomach to rescue the Euro, the country posted record export data for September, boosting the trade surplus to the highest level since June 2008.

“This is of course greatly encouraging for the German economy but as the ever widening gulf between Berlin and the rest of Europe is highlighted so clearly, it can only increase the likelihood of the EU breaking up,” predicts Jason Gaywood, consultant at currency specialists HiFX.

“With each passing day, ever increasing numbers of German voters must be discussing the merits of ‘going it alone’ rather than risking the sceptre of hyperinflation that lingers only too well in their memories. Sooner or later they will come to the conclusion, perhaps correctly, that they should cash in their chips and leave the game before its too late.

“Ultimately, Angela Merkel will need to take heed of the will of domestic voters as her political future rests in their hands rather than those of her peers in Brussels.”

The survey did not just involve Brits, but covered the working and retirement patterns of economically active people in 17 different countries from around the world. HSBC have carried out this survey annually since 2005, and in that time they have interviewed more than 100,000 people.

The question is: are we avoiding the issue of pensions, or can we simply not afford to contribute to them? The answer seems to be a bit of both. In these economically challenging times, pay freezes and job losses have combined with higher living costs to make it hard enough to get from month to month however old you are.

Yet we all know that the longer you leave pension saving, the harder it is to build a comfortable lifestyle for retirement. It is a truism that you cannot afford to contribute to a pension but nor can you afford not to.

For those savers who are making a provision, are they investing in the right way? The HSBC report did not think so. Cash savings accounts are still the investment vehicle of choice, notwithstanding that other methods of wealth creation and asset classes have historically outperformed them.

As part of a wider discussion on attitudes to investment, the HSBC report focusses on gender differences to money and financial decision making. Women are more risk averse in every country surveyed except China, where women are prepared to take more financial risks than men.

The report does not distinguish between the habits and attitudes of those who plan to retire at home and those planning to retire abroad. But if you plan to retire overseas, the combination of foreign tax regimes and a change in your lifestyle means that retirement planning requires a higher level of sophistication.

Even legendary investor Warren Buffet confesses he missed a trick when he turned down buying a collection of historic cars for less than $1 million.

Just a few of the celebrated collection from the National Automobile Museum in Reno were sold for $69 million a few years later.

Now, ex pat investors with a QNUPS – qualifying non-UK pension scheme – can consider holding classic cars within the pension’s tax-effective investment wrapper.

Investors in standard UK pensions and their offshore cousin the QROPS are penalised for putting money in to ‘taxable property’ – the technical name for assets like cars, wine, art and antiques.

The rule does not apply to many QNUPS pensions.

According to the Historic Automobiles Group Index (HAGI), the market size trades at a phenomenal £1 billion a year against a market size of between £10 – £12 billion.

To qualify as one of the 50 classic cars tracked by HAGI, the makers must have manufactured no more than 1,000 vehicles in the model range, they must be worth at least £100,000 each and have an established collector community.

HAGI benchmarked prices in 1980 and then tracked sales data for 30 years to compile the index.

Cherished classic car investments include the Aston Martin DB5, worth £10,000 in 1980 but at least £300,000 now; a Ferrari Dino 246GT priced at £9,000 in 1980 and selling for £150,000 30 years later and the sought-after Mercedes-Benz 300SL Gullwing, going for around £25,000 in 1980 but £500,000 now.

As a comparison, classic car prices have out paced other commodities – proving all that glitters is not necessarily gold, which was worth £260 per ounce in 1980 and now weighs in at around £1,150 per ounce.

Club Med – Portugal, Spain, Italy and Greece – has already toppled.

The US property market is flatlining under a 30% drop in prices over the past three years with the threat of tumbling even further under the weight of backed up foreclosures.

The secret of the wealthy is to always invest in prime property – and as ever the rule is to seek out homes in the best locations for returning a profit.

Here, in no particular order, are some places where the property market is still worth investigating:

• Canada – their noisy neighbours may be languishing in a property mire, but north of the border things are a little different. Prices are expected to rise a modest 5% next year, and although the weather may not compete with sub-tropical Florida, flight times to the eastern seaboard are on a par. Other pros are excellent value for money, winter sports and, depending on where you go, a British flavour.
• Gibraltar – Summer sun, no VAT, no capital gains tax and low income tax are big plus points, but a tiny, cramped city perched on the edge of Spain and a siege mentality score against.
• South Africa – The rising economic powerhouse of Africa. Similar time to London, a strong British background and ridiculously low house prices, with Cape Town apartments kicking off at just £60,000.
• Hong Kong – Demand exceeds supply and a single bedroom flat goes for at least £200,000, Prices have zoomed by more than 10% in the past 12 months, says property consultants Savills.
• Switzerland – Take your choice between chocolate box chalets or chic city apartments. Stable prices supported by an insulated economy and within easy reach of lots of European destinations. Choice is limited as purchases by buyers from overseas are restricted.

Don’t forget decent property in a good area keeps value and is easier to sell – like they say on TV, it’s location, location, location.

The Offshore Co-Ordination Unit (OCU) is a team of offshore analysts, technical tax experts and investigators, who will co-ordinate HMRC’s compliance work to identify UK taxpayers who are suspected of hiding income and assets in offshore accounts to avoid UK tax and duties.

The unit will data mine offshore information at HMRC’s disposal, including bank account data from other countries.

The OCU will take-over HMRC’s Liechtenstein Disclosure Facility (LDF) and co-ordinate inquiries in to suspected tax cheats with secret bank accounts in Switzerland.

The LDF urges investors with undeclared tax relating to cash or assets in Liechtenstein to negotiate a settlement with HMRC.

Exchequer Secretary to the Treasury, David Gauke, said: “The days when untaxed income or capital could be safely salted away offshore, beyond the reaches of the taxman, are long gone.

“The launch of this specialist unit, together with the other valuable work the department is driving forward in an effort to tackle offshore evasion, underlines the fact that offshore tax cheats are fast running out of places to hide.”

The OCU is the first in a team of 100 new offshore investigators announced by Chief Secretary to the Treasury, Danny Alexander, in September.

HMRC has announced several high-profile tax avoidance campaigns in recent weeks, including inquiries aimed at landlords in North Wales and the North West.

The development of tax investigation teams is part of a £900 million funding programme by the Treasury to crack down on tax evasion.

Other efforts to cut tax evasion include sending tax inspectors to check the financial records of small businesses. HMRC expects to carry out 50,000 visits a year from next year.

The government has also upped penalties for late filing of tax returns.

The pressure on Spanish bonds is still mounting as the cost of borrowing for the government hovers around the 7% mark – the level which has forced other Eurozone nations to go cap in hand for financial bail outs.

Rajoy may have chalked up a landslide election result, but that famous ‘mañana’ attitude means he won’t be sworn in for a month and meanwhile the financial pressure cooker is still boiling – and then the country closes for Christmas meaning the new government is unlikely to take any positive policy action until the New Year.

With property prices already 30% down on their peak in 2008 and 40% of young adults out of work, Spain needs to act fast.

Spain is the fifth Eurozone government to tumble this year in the domino reaction of the money men to Europe’s debt crisis. Greece, Ireland, Portugal and Italy have already succumbed and a new whispering campaign has broken out against France.

Spain and the other Eurozone economies are reaping the whirlwind for failing to take action to put their economies in order.

They have had the best part of two years to take a firmer grasp of the reins and have frittered the time away dithering about what to do in the hope a white knight flush with cash would come to their aid.

Germany is the only nation in the Eurozone with the financial clout to help – and is clearly not going to cough up the cash.

In reality, the Eurozone problems bolster the German economy. In the past, with each country having a separate currency, like the franc, lira and peseta, the governments could ease financial problems by devaluing against the mark, sterling and dollar.

Now they are hitched to the Eurozone, devaluation is not an option.

The other tools harnessed by the UK and US, like quantitive easing and low interest rates are out of reach as well, as these need the agreement of the European Central Bank – for which read France and Germany, who are scared of triggering rampant inflation which will spread the sovereign debt virus in to their economies.

The Eurozone claims one for all and all for one, but today, the financial union looks to have some partners who are less equal than others.

As borrowing rates for Spain nudge towards the fatal 7% mark that has triggered Eurozone bail-outs for Greece, Portugal and Ireland, and Italy teeters on the brink of bankruptcy, inflation is rising – but not at the same rate as in the UK.

The latest figures put EU inflation at an average 3.4% in October – up just 0.01% from September, up from 2.3% a year ago and 0.3% for the month.

Eurozone inflation was 3% – unchanged from September, but up from 1.9% in October 2010. The monthly increase was 0.3%.

The lowest annual rates of inflation for the European Union were:

• Sweden (1.1%)
• Ireland (1.5%)
• Malta (2.4%)

The highest were:

• United Kingdom (5.0%)
• Estonia (4.7%)
• Slovakia (4.6%)

The lowest 12-month averages up to October 2011 were in Ireland (0.8%), Sweden (1.6%), the Czech Republic and Slovenia (both 2.0%), while the highest were in Romania (6.6%), Estonia (5.2%) and the United Kingdom (4.3%).

The European Central Bank (ECB) is not too concerned about inflation in the Eurozone as the debt problems are flatlining growth.

Meanwhile, Bank of England Governor Mervyn King has backed the ECB for refusing to prop up countries with failing economies.

“The euro area does have the resources, if you were to regard it as a single country, to make appropriate transfers, within itself,” he said, speaking at the Bank’s quarterly Inflation Report press conference.

“The European Central Bank feels and with total justification that it’s not the job of a central bank to do something which a government could do perfectly well do itself, but doesn’t particularly want to admit to doing,” he said.

“I think it’s very important to recognise that there are circumstances when governments will try and put pressure on central banks to do things they would like central banks to do, in order to avoid their having to own up to the actions that they would like someone else to carry out.”

Gilt yields have hit 2.5% – and over 55s could see their pension drawdown income plummet as a result.

In September, thousands of over 55s lost income as the GAD rate – set by the government actuary department – was slashed from 120% to 100% to reflect a gilt yield drop to 3.5%.

QROPS investors can sidestep the problem by switching their pension funds from the UK to an offshore financial centre like the Isle of Man, Guernsey or Malta.

Although QROPS pension rules are set in the UK, payments, investment and tax issues are regulated in the country where the pension is based and where the ex pat lives.

UK pension provider AJ Bell is campaigning for the government to break the link between GAD and drawdown payments.

“For a 60 year old male with £300,000 going into drawdown on 1 December 2006 the maximum income was £22,320,” said an AJ Bell spokesman.

“When their pension benefits are reviewed in December, even if their pension fund is still worth £300,000, they will see their maximum income drop to £16,800, almost 25% less income. If their pension fund has fallen in value the drop in pension income could be even greater.

“This drop in income will come as a shock to many especially when you consider the effect of rising inflation over the past five years, the drop in real income is far worse.

“We have urged the government to reinstate the 120% factor and to review the link between gilt yields and pension income, and will continue to press the case. We hope this latest drop in the gilt yield and the negative impact it will have on pensioners’ incomes will give them reason to look at the issue again.”

As investigators reckon victims have paid out more than £200 million for worthless plots of land, the Land Registry has updated guidance to investors about the risks involved in landbanking.

The fraudsters talk up the price of plots of cheap green belt or agricultural land by claiming the value will increase because they lie in the path of large developments, although none have planning permission and few have any chance of gaining permission.

The Land Registry’s latest guidance suggests anyone considering such an investment should take professional advice from an independent surveyor or a solicitor before entering in to any contract.

Jane Allen from Land Registry’s Corporate Legal Services said: “We know that many investors, living both in this country and abroad, hand over thousands of pounds for land that has little or no chance of being developed.

“Some companies offer UK land plots from the Far East where the local authorities do not regulate such activities, or are not aware of the high-risk nature of the investment.

“Anyone considering buying land for its investment potential should read our guide. By publishing this updated version, we aim to improve public awareness of the risks of investing in land banking scheme. However, individuals should not assume that we think any particular scheme is a poor investment or that land within a specific scheme is unsuitable for development.”

The Land Registry has teamed up with the Financial Services Authority and Office of Fair Trading to crackdown on landbanking cheats.

The campaign has recently led to several firms closing and a number of web sites moving offline.

Recently, the FSA obtained a High Court ruling against a £11 million land bank operation, ordering owner Stephen Watkins, who traded as Consolidated Land, to pay £920,000 to his victims.

Around seven out of 10 of them have also decided to stay overseas indefinitely.

Concerns about pensions, jobs and the economy plus worries about lawlessness are blamed as reasons for not wanting to come home.

The figures come from Lloyds TSB International, which reckons around 5.5 million Britons are living overseas.

Other damning findings included three of of four believing they had a better quality of life overseas – while just 7% considered life was better in Britain.

Many (51%) enjoy their lives better in other countries and feel their families are better off too, with good schools and chances to learn languages and about different cultures.

Ex pats think the same about their finances – with two-thirds (64%) claiming they are financially better off abroad, compared to 12% who felt they had more money in their pockets back in Britain.

Overall, 68% of ex pats are happier overseas, with just 7% confessing they were unhappy in their new home.

Lloyds TSB’s expatriate banking managing director, Tony Wilcox, said: “Expats have an enlightening view of the UK, having experienced life both home and away, so it’s worrying that life in Britain appears so bleak when viewed through their eyes.

“Considering longer-term trends, I think expats’ increasing happiness with life overseas also reflects that large groups of people in the UK are gradually becoming more outward-looking with increased global travel, more international business and many people generally coming into more contact with other cultures.

“It has become easier and a more natural transition for some people to settle in and enjoy life overseas than it would have been 20, even ten, years ago.”

Every G20 government – including many European countries, the US, Canada, Australia and Japan – have signed to the new tax convention after months locked in negotiations.

The agreement lets tax authorities in different countries synchronise tax raids and inquiries.

Countries have also agreed to help each other collect tax owed and to swop intelligence aimed at identifying tax cheats.

“Today we have taken a major step forward to improve global tax cooperation”, said Organisation of Economic Co-Operation and Development (OECD) secretary-general Angel Gurría from the Cannes G20 Summit in France.

“The OECD looks forward to continuing to work with the G20 and other countries to maximize the benefits from this powerful multilateral instrument. Tax co-operation and compliance are of crucial importance for all countries and citizens – and not only in times of a tight fiscal and budgetary environment.”

The G20 governments have worked on the convention for around two years – including ways to include non-G20 countries in the investigations.

“Now that the G20 countries have led by example, we expect other countries to sign the convention, said Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration. “As the membership expands, so the effectiveness of the convention will increase. Over the coming months we will be working with developing countries so that they will rapidly be in a position to sign the convention.”

HM Revenue & Customs has already kicked off the UK’s first multinational inquiry under the convention with an announcement earlier this week that wealthy individuals with homes overseas were being checked out by a 200-strong team of investigators.

HMRC has warned that the next cross-border targets for tax inquiries will be commodity and forex traders.

Small investors have often been left outside the tax and investment benefits of a QROPS pension because the costs of setting up and running a scheme have been seen as prohibitive by many investors.

Now, several QROPS providers based in the Isle of Man, Guernsey and Malta are opening the way for savers with pension funds of less than £100,000.

There are many providers now offering QROPS lite products for funds as low as £20,000.

These offshore pensions are essentially slimmed down versions of the QROPS taken out by high-net worth investors.

Instead of offering full-blown investment choices, many are restricted to a few funds from specific managers.

QROPS pensions have never had a minimum transfer balance, but many providers declined acceptance of small funds because of high administration costs.

Now, economies of scale are playing a part as many more ex pats have smaller pension pots compared to the bigger funds of wealthier investors.

Annual fees and charges for some small QROPS are as low £150, and in several cases, less than £1,000.

The average UK pension pot, according to onshore pension provider Standard Life is around £36,000.

The changing financial landscape that is opening up Europe as a retirement opportunity for British ex pats is increasing the demand for QROPS lite pension transfers.

The benefits are the same whatever the size of the fund – QROPS cancel currency exchange rate fluctuations because they pay out in Euros. They are also exempt from any need to buy an annuity and sidestep UK inheritance tax etc.

In many cases, they also let retirement savers withdraw a larger tax-free lump sum than the UK 25 per cent of the fund value.

QROPS.net are pleased to announce that we can offer every one of the QROPS Lite products on the market. Due to our size and strength, many providers only offer their QROPS via our advisory service. Contact QROPS.net today

HM Revenue and Customs has tasked the team with uncovering overseas land and property owned by British taxpayers who have not declared any rent or capital gains.

The new team brings together tax, accounting and property experts from across HMRC. They are using new and innovative risk assessment techniques to identify wealthy individuals avoiding and evading taxes and duties.

The team is increasingly turning to web spiders – small pieces of computer code that crawl the internet looking for targeted data.

For example, the spider can look for overseas apartments or villas on private letting sites and tie up the property with an owner receiving rent.

These data-mining tools highlight people who do not appear able legitimately to afford the property, as well as those who do not appear to be declaring the correct income and gains from the property.

Other task force targets are commodity traders and people holding offshore bank and savings accounts.

The tax team is co-ordinating investigators throughout HMRC, including those who deal with companies, residence and domicile, trusts and estates.

The increasing number of tax information treaties that let governments swap information they hold about individuals are also part of the investigation.

Exchequer Secretary to the Treasury, David Gauke, said: “The government is committed to tackling tax evasion and avoidance across all areas of the economy. That is why we allocated HMRC £917m to reduce the tax gap over the next four years in the last Spending Review. This new team is part of that investment.

“With HMRC’s increased capability and expertise, and its increasing success in tackling evasion both at home and offshore, the message is clear: there is no hiding place for tax cheats.”

The deal lifts the traditional veil of secrecy draped over Swiss bank accounts for decades.

Under the agreement, 500 million Swiss francs will be paid to HM Revenue and Customs as a down payment against money raised from existing accounts held by UK taxpayers at a rate of between 19% and 34% to settle past liabilities.

From 2013, a new withholding tax of 48% on investment income and 27% on gains will be levied by banks on any accounts held by UK residents in Switzerland.

The Swiss authorities will also tip off HMRC about Swiss accounts held by UK taxpayers.

The new charges will not apply to any taxpayers disclosing their financial affairs to HMRC.

George Osborne, Chancellor of the Exchequer, said: “Tax evasion is wrong at the best of times, but in economic circumstances like this it means that hard-pressed law-abiding taxpayers are forced to pay even more.

“That is why this Coalition Government made it a priority to go after those who don’t pay their fair share. We will be as tough on the richest who evade tax as on those who cheat on benefits. The days when it was easy to stash the profits of tax evasion in Switzerland are over.”

Announcing the agreement, HMRC also revealed a new international team of investigators is seeking tax cheats across the world. Dave Hartnett, Permanent Secretary for Tax at HMRC, said: “The world has changed for tax evaders. A few years ago, no one would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion. However, with the clear wish of Switzerland as well as the United Kingdom to ensure that tax is paid as it should be, we are embarking on a new course which preserves important principles for each jurisdiction, and will be fair for all UK taxpayers.

“Our strategy is working. We will secure significant sums of tax that some had thought we would never see. Not only does this agreement settle past liabilities and make arrangements to secure correct taxation in the future, it also gives HMRC more scope to find out about Swiss accounts.”

The number of criminal convictions for tax crimes has jumped by almost 40% in a 12 months as tougher laws and far-reaching agreements with other countries have turned the screw on crooks.

In the year ending March 31, HMRC obtained 140 tax evasion convictions – up 38% from 107 in the previous 12 months.

The drive to blitz tax evasion is set to step up a gear fuelled by a £900 million investment in funding.

The target is a 500% increase in convictions – taking the number each year to around 700.

HMRC’s has two-pronged approach to dig out tax cheats:

• A campaign to root out assets and income hidden in offshore bank accounts in former tax havens. Liechtenstein and Switzerland are the most recent to succumb to a combined assault from tax men in the UK, USA, Germany, France and Italy.
• New powers at home to inspect tax records of 50,000 small businesses a year to uncover undeclared income

“Tax evasion is being tackled head-on through targetted disclosure opportunities backed up by third party data and state-of-the-art IT,” said David Hartnett, the permanent secretary for tax.

“The days of using offshore tax havens to evade UK taxes are drawing to a close. The only rational option is to talk to us because this always makes more financial sense than waiting to be caught.”

A proposed change in money laundering regulations to order anyone who the tax man suspects knows about tax evasion to hand over the details to HMRC is also underway.

The move will make failing to notify HMRC of tax evasion a criminal offence.

The proposal is part of consultation launched recently to upgrade money laundering regulations.

“It’s essential that the UK is a hostile environment for money laundering and financing terrorists,” said Lord Sassoon, the Commercial Secretary.

In three non-residency appeals rejected on the same day by the Supreme Court, Lord Wilson, one of the presiding judges highlighted that PwC failed to point out that their clients could have contacted HM Revenue & Customs to discuss their residency status.

In each case, the appellants, Robert Gaines-Cooper, Robert Davies and Michael James claimed they were not liable to pay tax in the UK because they were non-resident.

The court criticised HM Revenue & Customs for giving unclear guidance to ex pats over residency, but noted an information booklet invited inquiries.

Wilson said no evidence suggested that PwC contacted HMRC, who represented all three defendants.

Another of the judges, Lord Walker suggested PwC opted to do nothing.

“The appellants had expert professional advisers, and it was well known to them that a large amount of tax was at stake,” he said. “It seems possible that the preferred strategy was to let sleeping dogs lie, despite the obscurity of parts of the guidance.”

Although the Supreme Court cases did not involve QROPS offshore pensions, they show the importance of ex pats picking the right advisers – and the problems of taking the wrong advice.

QROPS pensions are only available to UK non-residents, and the first step in assessing if a QROPS is the right retirement savings package for an ex pat is determining if they qualify as a non-resident.

The options are simple – if the ex pat is not UK-resident, then a QROPS is probably the preferred pensions route, while if they are UK resident, a SiPP is a better choice.

Failing to assess residency makes the investment decisions that follow uncertain because making the wrong choice leaves the pension investor open to fines and penalties from HMRC.

That’s why QROPS.net advisers carefully look at residency status and the interaction of tax laws in the countries where the ex pat lives and where the QROPS provider is based.

The Isle of Man Finance Partnership has joined the Isle of Man Association of Pension Scheme Providers (APSP) to encourage ex pats to switch their retirement savings to the offshore financial centre.

The campaign to raise the IoM QROPS profile has full government backing.

Minister for Economic Development John Shimmin said: “The APSP has made great progress in representing the sector since its formation under a year ago and we are pleased to support its efforts in furthering the island’s reputation as a centre of excellence for retirement solutions.”

The Isle of Man stepped up a gear as one of the world’s leading QROPS pension jurisdictions with the introduction of the 50c scheme a year ago.

A new interpretation of QROPS rules by providers on the IoM lets retirement savers withdraw a larger tax-free cash lump sum than QROPS provided by other offshore financial centres.

Investors can take up to 30 per cent of the value of any transfers in to a QROPS plus up to 100 per cent of any fund growth.

APSP chairman Stuart Clifford explained the IoM’s tough regulatory framework injected confidence in to investors.

“The Isle of Man is unique among international offshore centres in having a dedicated regulatory regime for the managers of pension schemes and the schemes themselves,” he said.

“This regulation is distinct from the tax framework that governs the schemes and the result is a highly flexible and modern structuring opportunity of international pensions underpinned by a dedicated regulatory function. This is not available anywhere else and we look forward to working with the government to highlight the opportunities this presents to companies and individuals.”

The Isle of Man has offered QROPS pension since the product was introduced in April 2006.

Issues like qualifying to transfer funds to a QROPS offshore pension rely on residence status.

In the wake of multimillionaire Robert Gaines-Cooper losing his non-residency fight with HM Revenue and Customs, who should pay tax in the UK is a little clearer.

The government intends to try and make the defining residency easier from next April with a statutory test, but meanwhile, thousands of Brits living abroad need to know their tax status.

The basic rule arising from the Gaines-Cooper appeal rejected by the Supreme Court is not only does someone have to leave the UK permanently, but they have to break all ties with the country to become a non-resident.

These ties, highlighted in the Gaines-Cooper case, include not owning residential property in the UK. This means selling any former home. Other official ties that need undoing are cancelling listing on the electoral roll, handing back driving licences and severing connections like keeping personal belongings in the UK.

Just moving overseas is not enough – plenty of offshore workers leave the UK for years at a time but still keep a home in the country, probably have a wife and children living there and have other ties, like paying tax and voting.

The prize is financial freedom. A non-resident pays tax in the country where they live, not in the UK.

As a non-resident, they can make financial decisions that are not available to UK residents, like switching pension funds in to a QROPS.

UK residents working overseas should consider a SiPP pension based in the UK rather than an offshore pension.

Getting residency status wrong is expensive. In some cases, years of tax affairs are unravelled with steep fines and interest undermining financial decisions and security.

Huge growth in personal wealth in China is fuelling the global economy, with the country about to pass Japan as the second richest in the world behind the USA as household wealth doubles.

Wealth generation in Africa, Latin America and the Asia Pacific is driving the world economy.

According to research by bank Credit Suisse calculated global wealth increased by 14 per cent to $231 trillion between January 2010 and June 2011. Countries in the Asia Pacific accounted for 54 per cent of the surge.

“These are times of unprecedented economic change, and a radical reconfiguration of the world’s economic order is taking shape,” said Osama Abbasi, chief executive officer for Asia Pacific at Credit Suisse.

“Emerging markets are important drivers of the global recovery and remain the key growth engines of global wealth.”

Despite a teetering economy, the USA still stands astride the globe as the world’s richest nation – and is expected to stay in the top spot for the next five years with a projected wealth of $81 trillion in 2016.

China is forecast to leapfrog Japan by increasing household wealth from around $19 trillion now to $39 trillion in 2016.

Although the USA accounts for the greatest share of the world’s riches, households in other countries are better off financially.

Top of the table is Switzerland, where each adult has an average personal wealth of $540,000 – the only country with a total for personal riches that is more than $500,000.

Australia and Norway take the other top spots behind Switzerland.

Heading the wealth pyramid, are over 1,000 billionaires, of whom 245 are in the Asia Pacific, 230 in Europe and 500 in North America.

Next are 80,000 ultra-high-net-worth individuals with more than $50 million – with just over 800,000 living in China, around 170,000 in India and over 4 million in the rest of the Asia Pacific.

Below this come more than 330 million individuals with an average wealth per adult of between $100,000 to $1 million.

A survey of those with over £250,000 of savings and investments highlighted 17 per cent would like to move overseas in the next two years, compared to 14 per cent six months ago, according to the research by Lloyds TSB.

Rioting and lawlessness are blamed by most as their reasons for thinking about moving overseas – with 61 per cent of those asked citing crime and antisocial behaviour as their main fear compared with 43 per cent six months ago.

Only one per cent are less worried about crime now than then.

High taxes and the cost of living are major worries for many. Tax is the main reason for considering a move by 42 per cent – up from 35 per cent six months ago. Rising living costs are a concern for 31 per cent – up to 52 per cent in six months.

Since April 2010, the government has introduced the 50 per cent tax rate and changed 40 per cent tax thresholds to make high earners pay more income tax. Inflation has risen to more than 4 per cent at the same time – double the Bank of England’s inflation target.

“Sadly it seems August’s riots, tax increases and a rising cost of living have cast a pall over life in the UK for some wealthy people,” said Nicholas Boys Smith, managing director of Lloyds TSB International Wealth. “It may re-ignite fears of a ‘wealth drain’ from our economy as rich people seek pastures new.”

HM Revenue & Customs reckons the top one per cent of earners will contribute more than 25 per cent of the nation’s income tax take.

“High earners are important to the UK’s fragile economy, given the big slice of income tax revenues they deliver, as well as the contribution they make to the economy through spending and job creation,” said Boys Smith.

France is the most popular country for wealthy people who’d like to move abroad – 21 per cent selected the country as their most likely destination, with Spain in second (15 per cent) and the USA third (11 per cent).

Surprisingly, people in the UK are generally more satisfied with their lives, according to research by the European Union.

The report looked at a range of lifestyle and financial factors, like jobs, the economy and healthcare.

The findings showed that overall, countries in the north and west of Europe, including the UK, fared better than those in sunnier climes – with the tiny island of Malta at tenth the only place to buck the trend.

Luxembourg, Austria and the Netherlands came out top of the satisfaction survey – with the UK ninth of the 27 EU states.

After Malta, the remaining 17 states all returned a negative result – including France (13th) and Spain (16th).

The three countries at the bottom of the table are Hungary, Romania and Greece.

Overall, the research concluded that the whole continent is dissatisfied with their lives – although things have improved a little since last year.

“Even if they are still negative when evaluating the general situation of their country, Europeans seem to feel that the economy is recovering, but that daily life is more expensive than it was last year,” said the Special Barometer Social Climate report.

“Optimism that things will improve in the next twelve months has increased. Europeans are still struggling with serious difficulties, but their expectations for the near future are improving.”

The countries least satisfied with their governments are those that have experienced the worst economic problems – Greece, Romania, Latvia, Ireland and Portugal.

Luxembourg records the highest score, followed by Austria, Sweden, Estonia and Germany.

Several non EU surveys have returned France and Spain as the favourite European destinations of British ex pats – with the USA and Australia topping the charts for outside the EU.

In a year, the rate has surge in the cost of living has pushed the rate up from 1.9 per cent.

The highest inflation rates are in the Baltic states of Estonia (5.4 per cent) and Lithuania (4.7 per cent).

Countries with the lowest inflation rates are Ireland (1.3 per cent), Sweden (1.5 per cent) and the Czech Republic (2.1 per cent).

Overall annual inflation fell in seven states, remained stable in five and rose in fourteen.

The inflation rate in the UK is 4.5 per cent.

In the Eurozone, inflation is running a little lower than the rest of the EU – 3.0 per cent in September, up from 2.5 per cent in August. A year earlier the rate was 1.9 per cent. Monthly inflation was 0.8 per cent in September 2011.

In the Eurozone, the biggest contributors to the rising cost of living were transport (5.9 per cent), housing (5.0 per cent) and alcohol & tobacco (3.7 per cent)

Clothing costs jumped 14.1 per cent between August and September.

Some economists predict prices have hit their ceiling as slow industrial growth is releasing the pressure on inflation.

“We forecast an interest rate cut by the end of the year at the European Central Bank,” said Clemente de Lucia, an economist at BNP Paribas. “The central bank has to be forward looking, it has to look at the medium term and given the risks to growth, there is room to cut.”

Operation Twist is a $400 billion debt swapping exercise for the US Federal Reserve.

The strategy is to sell bonds due to expire within three years in favour of buying longer dated debt due to come of age in up to 30 years.

The 30-year timeline ties the debt deal to the term of US home mortgages.

The issue is can any action by the government change the countries sluggish economy?

Over recent months, the US has suffered the same dill-dallying over fiscal policy as Europe – with a loss of confidence in the markets that the politicians have the will and the ability to make changes to turn things around.

Obama has seen political infighting and score settling that has damaged the country’s ability to break free of economic shackles dragging down the mighty dollar. The Standard and Poor’s downgrading of the US credit rating should have been a rallying call rather than another nail in the coffin.

Banks and analysts are lining up to chivvy Obama in to changing his mind about Operation Twist.

Standard Life Investments has launched a particularly scathing attack.

“We fear that Operation Twist will be a failure. Even though US mortgage rates have fallen sharply in recent months – currently at 4.1% they are at record lows – the impact on the US housing market or indeed the wider economy has been limited,” said Andrew Milligan, head of global strategy.

“Mortgage refinancing remains little different to the levels seen a year ago. Indeed, the classic relationship between US home sales and mortgage rates appears to have broken down since 2008.

“The reason is that there are too many structural impediments to the housing market which Congress has not tackled: too many home owners in negative equity, too many mortgages where the ownership remains questionable, too little support from the government agencies Fannie Mae and Freddie Mac to help a wholesale refinancing programme.”

In line with many economists, Milligan does not believe Operation Twist will drag the US economy back in to recession, more likely it will make little or no difference.

The study looked at when those aged 18 to 24 now are likely to retire – and came up with the conclusion that most will have to work for around 50 years.

Today, men pick up a state pension at 65 and women at 60, but the government is proposing to change this to 66 years old for both by 2020.

According to the findings of the report by accountants PricewaterhouseCooper (PwC), the Department of Work and Pensions is already working on a retirement age of 68 years for men and women for around 2045.

After that, the state pension age is likely to be linked to longevity figures, and to clock up automatically every time statistics show people are likely to live longer.

Other government reports already show that of the 12.4 children aged up to 16 alive now, 3.3 million will see their 100th birthday.

A Department for Work and Pensions spokesman said: “We’ve been clear that the current timetable for moving the State Pension age to 67 is too slow due to the increases in life expectancy.

“We are committed to reviewing the date. We are continuing to look at how pension ages beyond 66 will be set, including considering an automatic mechanism.”

Ed Wilson, a PWC pensions director, has urged young adults to start saving as soon as they can for their retirement if they do not want to work long in to their 70s.

“Young people could still be working into their 70s if they fail to save independently,” he said.

Meanwhile, another report highlights how many workers face a frugal financial retirements.

The Prudential study shows one in three workers are not saving in a pension, while 43 per cent of those responding to the survey confessed they are unlikely to start saving for their retirement again because they have lost their jobs or cannot afford to save and pay their bills.

QROPS is short for ‘qualifying recognised overseas pension scheme’ and is a home for an ex pat’s pension fund when they have taken the decision to live abroad permanently.

Living outside the UK permanently is the key term.

The idea of a QROPS is a way to ease access to a pension fund for someone who has a UK pension fund but now lives overseas for good.

Around 2,500 QROPS pension schemes are available in 50 offshore centres, according to the latest HM Revenue and Customs list of registered schemes, which is published monthly on the HMRC web site

Although providers offer a wide range of schemes, many of the most popular are based in New Zealand, Guernsey, the Isle of Man and Malta.

Any UK pension saver who lives abroad permanently can transfer one or more pension funds in to a QROPS.

The standard process is to consult with a QROPS.net adviser who has experience in this specialist market to shortlist the best schemes that meet a retirement savers personal financial circumstances.

The adviser and providers then work together to make the transfer.

The main retirement savers who need a QROPS have a similar financial profile:

• They are former UK residents or international workers with UK pension rights
• They are now non-UK residents living permanently abroad

Moving the UK pension in to a QROPS also gives retirement savers other benefits, like a more flexible investment package, tax advantages and a haven from currency exchange rate fluctuation.

Where the retirement saver lives is not an issue – it’s simply a matter of matching the tax requirements of the country where they are resident with those of the offshore centre where the QROPS is based.

That lets the pension saver live where they want while giving peace of mind that their pension funds are growing in a secure in a low tax, reliable and politically stable environment.

The rules changed in April – slicing a sixth off the available drawdown cash.

Pension firm AJ Bell has pressed the government to change the rate back to 120 per cent of the equivalent annuity rate rather than sticking at the current 100 per cent.

Treasury Mark Hoban has refused to reconsider, explaining the limit is to protect, not penalise, retirement savers.

Hoban also claims that another pension reform – scrapping the need for pension savers to annuitise by 75 years old – will not work with a higher drawdown limit in place.

“The change in the drawdown withdrawal rate to a single rate of 100% of the Government Actuary’s Department rate at any age was integral to ensuring this product was suitable for use over a much longer period,” said Hoban.

Hoban added that the government understands the rate change is reducing pension pay outs, but stock market falls combined with low interest rates and rising inflation are creating a false picture of pension incomes at the moment.

“In reforming pensions we have to balance freedom, fairness and responsibility,” said Hoban.

Andy Bell, head of AJ Bell, said: “From reading the response to my letter you can understand why the government would have an aversion to changing rules that were adopted as recently as April 2011. However, it demonstrates that they are failing to appreciate the strength and depth of feeling on this matter.

“We will continue to work on building the case for change and will look to evidence the depth of feeling that exists on this subject. We have two surveys running concurrently with clients and advisers and will announce the results in the coming weeks.”

High prices, inflation making the cost of living even worse and miserable retirement expectations are depressing millions, according to research by comparison web site uSwitch.

The silver lining is Brits enjoy the fourth highest incomes in Europe – but too many other factors combine to make life hardly worth living in the UK, says the study.

France has the best quality of life – an accolade held for the third year in a row – closely followed by Spain.

Britain may offer relatively high earnings – behind the Netherlands, Denmark and Ireland – but also has the lowest holiday entitlement for workers and one of the highest retirement ages.

Besides the cost of living, nearly half of Brits are concerned about crime and violence.

Just five per cent of Brits are happy with their lot.

France and Spain are the favourite destinations for ex pats. Spain tops the list of the best place to live for 13 per cent, while 7 per cent opted for France.

The Spanish can expect to live a year longer than people in the UK and enjoy the longest holidays in Europe – 39 days.

Spain also tops the list for the cheapest alcohol and most sunshine.

Many ex pats retire to Spain, where they can spend an index-linked State pension and transfer their UK pensions to a tax-effective qualifying recognised overseas pensions scheme (QROPS).

A QROPS transfer takes a UK pension out of reach of Britain’s tough pension rules and gives the a pension investors tax benefits and flexible investment options.

Ann Robinson, a uSwitch director, said: “Last year at least our neighbours in Ireland were worse off, now we can’t even console ourselves with that. We are now officially at the bottom of the pile. We may still be enjoying the fourth highest household income in Europe, but the high cost of living means that we’re living to work.

Pension investments have faced a difficult few months, with billions wiped off stock markets worldwide, rising inflation and increased longevity, says Alan Carey, of the Alexander Forbes National Pension Index.

The net result is a reducing retirement pay out – and the figure has steadily dropped to the current 67.4 from an initial 100 in March 2000.

Then, the average 30-year-old expected annual contributions of 12 per cent of salary to provide an income equal to two-thirds of their final salary from the age of 65, the firm said.

That same saver could now expect an income of 43 per cent of final salary, down from 45 per cent in March 2011.

To get back on track, a retirement saver would need to invest 38 per cent of final salary, up from 33 per cent in March 2011.

But Office for National Statistics (ONS) data shows that the average total (employer and employee) contribution rate is just 8 – 12 per cent of final salary, which is two thirds of the original saving rate and a fifth of the rate required to meet original savings goals.

Defined contributions, also known as money purchase schemes, have set contributions from an employer and employee designed to deliver an income on retirement set as a percentage of salary.

Steve Watson, head of delivery, defined contributions and benefits at Alexander Forbes, said: “In the long term it is far better to stay on track with pension savings, rather than face the prospect of an impoverished retirement.

“The most important message for DC savers from the index is the importance of reviewing their projected income regularly, rather than assume that assumptions made about pension savings many years ago still hold true today, as in all likelihood they will not.”

The 350,000 or so multimillionaires who have a personal wealth of £2.5 million or more can expect special attention from a 100-strong team of HM Revenue and Customs tax inspectors.

The HMRC is keen to make sure every penny of tax due is paid and they figure that the wealthy offer rich pickings.

Top of their hit list are Premier League footballers who lay off the fees charged by their advisers on the clubs who are buying and selling their talents.

HMRC suspects this is disguised income that offers an opportunity to raise extra taxes.

“HMRC are aware of a potential tax issue concerning the payment of agent fees and are taking steps to ensure the tax rules are respected,” said an HMRC spokesman.

“When a third party pays a fee to an agent acting on behalf of an employee, the fee may count as part of the employee’s taxable earnings and so be liable to tax.”

The hit squad is part of HMRC’s new army of 2,000 tax inspectors tasked with rooting out tax evasion.

“The government has made £917 million available to HMRC to ensure that tax rules are adhered to across the board,” said the spokesman.

HMRC is also extending inspections of business records. A trial uncovered 44 per cent of businesses with issues keeping financial records – with ‘serious inadequacies’ in 12 per cent of the cases.

Tax bosses plan to step up the inspections to around 80 a day in the new year.

HMRC’s Director of Local Compliance, Richard Summersgill, said: “Good record-keeping helps businesses pay the right amount of tax at the right time, thereby potentially avoiding interest and penalties.

“Adequate records give businesses a clear idea of their trading position and profitability, allowing them to make business decisions and adjustments to ensure survival and success. Where a check has shown a business keeps adequate records, it gives HMRC a greater degree of assurance as to the likely accuracy of its tax returns.”

The Chartered Institute of Taxation has broadly agreed with the new three-part test for UK residency in a response to a call for consultation from the Treasury.

The issues that most worry them are definitions of ‘work’ and ‘ordinary residence.’

Part of the test lets someone work in the UK for 20 days without becoming resident, but does not clearly define what work is.

“We need a definition of ‘work’ in the new rules,” said CIOT policy director John Whiting.

“It is unclear whether you are working if you are travelling to a meeting, or if you attend a social event with a colleague, or if you are merely thinking about work. Would a three hour meeting on one day followed by a working breakfast and a journey back to the airport on the next count as two working days?”

CIOT also feels most people are confused by the difference between ‘resident’ and ‘ordinary residence.’

“Ordinary residence is a term that causes confusion and is difficult to operate. It should not be needed in a modern residence system, though there is a need for careful consideration to ensure no unintended hardship is created by it being abolished,” said Whiting.

CIOT also called for a transition period to let individuals bring their tax affairs in to line with new rules.

“The Government’s proposals are a big step in the right direction. We believe that the Treasury has created a residence test that addresses many of the concerns raised by commentators over the years, and goes a long way to producing a test that gives certainty, achieves a measure of equity and will, with suitable adjustment, create a measure of simplicity,” said Whiting.

“The current rules are not fit for purpose for either taxpayers or HMRC. The numerous legal disputes over the last decade, and the inability of tax experts, barristers and even judges to agree, show the need for a definitive test for tax residence. Businesses and individuals need this test set out in statute to provide certainty in this increasingly mobile world.”

In recent weeks, some well-heeled taxpayers in the US, France and Germany have volunteered to pay extra to help their countries through tough financial times.

For British ex pats trying to decide where to put down their roots and how the move will affect the tax they pay and other financial factors – like where to locate a QROPS offshore pension and other investments.

To help international accountants and tax advisers BKR have joined with the Financial Times to produce an interactive map of the world to show the countries with the largest and smallest tax takes.

The graphic not only reveals what high net worth earners pocket around the world, but how much income tax payers contribute to some government revenue flows.

The map highlights huge tax discrepancies between countries.

For example, no income tax is paid in Saudi Arabia and comparatively little tax is taken from income in Russia, where earners can keep around 75 per cent of what they are paid.

At the other end of the scale, workers in Brazil keep just 22 per cent of their incomes.

Countries with the lowest levels of income tax as a percentage of GDP are Japan, spain and the USA, while the country with the highest is Denmark, followed by Ireland.

More detailed corporate tax information about 54 countries is available from the BKR web site, where tax data from any number of the countries can be lined up for comparison.

Colin Pearson, 47, helped ex pats illegally release around £3.5 million from their investments by setting up scam pension funds in Barbados and Cyprus.

He earned £225,000 commission over three years, spending the money on cars and homes in the UK and Cyprus.

Pearson, of Hull, East Yorkshire, is the first crooked financial adviser to face prosecution for offences involving QROPS pensions.

He was caught when trying to fool a legitimate pension provider in to transferring cash to Cyprus by putting on a false Cypriot accent in a telephone call. The firm thought the call was odd and made inquiries that revealed his bogus activities.

Judge Jeremy Richardson, QC, imposed the jail sentence at Hull Crown Court after Pearson admitted a charge of making a false statement prejudicial to the Queen and HM Revenue and Customs.

The pensions scam let UK pension savers transfer their funds overseas to withdraw the cash contrary to QROPS rules.

The court heard the scheme let the pension investors evade 40 per cent tax on the withdrawals. The total amount of tax that went unpaid added up to £1.8 million.

In court, the judge told Pearson: “You are branded a criminal, your life is utterly destroyed and you are totally dishonest in your deceitful actions.

“A clear message must go out that individuals who cheat the revenue will receive substantial periods of imprisonment. No civilised society should tolerate such dishonest behaviour. Tax evasion is wholly unacceptable and will be punished severely.”

Pearson set up his first pension scheme in Barbados under a false identity – Ruediger Meyer of the Espirit Yacht Company. Espirit was registered with HMRC as a QROPS pension trust later that year.

In 2008, he opened Brewer Collins in Cyprus and again registered the firm as a QROPS pension provider with HMRC.

On both occasions, he exploited a registration loophole that HMRC has now closed.

The main draw to an IoM 50c QROPS from the rest of the thousands of products offered in the market for ex pat pension investors is the chance to drawdown at least a 30 per cent tax-free lump sum.

The IoM 50c QROPS is a custom-designed pension that was drafted cleverly around HM revenue and Customs registered pension rules that specifically state that a QROPS must retain 70 per cent of any transfer value as a fund to pay benefits to the pension member.

Until the 50c QROPS, pension draftsmen had taken this to mean at least 70 per cent of the fund should be ring-fenced to pay benefits, but closer examination of the rules shows this is not correct.

So how does this benefit a pension saver?

Instead of a limit of 30 per cent of the fund for the tax-free drawdown, a Isle of Man 50c QROPS can pay 30 per cent of the fund and up to 100 per cent of any growth on the fund after the transfer date.

It sounds like technical hairsplitting, but in terms of cash, this can mean a lot of money for someone with a large pension pot that has accrued a significant amount of growth after transfer in to a QROPS.

Boal & Co, the Isle of Man QROPS provider running the first 50c scheme – Trinity QROPS – claims this splitting of hairs can not only pay out more tax-free cash, but save on tax as well when compared to similar investments in a non-50c QROPS or a SiPP.

Isle of Man QROPS also offer all the tax and investment benefits of any other offshore QROPS scheme, like inheritance tax exemption and better investment options.

A newly introduced spousal trust also keeps QROPS funds out of the reach of the taxman as an extra layer of inheritance tax protection.

New Zealand QROPS reign supreme with almost half (47 per cent) of all ex pat pension transfers going to providers based in the country since the offshore pension schemes opened for business.

New Zealand also leads this year’s QROPS pension transfer league with 28 per cent of transfers.

The full figures for transfers since April 6, 2006 to June 31, 2011 is:

• New Zealand (47 per cent)
• Australia (23 per cent)
• Guernsey (10 per cent)
• Isle of Man ( 2 per cent)
• Hong Kong (1 per cent)
• Malta (Less than 1 per cent)
• All other jurisdictions (17 per cent)

For the first part of 2011, the figures show a new leader and a shuffling of the market place:

• Guernsey (32 per cent)
• New Zealand (28 per cent)
• Australia (20 per cent)
• Isle of Man (5 per cent)
• Hong Kong (Less than 1 per cent)
• Malta (Less than 1 per cent)
• All other jurisdictions (15 per cent)

The figures were published in IFA trade magazine International Adviser from a freedom of information disclosure to Concept Group from HMRC.

So what do these figures mean to ex pats switching from a UK pension fund to a QROPS offshore scheme?

The first consideration is these are numbers of transfer and not cash amounts – so the figures do not necessarily show where the money is going, just how many people are sending it.

Fund transfer figures were published by HMRC several months back that showed around £1.5 billion was moved out of UK pension funds in to QROPS from April 6, 2006 until April 5, 2010.

Next, Australia QROPS make few ripples in the offshore financial world, and this is attributed to the different categories of offshore pension market.

Some countries have QROPS transfers from ex pats moving in to live permanently in the jurisdiction and others are caretakers for money for ex pats living elsewhere.

Australian QROPS are mainly taken by former UK residents moving to the country to live – while Guernsey and Isle of Man QROPS are taken out by ex pats moving to other destinations. Australia features as one of the top retirement destinations for the British.

New world locations Australia and USA scooped second and third places.

Old favourite France is relegated to fourth place this year, with Ireland taking fifth. Nowhere else has any significant number of newly retired Brits – although places like Canada, Cyprus and New Zealand have pockets of ex pats.

The figures were disclosed in a report from pension provider Standard Life discussing retiring overseas.

John Lawson, head of pensions policy at Standard Life, said: “Retiring abroad is a dream for many, but does require careful planning and advice. Many people think living abroad is cheaper than living in the UK, but this isn’t always the case.

“Doing your homework before moving, matching your retirement income and expenditure, and making the appropriate decisions around purchasing an annuity or using income drawdown are key considerations. Your retirement income could also be subject to exchange rates and currency fluctuations, as well as local tax laws.”

Another pension option not consider by Standard Life is transferring a UK pension pot in to a QROPS. The firm does not include this option because they do not provide a QROPS overseas pension scheme.

Switching UK funds in to a QROPS as an ex pat means taking control of retirement savings and moving them outside the influence of UK tax and investment restrictions.

A QROPS can also have currency exchange advantages as most offshore pensions will pay benefits from a number of major currencies.

Ex pats do have to consider some pension issues on moving to Australia and the US -

• UK state pension increases only apply to ex pats living in the European Union or a country with a reciprocal social security agreement with the UK. Outside these countries, the UK state pension payment is frozen at the amount initially paid when first claimed
• QROPS pension transfers can meet some difficulties with the US tax authorities if they are not handled carefully due to anti-avoidance laws

“Ex pats need to think about the state pension and if their retirement destination has any reciprocal agreement with the UK. Without a reciprocal agreement, they need to be careful retirement income covers living costs over time. Over a 20 year retirement, the basic state UK pension could halve in real terms if a reciprocal arrangement is not in place,” said Lawson.

Although the crisis has subsided that saw billions wiped off share values in markets across the world, investors are still nervously eyeing economic data in fear the worst is not yet over.

That fear not only stalks investors trading in stocks and shares, but also pension savers who have a good deal of their funds in those same equities.

Regardless of whether you are a UK pension or SiPP saver or an ex pat who has switched funds to an offshore QROPS pension, a drop in share values hits the value of the underlying fund the same way.

The options are hard to swallow -

• UP pension contributions to make up for the shortfall in the future retirement pot
• SWITCH to investments with a better return – if you can find them
• STAY as you are and hope the market has time to recover before you need to draw on your fund

Working out how to go forward is not easy. Even professional analysts have doubts about how the markets will play out over the coming months.

One, Tom Higgins, global macroeconomic strategist at investment firm Standish, looks at the likelihood of a return to recession for the US and Eurozone and sums up the opinions of many of his Wall Street colleagues – he reckons:

• The US and Europe have a 50% chance of falling back in to recession
• Consumer and business confidence was dented by the Standard & Poor’s downgrade of the US credit rating
• Failing to deal with the Eurozone debt issues is a continuing threat to stability

“Although reliable leading indicators – such as average weekly hours, jobless claims, and new orders for durable goods – are not yet pointing to a recession, the sluggish pace of economic growth in the US and Eurozone endangers both economies to shocks that could easily tip them back into recession,” said Higgins.

“The US economy also appears to have been much less resilient to the spike in oil prices associated with rising tensions in the Middle East and the supply disruptions from the Japanese natural disasters than it first appeared. According to our estimates, US GDP growth averaged just 0.4% in the first half of the year.

“The situation is arguably worse in Europe. Against this backdrop, we have revised down our projections for global economic growth to 3% from 4% in 2011 and believe there is a 50% probability of recession in the US and Europe.”

Three out of four high net worth individuals – classed as someone with more than US$1 million after settling all their debts – rely on IFAs while other advisers lag far behind.

In comparison, only 20% of millionaires put faith in stockbrokers and just 14% confide in wealth managers.

Surprisingly, after second place accountants, who attracted just over a third of the votes, journalists and financial web sites were considered as a reliable source of financial advice by 31% of ex pats polled by financial firm Skandia for their Millionaire Monitor Report.

Just 10% of millionaires took opinions from tied advisers linked to a life or insurance company.

By gender, 55% of wealthy men are keener to look for independent financial advice compared with 44% of women. Men are also more avid followers of the financial press and web sites.

The survey also looked at attitudes to risk, finding controlling risk is a key factor for high net worth individuals.

Around two-thirds are concerned about managing risk, while six out of 10 consider investment risk more than ever.

Nevertheless, many are happy to live with investment risk, with four out of 10 assessing their risk tolerance at high levels.

Of course, the converse is six out of 10 prefer low risk investments. “The pain of loss outweighs the pleasure of gain, and the fact that millionaires have a lot to lose means controlling risk is one of the most important elements they will seek advice about,” said Graham Bentley, head of investment strategy at Skandia. “Having said that, the majority of millionaires are still looking to grow their capital rather than just preserve it, and many are prepared to accept a relatively high level of risk to achieve that.”

The Swiss government has revealed the country’s tax authority is in the ‘final phase’ of negotiating a tax settlement on undeclared assets hidden from the prying eyes of HM Revenue and Customs in the country’s bank vaults.

An agreement was reached with German authorities last week and a deal with HMRC is due within a few weeks.

The Swiss are trying to save face by avoiding ditching the country’s strict financial secrecy laws by paying a fixed rate tax based on the value of assets in banks that belong to British taxpayers.

“It’s a complex subject, we did not want to negotiate with too many countries at the same time,” said a spokesman.

Reaction to the proposed deal varies between countries.

• France has had no contact with the Swiss for almost a year. French tax sources say the Swiss plan contravenes French tax rules but is a starting place for talks.
• Italy scoffed at the idea and wants full disclosure
• Greece seems willing to take whatever cash is offered

Under the terms of the German deal, Swiss banks will pay £1.53 billion to tax authorities in Berlin.

In future tax years, the banks will pay tax on the value of all German taxpayer holdings at a rate of 26.375%. Swiss banks will also pass on details of any new German-based account holders to Berlin to prevent cheats from avoiding tax by concealing assets.

The Berlin authorities reckon German taxpayers have between £112 billion and £156 billion that could raise around £46 billion in tax secreted in Swiss banks.

British and German tax authorities have pressured Swiss banks to divulge information about hidden accounts for around two years with the help of whistleblowers who have sold lists of bank customers.

The rising cost of living in the UK is running at 4.4%, according to the latest data collected to calculate the consumer price index.

Inflation in Estonia is the worst in Europe at 5.3%, followed by Romania (4.9%) and Lithuania (4.6%).

Despite eurozone debt problems, 15 of the 17 countries that have adopted the Euro as a currency have inflation running at 3.8% less – while four out of 10 of the countries that have not, including the UK, have inflation rates of 4% or more.

The lowest rates of inflation are in Ireland (1.0%), Slovenia (1.1%) and Sweden (1.6%).

A look at how fast the cost of living is going up in favourite ex pat destinations shows Spain has inflation at 3% and the rate in France is just 2.5%.

As a comparison, inflation is an average 2.5% in the eurozone, but averages 2.9% for the other European countries.

Paying more for transport (5.5%), housing (5%), and alcohol and tobacco (2.9%) were the main contributors to rising prices over the year ending July 31, while the cost of clothing went down by 2.9%.

Bank rates in the Eurozone remain at 2.25% on borrowing and 0.75% on savings, after the latest statement by the European Central Bank.

The UK’s official bank interest rate remains at 0.5% for the 30th month in a row.

In comparison, the US Federal Reserve has indicated interests rates will stay low until at least 2013. The rate stands at 0.25% and inflation is 3.56%.

Low interest rates and high inflation are twin problems for savers and those living on fixed incomes.

When inflation is running higher than savings rates, spending power and capital is eroded with little chance of recovery.

At the same time, the pensions black hole increased by almost half to an aggregate £116 billion for all the schemes in deficit.

Two agencies monitoring pensions have revealed that the falling markets reduced the value of every UK pension by an average £2,000 in just four weeks.

The National Association of Pension Funds (NAPF) added up the cost of dropping values for defined benefit schemes, defined contribution and personal pensions.

The losses averaged between 6% and 7% for every pension fund in the UK.

Joanne Segars, chief executive of the NAPF, said: “While we have estimated that the total value of assets in pension schemes has been reduced by 6-7% over the last month, funds are long-term investments and not easily unsettled by short-term volatility.

“On top of this, they are constantly monitoring market performance and spreading their investments across many asset classes. As we can see from this week’s stock market performance, prices can rise as well as fall.”

Meanwhile, the total pension deficit black hole widened from to £67.3 billion from £8.3 billion by the end of June, says the Pension Protection Fund (PPF).

Funding ratios for the PPF7800 Index fell from 99.2% to 93.7%, with total assets at £1001.4 billion and liabilities at £1068.7 billion.

The PPF, which rescues failing pension schemes, blamed the deficits on falling share prices and decreasing gilt yields for the poor returns.

“During July, assets decreased 0.26% mainly due to declining UK and global equities, with some offset from higher bond prices. Liabilities also rose, by 5.6%, due primarily to the significant fall in gilt yields,” said a spokesman.

Around £116 billion is needed to bring all schemes in deficit in to the black – up from £77.6 billion a year earlier.

Expert analysts have looked at each of the BRICS countries – Brazil, Russia, India and China – and conclude that beneath the hype, only Russia looks a good candidate for investors.

The view of James Smith, manager of the £171 million Ignis International Emerging Markets Select Value Fund is Brazil, India and China all have their market flaws and only Russia is attractive as a candidate for profit taking.

Here’s his view of each market in more detail:

Brazil

A market with long-term growth potential, but ahead of events with stock prices that are too high

Russia

Some stocks in Russia are trading around 7-8 times earnings, which makes them cheap, although they have risen recently due to higher energy prices.

“Russia might be a candidate for profit taking in the coming weeks and months although we will see how the market performs,” suggests Smith.

India

Indian stocks are expensive and the country faces inflation problems.

“The big question is can India tighten on inflation without hitting its economic growth?” asks Smith.

China

Many Chinese companies, are overvalued, says Smith, although after the recent fall in the market they are more attractively priced than they have been for some time.

“The market often gets confused between GDP growth and stock market performance and China is a classic case of that. For value investors like us, the sweet spot comes when the prospects for corporate earnings growth look good at the same time that valuations are cheap,” he said.

Smith also looks at some markets they pick up less publicity than the BRICS – he suggests Eastern Europe is performing well, especially Poland, Hungary and the Czech Republic, while further afield, Argentina is a dark horse.

Nearer home, Israel and Egypt are two contenders for investors that are often overlooked.

Although pensions are showing signs of recovery in most industrialised nations as stock market linked investments improve, inflation and low interest rates are taking their toll on growth.

QROPS investors can benchmark their pension performance against the OECD averages, which show funds have an average growth of 2.7% last year, down from 4.3% the year before.

Recovery is by no means across the board, the OECD pensions survey for 2010 shows most markets recovered 80% of the losses made in 2008, but poor performance continues in Ireland, Japan, Portugal, Spain and the United States.

Top performers were pensions in New Zealand, Chile, Finland, Canada and Poland.

Public pension reserve funds increased, from US$4.6 trillion in 2009 to US$4.8 trillion in 2010.

Investment returns were, on average, lower in 2010 than in 2009 but still positive.

The report points out that the crisis of confidence in the Eurozone and fears over financial markets make predicting pension performance unsafe.

The OECD also highlights that countries with falling numbers of defined benefit pensions and savers with small funds suffer higher operating costs that eat in to returns and exacerbate the effects of inflation and low interest rates.

The report disclosed pension fund administration costs differ widely across the OECD, ranging from 0.1% of assets in Denmark and Portugal to 1.3% in Spain and 1.4% in the Czech Republic.

Costs average a higher rate in less-developed countries, with `ukraine recording the highest at 5.9% of plan assets.

Defined benefit plans cost less since they are underwritten by employers, who pay do not have to reveal the full costs.

Public pensions perform better than private schemes, with average returns of 4% in 2010, down from 7.3% the year before.

The three offshore financial centres were listed in Senator Carl Levin’s Stop Tax Haven Abuse Act as three of 34 places that were likely locations encouraging tax evasion by US companies and taxpayers.

Delegates from each island have spent the last decade on and off trying to persuade levin and the US government to exclude them from the blacklist.

Guernsey has always been against appearing on the list. In recent meetings Chief Minister Lyndon Trott persuaded the US that Guernsey is a well-regulated financial sector, with no bank secrecy laws and a co-operative attitude to sharing tax information.

“The decision to no longer blacklist Guernsey is a major achievement that underscores the importance of having started and continuing the dialogue with politicians and government officials in Washington. We are delighted that our relationship with the United States is not only recognised as important but that it continues to be judged by both governments as a success,” he said.

Ministers in Jersey have also welcomed the news that the island is no longer blacklisted.

Assistant Chief Minister, Senator Freddie Cohen said: “Jersey welcomes removal from the list of secrecy jurisdictions.”

“Jersey has made strong representations to the US Treasury and Senate officials that Jersey’s inclusion in the list of jurisdictions in the previous version of the act was subjective and took no account of the island’s tax information exchange agreement with the US and our good record of responding to requests for tax information, for which we have been congratulated by the US tax authorities.”

The Isle of Man has yet to comment on the move.

Inclusion on the list would have resulted in sanctions from the US if the bill is voted through Senate.

Only 14% of Britain’s millionaires inherited their good fortune, while the rest piled up the cash from working hard, selling a business or investments.

The bad news is, nearly half would leave the country for good, reports investment firm Skandia, who commissioned the report.

They gave their reasons as seeking a higher standard of living, tax and less miserable weather.

Despite their tax concerns in the UK, only 2% include a tax haven like Switzerland or the CAyman Islands at the top of their list of destinations.

Most move to France, Spain, the USA or Australia, which have similar economies and tax regimes.

Jo Rimmer of Skandia said: “Our survey seems to indicate that the UK’s wealthiest really are saving for a rainy day and will seriously consider moving to sunnier climes if storm clouds gather in either economic or meteorological terms.”

Meanwhile, more research looking at how the credit crisis has affected high net worth individuals worth a £1 million or more has revealed the UK has more than 250,000 millionaires whose finances remain largely untouched by austerity measures afflicting the rest of the population.

The recent study by CoreData Research UK pinpointed 284,317 individuals or households in Britain with £1 million plus excluding their main home in net assets.

Most of the assets is evenly split between shares and property (33% each). The other third is held in less popular assets.

Despite the global economic problems, the number of big firms managing money for high net worth individuals is shrinking as a feeding frenzy of banking mergers and acquisitions followed the credit crisis.

The top 20 institutions increased their share of cash under management t from 77% to 825 last year.

Bank of America, the largest, has managed assets of $1.94 trillion, swollen by linking with Merrill Lynch during the crisis.

Morgan Stanley is second with $1.63 trillion under management, followed by UBS looking after $1.56 trillion, and Wells Fargo handling $1.39 trillion.

The market fears Italy will take a tumble as the government has the third largest bond debt in the world with 900 billion euros of papers due to mature over the next five years.

As investors await this week’s results of Italy’s banking stress tests, the fear is that if one rollover debt auction fails, the country’s economy will topple from a domino effect.

Although the banks are expected to pass their test, nothing less than the highest score will quell doubts about the resilience of the sector and whether Italy’s banks are about to go under.

“The yield on the 10-year Italian government bond has risen to nine-year highs over the last few days, and these borrowing costs are now high enough to cause a funding crisis. The results of the Italian bank stress tests are announced this week, and while they are expected to pass, they really need to pass with flying colours in order to appease concerned investors,” said Tom Higgins, global macro strategist at BNY Mellon Asset Management.

“Ultimately a large-scale recapitalisation of the banking sector is also required, while domestic austerity measures would also help to boost confidence in the country’s finances. However, it’s worth remembering that Italy is in a better position than many of its indebted Eurozone peers, in that it has not had a housing bubble, and private sector debt is relatively low.”

Higgins also fears that Greece is almost certain to default – and the only option for the European Union, european Central Bank and International Monetary Fund is to broker a deal that lets Greece go in to default without triggering contagion across the globe.

“The failure to address Greece’s issues has piled pressure on the Irish and Portuguese economies – Moody’s has downgraded the debt of both countries to junk over the past week – but now the focus is turning to Spain and Italy. As speculation and investor worries intensify, and bond yields soar, funding costs are rising and there is a very real systemic risk to the global economy,” he said.

The treaty is the beginning of the end for tax secrecy in some financial centres, as staying outside the agreement will attract suspicion from the world’s largest economies.

Companies and individuals with accounts in non-signatory countries are likely to be viewed as taking part in tax evasion and money laundering.

Signing, on the other hand, means drawing back the veil from secretive financial organisations.

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters includes standards for tax authorities to routinely mutually exchange financial information.

Tax investigations

“The entry into force of the amended multilateral convention marks an important step in the fight against tax evasion and I urge all countries to join” said Organisation of Economic and Co-Operation and Development (OECD) Secretary-General Angel Gurría.

“These amendments will help counter cross-border tax evasion and ensure compliance with national tax laws as acknowledged by G20 Leaders.”

Besides exchanging tax information, member countries can also launch simultaneous tax investigations, serve documents and collect tax for other governments.

The new convention is far wider-ranging than any previous treaty or agreement.

Around 20 countries have already signed the convention – and many are from outside the OECD group of 34 world-leading economies.

Confidential banking

Implementation of the treaty was announced as the Global Forum on Transparency and Information Exchange for Tax Purposes meets in Bermuda to discuss a more transparent global tax environment.

The convention is the latest in a series of measures to tighten up on tax avoidance following the credit crisis.

Britain and the US have led the vanguard of nations clamping down on offshore tax shelters with tough new laws and anti-avoidance policies.

Many small nations have already buckled under their concerted pressure to reveal details about customers with cash in previously confidential bank accounts.

The study by analysts for the World Gold Council, looked at how investments strategies factoring in 2.25% inflation and 2% deflation affected portfolios.

The conclusion was keeping 5% of assets as gold was the best strategy in any long-term scenario, although the holding should increase with inflation and decrease if prices fall.

The price of gold has soared 9% this year to peak at a record $1,575.79 per ounce in May.

“The study suggests that, in an optimal portfolio, you should have 5% in physical gold and that will come as a surprise to some investors,” said Marcus Grubb, managing director of investment for the World Gold Council.

“A number of investors think that if the world returns to a more normal interest-environment, a more normal fiscal and monetary environment and growth environment, that gold will lose its relevance and what the study proves is that is not the case.”

Gold tends to act as a readier convertible currency when the US dollar struggles against other key currencies like the Pound, Euro and Yen. Many investors have turned to the precious metals following the uncertainty and unrest of economies across the Arab world in recent months.

The study also revealed that gold prices perform well in times of low interest rates, like the US and Europe have experienced since the credit crisis.

One reason gold holds value when other investments poorly perform is that price is tethered to supply and demand and has no relation to interest rates or currency exchange values.

Gold is trading at $1550.41following a disappointing show by the Euro reflecting investors’m worries over debt contagion across other Eurozone countries after rescues in Greece, Portugal and Eire.

The basic premise is Lloyds Banking Group wants customers to give them the responsibility for planning their investments and finances because they are a brand everyone can trust.

Just put that in to perspective.

This is the Lloyds Banking Group that is 41% state-owned after picking up bail out billions to stop the bank going under in the credit crisis.

The same bank that has just announced another 15,000 job cuts on top of the 27,500 jobs slashed by management since 2009.

Don’t forget Lloyds has also set aside £3.2 billion to compensate customers who were missold payment protection insurance.

And figures released this week revealed that Lloyds is the bank most at risk from mortgage repayment problems if interest rates rise because of the amount of high loan-to-value lending sitting on its loan books.

While the management is cutting and slashing costs and staff in a behind-the-scenes bloodbath, the bank is quietly wooing financial advisers with an execution-only platform built around Scottish Widows.

“We will also refocus our international business on UK expatriates and others with UK connections,” says an internal review document.

“We will invest in new coverage models to better meet our customers’ service needs, electronic capabilities such as an improved online channel and an execution-only service, and a new investment platform incorporating Scottish Widows’ and third-party products.”

The review discloses the bank aims to become the number one adviser to ‘UK mass affluent, affluent and high-net-worth customers’ and intends to raise income per customer by at least 50% by 2014.

The bank also admits missing the boat on financial advice by not developing an investment platform sooner, which has let insurance company rivals jump ahead in the market.

Lloyds Banking Group – which includes Lloyds TSB, the Halifax and Bank of Scotland – has 30 million customers.

Headline’s in the financial pages have trumpeted out warnings about the tax legality of some QROPS schemes in recent weeks following action by HM Revenue and Customs and the Treasury.

Tax loopholes

The overriding point is the UK tax authorities are tightening up QROPS rules to make sure investors do not benefit from tax loopholes.

The point is that QROPS are robust pension plans for ex pats that are here to stay – the problem is a few advisers and providers are working to undermine the rules to make tax gains for a few ‘grey area’ customers.

For QROPS investors who are unsure about the status of their offshore pension scheme, now is a good time to ask a second, impartial adviser to review the scheme.

Reliable advice

For QROPS investors who have schemes dating back a few years, new solutions are cheaper to run as the offer lower charges and improved investment options.

As the leaders in QROPS advice, QROPS.net can find you the perfect solution for your pension, wherever you are in the world.

Contact QROPS.net today

Some data from the European Union tracked consumer prices across a range of goods and services for countries inside and outside of the EU for 2010.

The costs of food, alcohol, clothing, consumer electronics, transport, hotels and restaurants were monitored to produce a league table rating countries from the cheapest to most expensive.

The average, scoring 100 points, was taken for the basket of goods and services across the EU member states for 2010.

The only country to hit the 100 mark was the UK. Of the remaining 36 countries, 14 scored higher than the UK, with Switzerland topping out at 148 – or 48% more expensive than the EU average.

Bottom was literally poor old Montenegro, scoring 44, 52% cheaper than the average and 104% cheaper than Switzerland.

Many prices varied for the same product or service across Europe due to differing local purchase taxes and VAT.

Alcohol and tobacco was most expensive in Norway – scoring 237 points, while the cheapest country for drinkers and smokers is Macedonia.

For eating out, both countries are also the most expensive – Norway (178) – and the cheapest – Macedonia (42).

Source: report2 published by Eurostat, the statistical office of the European Union

But it’s not like moving cities at home – a lot of other factors have to be considered.

Upping roots to another country can involved a new language, a different currency and abiding by new laws.

Moving on a whim is not wise. Anyone considering changing status to an expat needs to consider a lot of factors before they go:

Health

Healthcare in the UK is of a reasonably high standard and free at the point of supply, but for ex pats medical arrangements vary significantly between countries and even with some countries.

Anyone with a serious pre-existing condition that needs monitoring, regular drug prescriptions or specialist care should check the facilities in their destination before leaving the UK

Wealth

Tax and foreign currencies both affect income. Shifting money between the UK, the Eurozone or elsewhere costs money that reduces spending power. Inflation in the destination country and the UK also affect the pound in an ex pat’s pocket – and then the tax man always wants a slice.

Happiness

This is more personal. Happiness could be kicking off shoes and feeling the sand beneath your feet on a sun-kissed beach or wining and dining in a cosmopolitan city bar. Whatever it is, any ex pat needs to make sure any new home delivers the advertised results.

Financial advisers cannot do a lot about health and happiness, but they can ease financial difficulties by smoothing the way with the right pension arrangements.

Many ex pats opt for a qualifying, recognised overseas pension scheme (QROPS) that overs flexible currency exchange and investment options that reduce tax and inflation problems that ultimately results in more cash in the bank.

A survey of the top 19 economies ranked Britain seventh in the premier league of most taxed countries.

High earners lose 39.1% of their income to the HM Revenue and Customs, while many other countries are happy to take a much smaller slice – for example, the Russian tax man’s cut is 13%.

Italy snatches the biggest tax take with 45.9% of earnings.

High net worth

The survey also looks at low earners and found British workers lose around 16.8% of their wages in tax – compared with zero in Dubai, 4.3% in Eire and around 10% in the USA and Japan.

Germany topped the league, snatching 27.4% of income in taxes.

Other surprises above Britain in the table were Mexico, India and Estonia, according to the findings of accountants UHY hacker Young. They joined European Union partners France and Italy.

Meanwhile high net worth individuals looking to hold on to as much of the income as possible should cast an eye over Jersey’s new tax proposals.

The Channel Island’s Treasury Minister Phillip Ozouf wants US dollar millionaires to come to the offshore financial centre – and is willing to dangle an attractive carrot.

Tax inducement

He is asking the island’s parliament to slash taxes to 20% on the first £625,000 of earnings – roughly $1 million – and just 1% on any further income.

That means a dollar millionaire will pay a minimum £125,000 on £625,000 and a marginal £10 a £1,000 on subsequent income – much less than the 39.1% tax take in the UK.

A UK taxpayer would have to hand over £244,375 to HMRC instead of £125,000 to the Jersey tax authority – a saving of a cool £119,375.

Ozouf explained the tax cut as a simple financial inducement to entice high net worth individuals to go and live in Jersey.

SiPP Specialists Ltd, based in Douglas, Isle of Man, has launched the SIPP Specialists 2010 scheme and received a QROPS registration number from HMRC.

The move shows HMRC has finished the IoM 50c QROPS review, which has run since the end of 2010 after written complaints were made following the launch of the first 50c QROPS in September 2010.

For pension and retirement savers, this gives the Isle of Man 50c pension a clean bill of health and opens the way for immediate transfers from UK pension funds.

Some advisers and providers alleged the 50c scheme – named after Section 50c of the IoM’s pension legislation – did not meet the requirements of a QROPS scheme.

After a lengthy inquiry, HMRC has made no official announcement, but appears to disagree with the complaints.

SiPP Specialist director Dougie Elliott claims the new QROPS will offer competitive fees and top customer service.

The main difference between the Isle of Man 50c QROPS with with Guernsey QROPS is the IoM offshore pension gives a 30% tax free lump sum, while most Guernsey schemes offer 25%.

Both the Isle of Man and Guernsey QROPS have the same tax and investment benefits for ex pats switching their pensions offshore.

Much of the haggling over whether the Isle of Man 50c QROPS met HMRC rules related to rival advisers and providers trying to make up the business edge the extra tax free lump sum gives to IoM pension providers.

SiPP Specialist took a swipe at these industry insiders by stating the Isle of Man did not need a voluntary QROPS code of conduct like Guernsey because the financial jurisdiction has tighter financial regulation.

The firm is also planning to offer a Gibraltar QROPS.

HMRC has looked long and hard at the Isle of Man’s 50c pension legislation and decided the additional tax free lump sum offered is within their interpretation of QROPS rules.

The 50c pension – named after section 50c of the IoM’s pension rules – offers investors a tax busting lump sum of up to 30% of the value of the pension fund.

The math is a little complicated and many IoM QROPS investors will not receive the full 30% tax-free lump sum.

The final figure for an individual pension investor will depend on investment growth within the QROPS.

The Isle of Man 50c gives an investor the standard 25% tax free lump sum based on the value of the sum transferred in to QROPS – then an extra drawdown based on the accumulated investment growth after drawdown.

HMRC rules specify 70% of the fund must be retained to provide a pension for the investor – the 50c legislation expands this to define the fund as the transferred in value of the QROPS.

In the competitive QROPS market, other leading jurisdictions like Guernsey and Malta are currently offering a 25% tax-free lump-sum drawdown but are expected to quickly overhaul their pensions frameworks to match the Isle of Man QROPS.

IoM QROPS investors should note the 50c rule is not retrospective and only applies to schemes started since the rules were changed in October 2010.

Investors with IoM QROPS schemes pre-dating the 50c legislation should consider reviewing their current pension with a view to upgrading.

After one European Union bail-out, the government is between a rock and a hard place – Greece is one the verge of bankruptcy and the best way out – devaluing the currency to increase competitiveness – is not an option because of Eurozone restrictions.

The only choice is to swallow a bigger dose of the bail out pill that has already cut government services and jobs to the bone.

That means more higher taxes, more job cuts and a fire sale of nationalised assets.

Some would argue that over generous retirement plans and a burgeoning public sector put Greece in this position. Like many other European economies, the country’s finances flattered to deceive and behind the some and mirrors was a mountain of public debt exposed by the global credit crisis.

The bail out pill might be bitter medicine to swallow, but Greece needs to follow the example set by the UK government with more prudent financial policies that are viable for the country.

Greece has just two QROPS schemes – the 55 Superannuation Pension Scheme and the Prostheto Pension Plan.

Greece and the UK have strong links – besides arguing over the Elgin Marbles seized by the Parthenon by an over zealous tourist, Lord Elgin, cricket is played in Corfu and the UK military, especially the RAF, has a long-established relationship with Cyprus.

Anyone with a Greek QROPS should take stock of the country’s finances and look at the options of shifting their retirement savings elsewhere in double quick time.

A more stable and better regulated financial centre like Guernsey or the Isle of Man would seem reasonable choices – although personal circumstances might dictate otherwise.

A QROPS review might also disclose cheaper administration charges – and reasonably priced set up fees as well.

Both are reporting bumper deposits from nurturing new markets.

Money is soon to start rolling in to the coffers of Guernsey’s financial institutions from Russia, while Jersey’s bankers are busy counting cash from Hong Kong and the Far East.

Both Channel Islands present the best of both worlds to their new partners.

Jersey and Guernsey are reputable offshore financial centres with robust economies and stable governments. Both have more than a toehold with institutions in The City of London.

A delegation of Guernsey financiers has just returned from wooing bankers and investors in Moscow.

While their colleagues across the water in Jersey are celebrating funds under administration hitting their highest level since 2009 thanks to a boost from the Middle East and Asia – especially the United Arab Emirates (UAE) and Hong Kong.

Jersey reports bank deposits up £4.9 billion (3%) in the first three months of this year. Funds from the Middle East, including the UAE amount to £10.4 billion, and those from the Far East, including Hong Kong total £20.2 billion.

Jersey Finance boss Geoff Cook credits this growth to recent promotional visits by island financiers to Hong Kong and the UAE..

“It is extremely encouraging to see that growth is reported in line with the strategic direction Jersey has taken as a jurisdiction: to position itself as a specialist centre for alternative funds and to focus on building links with international markets,” he said.

Guernsey remains some steps ahead in the race to bring offshore pension cash home with several market-leading QROPS providers based on the island.

The crown may soon slip as the Isle of Man has won 50c QROPS approval from HM Revenue and Customs and Gibraltar prepares to come up on the outside by opening for QROPS business later this year.

The issue is not really the rule – it’s quite straightforward – but the way some advisers and providers are selling products to unwitting retirement savers as tax solutions.

To understand the five year rule, an understanding of why a QROPS is available at all is required.

QROPS offshore pensions cam in to being on April 6, 2006 as a method of porting pension savings between financial jurisdictions for ease of access by ex pats.

The five year rule comes in here – for the first five years an ex pat is abroad, the QROPS provider has to report any unauthorised withdrawal to HMRC.

An unauthorised withdrawal is taking funds or benefits from a pension before the age of 55 years old at the earliest.

The reason for this is an ex pat is not considered a non-UK national until stacking up an absence of at least five clear tax years from Britain. During that time, any QROPS pension follows UK pension rules – but after the five years, the ex pat is deemed to have left the UK permanently and any pension income is considered taxed in his or her new country of residence.

Because HMRC no longer has a tax interest in the QROPS and the pension investor has no call on state benefits if they spend their fund, what happens next is of no concern of HMRC.

The big problem for QROPS investors is drawing down funds in the five year period. All HMRC action against QROPS providers and jurisdictions to date has related to breaching drawdown regulations governed by the five year rule.

The providers and jurisdictions at risk of losing QROPS status are those that let pension investors access funds in contravention of the five year rule. If the five year rule is broken, both the provider and the investor face fines of at least 55% of the transfer fund value in to the QROPS scheme.

The lesson for QROPS pension investors is really sit tight for five years and become an official ex pat before tempting fate and making an unauthorised withdrawal.

The test is aimed at removing uncertainty over residence for tax so individuals have clearer opportunities for tax and pension planning.

Publishing the test is an important milestone in tax law because traditionally, HM Revenue and Customs has favoured not to issue statutory definitions but preferred to examine each case on its own merits.

This practice has lead to confusion with several cases going through the courts at the moment – notably an outstanding appeal by millionaire businessman Robert Gaines-Cooper who left the UK in 1985 to live abroad but was judged a UK resident for tax in 2010.

One of the major financial planning issues for ex pats is defining residence for tax – and getting the calculation wrong means unravelling investment and pension planning in the face of massive fines and penalties demanded by HMRC.

For instance, ex pats who believe they are non-UK residents who transfer UK pension funds offshore to a QROPS face a fine of at least 55% of the transfer value of their fund if they are later ruled as UK tax resident.

The new test looks at the ‘quality’ or residence rather than time spent in the UK, which reflects the findings of courts in the latest residence tax cases.

Full details of the proposed three-part statutory residence test are laid out in a consultation document published by HM Treasury called ‘Statutory definition of tax residence: a consultation’.

A copy is available for download here http://www.hm-treasury.gov.uk/d/consult_condoc_statutory_residence.pdf

“By introducing an SRT, the Government aims to make the rules simpler and clearer but the tax residence status of the vast majority of people will be unaffected,” said a Treasury spokesman.

The consultation also covers new proposals for taxation in the UK of foreign nationals.

Both consultations close on September 9, 2011. A summary of responses twill be published in the autumn.

Draft legislation will be published for comment later in 2011 with a view to including final legislation in Finance Bill 2012.

The Financial Services Authority (FSA) has sent an open letter to firms warning them to toe the line or face enforcement action.

The threat was made by FSA director of conduct policy Sheila Nicoll follows reviews of client files at 16 leading wealth management firms.

Around 80% were judged to have offered unsuitable investment advice or the suitability was undetermined.

The FSA review was aimed at examining the business models of wealth management firms and looked at a range of advisers from private banks to small firms.

The result was 14 of the 16 were rules to be offering medium to high risk advice to the detriment of clients. The majority – around two thirds – overruled the firm’s in-house advice guidelines or ignored client’s attitude to risk.

Some firms could not show advice was in line with know your customer requirements or based advice on out-of-date customer details.

The FSA also claims some of the firms did not properly follow regulations about risk profiling, Mifid client classification and keeping client records.

Enforcement action is to follow against some of the wealth management firms selected for the review – meanwhile firms who have received a letter from the FSA must respond by August 9.

“We have identified significant, widespread failings, which we are concerned may also be prevalent in firms outside our sample. In this letter we explain the issues we have identified and ask you to consider whether your firm meets – and can demonstrate that it meets – our suitability requirements,” says the letter.

“We also had concerns that firms were not taking reasonable care to organise and control their affairs responsibly and effectively, using adequate risk-management systems.”

Wealth management firms that fail to respond to the letter are likely to face compliance checks and fines.

The first prime global cities index was published this month by international property consultants Knight Frank.

The quarterly index will compare residential property prices in 15 top destinations.

The most expensive city to live in is Paris – with prices raising by 22% in the past 12 months.

Cash flowing in from overseas buyers and a restricted supply of properties has led to demand outstripping supply.

Moscow performed the worst. House prices dropped 8%in the year, although the decline is slowing with a fall of 0.7% in the first three months of 2011.

Increasing divergence

Liam Bailey, Head of Residential Research at Knight Frank, said: “There is now an increasing divergence between the performance of the prime global cities and their wider domestic markets. Governed less by affordability and macro-economics and more by international demand as well as fluctuations in supply and changing tax rules, these cities compete at a different level in attracting the world’s wealthy elite.

“The top end of the London and Paris markets are now sectors which appeal to wealthy international purchasers as much as to the domestic rich, meaning their price performance is capped by global economic and wealth trends as much as by national factors.”

Overall, annual price growth for the top 15 cities averaged 6.6% in the first quarter of this year compared to 12.7% in the same period of 2010.

Subdued Asian prices

The slowdown is attributed to a cooling of house prices in the main Asian economies.

“Our first set of results provides some interesting findings. In Q1 2010 there was a simple sub-text to the global prime property market,” said Brady. “Asian cities were witnessing double-digit price growth on an annual, and in some cases quarterly basis, while Europe and the US were occupying the bottom rankings. A year on and the scenario is less clear-cut. The rate of growth in Asia is more subdued.”

Equity Trust, the group behind the ill-fated Panthera ROSIIP (recognised overseas self invested international pension) took the case to court in a bid to overturn HM Revenue and Customs withdrawing QROPS status from Singapore three years ago.

Now, with their defence in tatters, Panthera’s QROPS customers face tax penalties of 55% of the value of their transfer funds for breaching QROPS transfer rules. UK pension providers who transferred client funds to Panthera may also face similar tax penalties.

The judge kicked out Equity Trust’s claims that HMRC was wrong to withdraw QROPS status from their pension scheme – but granted leave to appeal due to the financial ramifications the decision has for all QROPS schemes.

QROPS transfers broke pension tax rules

HMRC booted Singapore and the Panthera scheme off the list of HMRC QROPS providers in 2008 after suspecting some investors were withdrawing cash from their schemes against pension tax rules.

In explaining the decision, the judge agreed with HMRC that the Panthera scheme should have been open to Singapore residents to meet QROPS qualification rules, but regulators in Singapore considered it was a foreign trust and would not register the scheme as a pension, effectively closing the pension to investors living there.

Subsequently, Panthera promoted the scheme on the tax benefits offered by the trust status.

Equity Trust could show only six ‘possible’ Singapore residents invested in the QROPS and failed to persuade the judge that their problems registering with regulators arose from the Panthera rosiip being a personal pension rather than an occupational scheme.

On the web, Equity Trust bills itself as ‘the world’s leading independent provider of trust and fiduciary services with 1,200 employees operating across a global network of more than 30 jurisdictions.’

Building a financial strategy on ill-advised tax interpretations can end up costing QROPS investors thousands in unauthorised payment penalties because legally they remained UK resident and their pension switch was unlawful.

Chancellor George Osborne confirmed a statutory test for residence to ease how someone can work out where they live for tax purposes is underway.

The trouble is the law is murky in this area – and HM Revenue and Customs keep stirring the muddy waters with ‘interpretations’ that differ from statute and case law.

The latest example is the much-hyped recent announcement of a 10-day residency test.

Many are arguing HMRC will deem someone resident for UK tax if they work in the country for 10 days or more.

HMRC has stated that if someone stays in the UK for 10 days or less and has a full-time contract of employment overseas, residency status will not be challenged.

If that person stays in the UK for more than 10 days, HMRC may then want to check their overseas employment contract to show they are not resident in the UK.

The problem is this is an HMRC internal guideline that is not supported in law.

Taxpayers and advisers then interpret the statement as a rule and base their tax and financial affairs on whether they meet the qualification or not.

Best advice is for taxpayers considering a QROPS or QNUPS offshore pension to go through a tax status review as proof of residence.

This will establish where a QROPS investor is resident for tax and whether an offshore pension is a suitable retirement savings package for them.

This review can affect the choice of an independent financial adviser. A small financial firm is unlikely to have access to an international tax professional who can conduct a tax status review.

Always check residence before transferring cash because the penalty for making a mistake is severe – a fine of up to 55% of the value of the funds transferred.

QROPS.net is the world’s leading QROPS pension advice firms and has tax status specialists on call. If you want to move UK pension funds offshore, then contact us today to take advantage of the best tax and financial advice.

The Organisation of Economic Co-operation and Development (OECD) has given the world economy a good report , but says some countries could still do better.

Economic growth across the globe has split between slow and fast track countries.

World GDP is projected to increase by 4.2% this year and 4.6% in 2012. Across OECD countries GDP is projected to rise by 2.3% this year and 2.8% in 2012.

US activity is projected to rise by 2.6% this year and 3.1% in 2012. growth in the Eurozone is forecast at 2% this year and next, while in Japan, GDP is expected to contract by 0.9% in 2011 and expand by 2.2% in 2012.

The OECD cites high unemployment as a global problem that should spur job creation policies.

Around 50 million people are unemployed across the OECD countries alone

The report also said recovery is self-sustained with trade and investment replacing fiscal and monetary stimulus driving economic growth.

A measure of the impact of the downturn on the European economy is government debt in the Eurozone is set to rise to 96% of average GDP and to just over 100% of OECD GDP – about 30% above public debt levels before the recession.

The OECD has also identified risks to recovery, including -

• A stronger than expected downturn in China
• Continuing financial problems in the USA and Japan
• House price weakness across the world
• Dangers from emerging economies overheating from inflation

The OECD is also concerned about vulnerable european economies which still have underlying problems that need resolution – bail outs in Greece, Portugal and Eire were given as examples.

Meanwhile, some stability is about to be injected back in to the International Monetary Fund after the vacancy left by former chief Dominique Strauss-Kahn, who faces attempted rape charges.

Christine Lagarde, the French minister for the Economy, Finance and Industry has been nominated to take Strauss-Kahn’s place. Her nomination is supported by the EU and backed by other governments.

Boiler room investment frauds are run by criminal gangs selling fake or worthless shares to unsuspecting investors.

The frauds are big business for the scammers – and a source of heartache and resentment for the losers who run up hundreds of millions in losses every year.

The Financial Services Authority reckons the annual losses add up to around £200 million in the UK alone.

The FSA also publishes a regularly update watchlist of boiler room scammers http://www.fsa.gov.uk/pages/Doing/Regulated/Law/Alerts/overseas.shtml]

Boiler room investigations are head by the City of London Police, that publishes a list of important points to watch to guard against fraudsters:

First contact is a cold call

Watch out for unsolicited email, letters or phone calls from company’s you have never dealt with – think about how they found out how to contact you.

Don’t be fooled by a name

Boiler rooms borrow real company names or make them up to sound convincing

The firm has no presence in the UK

Boiler rooms are based overseas because they are out of reach of the FSA and police

The sky’s the limit

The seller offers you unbelievable returns on your money because that’s exactly what they are – lies

Inside information

A big giveaway – if the knowledge is so good and profitable, why are they making a cold call to share it with you?

You’re on to a certain winner

No reputable investment firm would make promises of a guaranteed return

Instant decisions

If you have to buy then and there or you lose the deal, then do not buy because no regulated investment firm would use such tactics

Hush-hush dealings

Why would a salesman want to keep a legitimate deal secret when they could make more commission from trading with other investors?

Pay now to secure the deal

If you pay anyone in advance for shares or advice you risk them taking the money and running.

Bank information

Do not give anyone you do not know and trust your bank details

If you suspect boiler room fraudsters are targetting you, contact Action Fraud http://www.actionfraud.org.uk/

British ex pats tend to look for a place in the sun not too far from home – with France and Spain topping the list.

But France has never really been tax-friendly and financial crisis in Spain has seen significant tax increases.

Surprisingly to many, the UK is placed 22 in the table of 34 countries listed by tax take.

A report that can help with decision of where to put down new roots is the annual Taxing Wages study from the Organisation for Economic Co-operation and Development (OECD).

The research picks the bones from taxation rules in the 34 OECD countries, which covers many of the world’s major economies. The results are not encouraging for someone looking to save tax.

• France, Belgium and Italy were the highest-tax countries for one-earner married couples with two children while New Zealand took the least. Chile, Switzerland and Luxembourg were also clustered at the bottom.

• Belgium, France and Germany had the highest tax takes for single workers without children on average wages. Chile, Mexico, Korea and New Zealand also scored low.

• Tax went down slightly in Hungary, Denmark and Germany

• Tax went up in the Netherlands and Spain

• Ireland increased income tax and decreased child benefits.

Average tax burdens fell across all OECD countries at all income levels, mainly in favour of families with children rather than singles or higher earners.

Despite the slight changes, tax still rose in 22 OECD countries, with many of the changes introduced by governments just shifting payment responsibilities from employees to employers or away from governments.

Don’t forget the figures relate to OECD countries – that leaves around 120 or so other places, including the Gulf States and the Far East.

For ex pats or UK taxpayers looking to move overseas, detailed country-by-country tax and financial data is available at http://www.oecd.org/document/59/0,3746,en_21571361_44315115_45092219_1_1_1_1,00.html

A league table of OECD countries by tax take is at http://www.oecd.org/document/6/0,3746,en_21571361_44315115_44993478_1_1_1_1,00.html

Equity Trust, the firm behind the failed Panthera Recognised Overseas Self Invested International Pension (Rosiip) claims the court ruling leaves the way open for HM Revenue and Customs to tackle other providers suspected of abusing pension rules.

In a statement, a spokesman for Equity Trust said that under the current ruling, any QROPS that has discretionary power to exclude applicants could be closed by HMRC.

This power is thought to be a standard clause in many QROPS pensions that gives trustees the authority to block transfers if they consider they are not bona fide – for example, to allow money-laundering.

The judge gave Equity Trust leave to appeal – and the firm claims the judge made a wrong decision.

The Panthera Rosipp was shut down when HMRC withdrew consent for Singapore to operate QROPS offshore pension schemes around three years ago.

HMRC claimed the scheme was not a QROPS because the trustees did not register with financial regulators in Singapore nor was the scheme open to Singapore residents.

QROPS rules say the offshore schemes must be regulated and open to residents in the country where they are based to qualify for recognition by the UK taxman.

Equity Trust argued their pension could not register because the Singapore financial authorities judged it was a foreign trust and not a pension scheme. They also claimed the scheme was open to Singapore residents but failed to convince the judge of this.

The financial consequences of the High Court decision affect both investors who put money in to the Panthera QROPS and the UK pension firms who transferred money as the transfers now become unauthorised pension withdrawals.

Under tax rules, both the investors and pension transferees may have to pay penalties of up to 55% of the transfer value of funds paid in to the scheme.

Contact QROPS.net for help on transferring your UK pension into a QROPS.

The good news is increasing interest rates can push up the returns from investments – especially those in a QROPS offshore pension.

The trouble is, the rate rises are coupled with increased inflation and continuing worries over the economies of Greece, Portugal, Spain and Eire.

Spain in particular has long been a favourite destination for retiring British ex pats.

Although inflation is flaring up in the Eurozone, levels are running lower than the UK’s 4.4%.

Nevertheless, anyone on a fixed pension income finds inflation of 3.6% in Spain, 2% in France and 2.5% in Italy, erodes their spending power.

Average inflation across the Eurozone is 2.7%, according to the latest figures.

On top of inflation and rising interest rates, property prices are proving to add to their financial woes.

Selling up in many countries is not easy as the combined effects of interest rate hikes, job losses and banks tightening up on borrowing mean few buyers are about, and those that are can afford to negotiate a bargain basement price for property.

For ex pats planning to stay the course in the new European homes, one way of making the best of their finances is to consider switching UK pension funds in to a QROPS offshore pension scheme.

QROPS allow investments in many major currencies, including the Euro, which takes away the stresses of currency exchange rate fluctuations having an impact on income.

They also pay out gross, leaving tax to be deducted in the ex pat’s country of residence.

Many QROPS have flexible investment options that are not available to UK pension investors.

Any UK pension funds can be consolidated in to a QROPS, although the state pension is outside the scheme and some final salary schemes will have enhanced benefits that might be difficult to replace inside a QROPS.

Transferring to a QROPS is available for any British ex pat living in the Eurozone.

For more information about transfering your pension to a QROPS , contact QROPS.net by calling the London UK office on +44 203 111 9785 or by email info@qrops.net.

Providers and advisers are mulling the effect this could have on New Zealand QROPS.

The changes take effect from April 1, 2012.

The Kiwisaver scheme was quickly becoming a financial burden for the New Zealand government and had to change.

Around NZ$1 billion a year flowing in to the retirement schemes came from the government – and much of that money was borrowed.

Economists and politicians were worried that the borrowing did not increase national savings as the inflow was cancelled out by the debt created to find the cash to inject in to the pension.

The main changes involve member contributions in Kiwisaver schemes.

• Tax credit is slashed by 50% to 50 cents on the NZ dollar contributed to the scheme

• Employer contributions will be taxed at the employee’s marginal rate from April 1, 2012

• Minimum contributions will rise to 3% from April 1, 2013

New Zealand faces a general election before April and the Labour Party opposition has not confirmed support of the changes should they take over government.

New Zealand pension analysts suggest the changes do not change the fundamentals of a Kiwisaver, but transfer the funding responsibility away from the government to employers and employees.

New Zealand QROPS are popular investment destinations for ex pats as special rules can let pension savers access cash in the pension early without tax penalties.

For more information about New Zealand QROPS and how the proposed changes may affect your offshore pension planning, contact QROPS.net by calling the UK office on +44 203 111 9785 or by email info@qrops.net.

Investment promotion is a restriction on fund choices with a QROPS offshore pension that some regulators interpret as favoring a specific firm or product rather than offering a wider choice.

Several regulators see QROPS investment options as a back-door to financial rules aimed at broadening choice rather than narrowing options.

The Emirates Security and Commodities Authority is considering regulations that will require approval from the UAE central bank to promote investment funds.

Other QROPS offshore pension jurisdictions looking at the issue are Singapore and Hong Kong.

Both finance centres have had brushes with the UK taxman over regulatory issues relating to QROPS.

Singapore lost QROPS status some years back, while HM Treasury has amended the current Finance Bill before Parliament to close a tax loophole exploited by QROPS advisers and savers in Hong Kong.

Guernsey QROPS status query

QROPS advisers in Guernsey are concerned ‘pension triviality’ rules that started in April 2011 may put the island’s QROPS status at risk.

The rules let pension savers over 50 with funds of less than £30,000 in a Guernsey domiciled scheme can commute their funds in full.

This seems to sit at odds with HM Revenue and Customs QROPS rules that require providers to retain at least 70% of a fund to pay benefits to the pension member.

One pensions firm has written to HMRC seeking clarification.

To get the latest information and advice about transfering your UK pension to a QROPS, contact QROPS.net today.

The question investors need to answer is how his personal issues affect crucial economic decisions that need making in Europe.

Applying the ‘knocked down by a bus rule’ would seem to work.

To remind those not in the know, if someone is not there to do there job in a large organisation, applying the rule to scupper their excuses of why they can’t do things generally results in action.

The rule is simple – if Strauss-Kahn was knocked down by a bus on the way to work, someone else would step in to fill the breach and make decisions.

Analysts reckon core business indicators in Europe are strong – especially for Germany and France. That’s why they are not particularly worried about the fate of Strauss-Kahn.

Yes, the episode is lamentable, whatever the outcome, but the days have gone when the fate of Europe relied on the actions of one man.

Italy, Spain, Portugal and Ireland have sovereign debt problems that will remain hard to shake off and that will require some savage sorting out, but the strength of the Franco-German Euro stalwarts will stand them in good stead.

Many investment analysts view the end is closer than crisis.

For instance, Jeff Taylor, Head of European Equities at Invesco Perpetual, provides his outlook for Europe, insists that a strong distinction is drawn between Greece, Portugal and Ireland and, on the other hand, Spain and Italy.

Spain’s national debt level is much lower than any of the three bailout countries, he argues, as well as being lower as a proportion of GDP than the UK, France or even Germany.

He also claims Italy has a lower annual deficit than the UK and most Eurozone countries, while Spain’s annual deficit will fall sharply this year as the country reforms labour markets, pensions and banking.

This leads Taylor to conclude that Euro stocks and shares look cheap and do not present the risk that may have surrounded them a year or so back.

The strategy puts thousands of pensions at risk, because the Pension Protection Fund (PPF) protects few members of final salary schemes under these circumstances.

The inquiry is underway as two private equity deals have shunned financing pension liabilities in recent weeks.

the latest was the high-profile deal involving mattress and bed firm Silentnight.

HIG Capital acquired the company out of administration after the PPF rejected a 6p in the pound and 10% of equity offer to cover pensions while trade creditors were offered 65p in the pound.

Pensioners left high and dry

The buy out went ahead despite the PPF refusal to take the offer, leaving the firm’s 1,250 employees and more pensioners high and dry.

PPF generally takes a 33% stake in a buy-out and funds the pension from selling the shares at a profit.

In April, printing group Polestar was also sold out from under the pension scheme – this time the firm’s pension scheme trustees accepted a £45 million deal over 12 years against a £500 million liability.

A PPF spokesman confirmed the regulator is investigating both companies with a view to taking action to tighten the rules.

For ex pats looking at protecting their pensions, one option is to transfer the fund in to a QROPS offshore pension scheme.

Best advice for a QROPS transfer

Key to the decision is looking at any extra benefits available within the company scheme and weighing those against the risk of the firm succumbing to a buy out.

QROPS.net professional, independent advisers can help benchmark your company scheme so you can consider your pension options by switching the fund to an offshore scheme.

In some cases, the best advice might be to keep the pension in the UK to preserve special benefits.

Doubtless, while the UK economy remains fragile, more firms will go under and their white knights will continue to exploit pension loopholes to save money.

Derek Hankinson, who lost the largest single tax case worth £30 million in income tax, interest and penalties, is restating his case before the Court of Appeal in London.

His legal team are arguing that HM Revenue and Customs stress test their inquiries with a stronger burden of proof – and if that’s the case, evidence that was used to against Hankinson should be inadmissible.

The case depends on the court’s interpretation of the taxman’s powers of discovery.

Generally, HMRC has to prove either that a tax inspector could not have reasonably been aware of discovery information when an inquiry is launched , or negligence or fraud was involved in submitting the original tax return.

Hankinson claims that as HMRC has tightened the rights of taxpayers, they should have a stricter burden of proof as well and instead of applying the power on the basis of ‘either…or’ it should be ‘and’.

Then, it follows the Hankinson argument is correct, any evidence wrongfully discovered after the power was wrongly applied should be set aside.

The original case, which Hankinson lost last year related to Hankinson claiming he lived overseas when earning a significant income in the UK. The court disagreed he had left the UK and found for HMRC.

Hankinson appealed based on the fact HMRC made a discovery assessment about his residency status six years after the tax year in question ended. The court did not grant leave to appeal, so he appealled that decision as well.

Many legal and tax experts have commented on the case and few believe Hankinson will win in the Court of Appeal as two experienced tax judges have already found against him.

The problem many advisors face when trying to set a client’s residence status for tax is that UK law does not define a test in statute and many of the rules are made up on the hoof by agreeing interpretations with HMRC.

The government has suggested that residence will be defined in statute, but no date or format has been released.

The MINT countries – Mexico, Indonesia, Nigeria and Turkey – are the new wave of opportunities for investors looking beyond traditional markets.

According to experts at investment group Fidelity International, the MINT countries are rapidly becoming rivals for the BRIC countries of Brazil, Russia, India and China.

Fidelity International agrees they are not like-for-like investment replacements, but do represent long-term potential:

• Mexico: Mexico thrives as the USA’s poorer neighbour. Around 80% of Mexico’s exports go to the US, and a fair amount of US investment flows back, with industry south of the Rio Grande beginning to compete on cost with China.

• Indonesia: is the most similar to a BRIC country with a population of 245 million, which is bigger than Brazil or Russia. The government has an economic vision for the country to become one of the world’s 10 largest economies by 2025.

• Nigeria: Africa remains off radar for many Western investors as a result of the negative perception of the continent – shaped by images of poverty, famine and conflict. Nigeria has Africa’s largest population and is rich with natural resources.

• Turkey: The Turkish economy has bounced back strongly since the global downturn, growing by an estimated 8.1% in 2010. The government’s budgetary and public debt position is significantly better than many countries in the Euro-zone.

These are by no means the only up and coming investment options for QROPS pension savers.

Vietnam, Philippines, South Africa, Malaysia and Colombia also offer attractive returns – but unfortunately their initials do not make a catchy acronym like BRIC and MINT.

Other issues that detract from some economies are highlighted by the civil and political unrest across North Africa and the Middle East, where risk outweighs any likely financial gain.

Fidelity International explains that finding investments to match the performance of the BRICs countries over the past decade is a challenge.

Around 80 taxpayers who have not paid tax on their investments are signing up for the HM Revenue and Customs tax amnesty every month – with thousands more waiting to see if more favourable terms are offered.

So far, HMRC has raked in more than £140 million from taxpayers with money stashed in previously impenetrable secrecy of banks in Liechtenstein. Just over 1,350 investors have spilled the beans about their financial affairs in the former tax haven.

The tentative HM Treasury target is to collect £3 billion from the Liechtenstein amnesty.

Next on the HMRC hit list is the big prize – Switzerland. The country’s bankers have fought a desperate rearguard action for many months against the UK, USA, France and Germany after hackers stole bank account records and sold them to tax authorities.

HMRC is negotiating the terms of a tax amnesty with the Swiss that will involve the country’s banks and investment houses handing over lists of UK residents doing business with them.

HMRC feels more tax cheats would volunteer information about the Liechtenstein holdings if the Switzerland deal was closed as many are holding out in case the terms of the second amnesty improve on those offered now.

The Swiss are trying to hold out on the deal to save face after years of pointing to elaborate secrecy laws to mask their dealings with offshore investors.

In return, the big banks are squeezing their Swiss counterparts by making wholesale borrowing almost impossible on international money markets, which cuts off funds and severely hampers their ability to trade.

More Liechtenstein investors are likely to throw in the towel in October when banks and trust company’s in the country write to clients telling them that their financial details have been disclosed to HMRC.

Katja Gey, Liechtenstein government’s director of international affairs feels the uptake is“more than satisfactory”.

HMRC reports that the results of the amnesty are far more than expected.

Taxpayers coming forward range from small investors to families holding high value trusts.

Investors who miss the amnesty are likely to face larger fines and penalties.

The guide is the latest in a flurry of codes of practice for advisers and providers.

Guernsey QROPS advisers were first out of the blocks by publishing a guide at the end of March.

Recently, New Zealand QROPS experts announced they were putting together a code of practice and seminars for advisers that they hope to publish later in the year.

Advisers involved in drawing up the global guidance want to give pension investors more confidence in the advice they receive and to give independent financial advisors a QROPS advice road map.

QROPS offshore pensions are regulated by HM Revenue and Customs, with more than 2,000 registered schemes available from hundreds of providers in around 50 countries.

Many industry professionals want to act to expel poor advisers who they feel give unsuitable advice to some clients in return for charging sky-high fees.

Pension advisers in New Zealand, Australia, Hong Kong and Canada are believed to be working on the project.

Meanwhile, pension savers considering a QROPS transfer are urged to check out their advisers before committing to any transfer.

Anyone who does not match these criteria should be avoided:

• Work for a regulated firm
• Give whole-of-market advice, and not restricted product information for a single provider or jurisdiction
• Have access to professional tax and investment advisers
• Has a background of successfully completed QROPS transfers

Anyone needing help should feel free to contact QROPS.net, an established and reputable international financial firm specialising in QROPS pension advice.

Our experienced and professional advisers have a track record of successful QROPS transfers.

As a whole-of-the-market firm, QROPS.net can select a QROPS pension tailored to your personal financial circumstances.

For more information, call QROPS.net on +44 (0) 203 111 9785 or info@qrops.net

For those that aren’t in the know, the august Economist magazine has preached the doctrine of burgernomics for years and compares the price of the ubiquitous Big Mac across the globe as an indicator of currency performance.

The starting point is the price of a Big Mac in the home of the burger, the USA – currently $3.73.

The rules of burgernomics now state to find out whether a currency is over or undervalued against the dollar, convert the local price in to US Dollars and then work the figure as a percentage of the US burger price.

Simples. For example, a Big Mac costs £2.29 in the UK. The Sterling to Dollar exchange rate is around 1.63, giving an equivalent cost in the UK for the burger as $3.48, which is 7% less than the cost in the good ole USA.

Overall, currencies in the Far East and other developing areas tend to show a weakness against the dollar when the price is converted for burgernomics.

In economic terms, this tells us that a weaker currency leads to more competitively priced exports and should encourage consumers to buy domestic products rather than more expensive imports.

The rule of burgernomics is the cheaper your Big Mac, the more competitive the economy.

Unsurprisingly, the cheapest Big Macs are on sale in China and Hong Kong. The most expensive are in Norway, Switzerland, Brazil and the Eurozone.

For ex pats looking for a place to retire, burgernomics is a possible financial bench mark to consider along with climate, tax, lifestyle and property prices.

Nevertheless when it comes to pensions and sound investment decisions, perhaps a more traditional approach might produce better returns.

Around seven out 10 advisers (68%) are expecting to arrange more QROPS. The rest expect QROPS transfers to remain around the same levels (28%).

According to the latest QROPS transfer figure, 19,211 UK pension holders have transferred their funds offshore since the QROPS scheme started in April 2006.

For the past two years, QROPS pension transfers have hovered around the 6,000 mark.

Skandia promotes the offshore pension because they offer ex pat investors who have relocated overseas flexible investment and currency options tied up in a tax effective pension.

Skandia also expect the numbers of ex pats switching to QROPS to continue to grow next year as well.

Product and Development director Adam Wrench revealed Gibraltar’s financial regulator is reviewing the product pending approval.

He was discussing HM Revenue and Customs’ recent move to bolster QROPS anti-avoidance rules by adding a new clause to the forthcoming Finance Bill.

The clause prevents QROPS investors from claiming extra tax relief on pension contributions to financial centres with double taxation agreements with the UK.

Gibraltar is not affected by the clause as the British Overseas Territory has no double taxation treaty with the UK.

HMRC lists 11 QROPS schemes for Gibraltar, but the providers have voluntarily suspended transfers pending resolution of a tax issue between HM Treasury and the territory’s government.

Gibraltar loses ground to QROPS rivals as tax dispute rumbles on

The dispute has rumbled on for 18 months, with the Treasury insisting a 0% income tax rate for pensions needs a rethink, while the government in Gibraltar seems resolute not to consider a change.

The result is Gibraltar QROPS providers have lost ground to rivals in a fast-moving market where other financial centres like Guernsey, the Isle of Man, Malta and New Zealand have seized the initiative.

All these countries offer similar benefits to British ex pats seeking to move their pensions overseas – English is a common language, the legal system is similar to that in the UK and each has a robust financial regulation and political stability.

In a bid to distance themselves further from other QROPS providers, Guernsey has published a best practice code to aid consumer protection and New Zealand is currently working on a similar document.

Other QROPS are available – HMRC publishes a regularly updated list of global providers with around 2,500 QROPS schemes in 50 countries.

QROPS.net offers independent financial advice covering all QROPS schemes. To discuss your pension options, call +44 (0) 203 111 9785 or email info@qrops.net

Around 46% are ready to pack and leave for good, according to 1,000 people surveyed by insurance provider Aviva – compared to just over one in three last year (39%).

Some are more cautious (21%), saying they would gladly leave the UK, but for no longer than three years.

The main drivers of discontent is the faltering economy, a declining job market (89%) and government spending cuts (54%) badly impacting on their lifestyle.

Many have had enough of indifferent summers followed by bad winters (46%), as a better climate beckons from abroad.

Together, these events are making people miserable and dissatisfied and they wonder whether they could make a better life for their families somewhere else.

Australia is still the favourite ex pat destination

A third of Brits also hope moving out of the UK would give them a better lifestyle, less stress and improved health and work/life balance.

Worryingly, many (37%) who would dearly love to live overseas are concerned about how they would fund their new life without state-funded benefits

The nation’s favourite overseas destinations have not changed since last year, they still are:

• Australia
• USA
• Canada
• Spain
• New Zealand

Other popular places to live include: France, Italy, Dubai, Switzerland and Germany.

Health is a major consideration for one in three moving abroad with concerns they will miss the National Health Service. Nearly half (46%) believe Britain has a better health benefits than any other country.

Teresa Rogers, business lead for International PMI at Aviva, said the survey shows that there are certainly pros and cons to moving and people need to plan carefully if they are considering making their dream a reality.

With a potential of an estimated NZ$300 million investment in New Zealand QROPS every year, Mark Hattersley, of financial advice support firm Strategi, alleges some advisers are ignoring QROPS rules and the system needs tightening up.

The firm, based in Auckland has also revealed New Zealand QROPS providers are developing a code of practise to make sure advisers and investors know what to expect when investing in an offshore scheme.

With more advisers participating in this potentially lucrative market, lines between what is a strict pension transfer from the UK to New Zealand versus the provision of advice around the applicability or otherwise, of transferring the pension to New Zealand have blurred, claims Hattersley.

Guernsey QROPS providers have recently issued their own code of practise – believed to be the first in the world.

New Zealand QROPS schemes have come under the spotlight recently. One firm has announced closing to new business from overseas due to regulatory concerns.

Some New Zealand QROPS schemes have come under criticism from other providers who claim these firms breach QROPS rules.

Strategi is also developing a QROPS standards awareness course for New Zealand QROPS advisers and providers.

David Greenslade, managing director of Strategi, reckons the voluntary code and training course are signs of an emerging QROPS professionalism.

He explained that the wider industry realises there is a potential issue with a sub-sector of QROPS products or services, and is taking steps to rectify the problems without having to wait for the regulator or government to initiate change.

If you are interested in New Zealand QROPS, contact one of our specialists today

Advice about your present arrangements

It may sound odd but the first thing you need to get a new pension is get out the documents relating to your old scheme. This is because there are two issues that need to be discussed.

• Will your current scheme allow a transfer to a new pension scheme?
• Is the transfer a good idea?

Some private pensions will not allow a transfer if the scheme is already in payment (although some might). For most investors, a QROPS is a good idea but for a small minority with a high final salary scheme the numbers may not add up.

Advice about your wider finances

Moving abroad may be a good time to stop and think about your wider financial situation. Your pension is obviously about long term financial planning, but could your short term finances benefit from an overhaul? If you are about to move to a foreign country, you may appreciate advice about the current accounts on offer, and whether there are any short term savings products that may suit you.

Advice about your tax bills

When your UK pension has been transferred to your QROPS, there will be no more UK tax to pay, as long as you stay outside of the UK for more than 5 tax years. However, your pension may fall into the QROPS country’s regime, and you may also have a tax bill for your country of residence.

Given that the tax situation may change if there is a new Budget of either of those jurisdictions, your QROPS adviser will need to be on the ball at all times.

QROPS in offshore destinations are popular, as they are often “tax neutral”. Your QROPS adviser will be able to give you an idea of what your tax bill might be.

Advice about the new schemes

You will also need advice about what you can and cannot do with your new scheme. When can you withdraw money? What assets can the pension hold? These are questions that you need to understand before signing on the dotted line.

The idea of a QROPS is to let ex pats transfer their retirement savings to a similar scheme in another country to simplify tax and ease access to the cash.

QROPS offshore pensions are beginning to come of age. It’s easy to forget that the first schemes were set up on A-Day (April 6, 2006) and have gone through a lot of teething problems as pension investors tried to push the envelope to see if they could find way to take their pension money early.

Over the years, the numbers of transfers have swelled to around 6,000 a year.

Some transfers have had their problems – mainly because they bucked the rules.

As long as a QROPS investor keeps three main points in mind, not much can go wrong with a transfer:

• Avoid the tax treaty trick – the loophole is closed. Work on the principle that any pension payment coming in to the UK is taxed in the same way as if the payment originated onshore.
• Don’t try and stay in the UK to take advantage of QROPS tax breaks – the plan won’t work
• Don’t set out to cheat the taxman by deliberately setting up a QROPS in such a way to break the rules

The underlying message is it’s not the QROPS infrastructure that’s wrong, it’s the way some pension savers try to tinker to gain benefits to which they are not entitled that causes the problem.

Play the game by the rules and a QROPS pension will work out just fine.

When looking in to a QROPS transfer, bear these points in mind:

• Compare QROPS from different tax jurisdictions
• Investigate the how tax interacts between the UK, the jurisdiction where a QROPS is based and where you intend to live
• Always have a Plan B – what happens to the cash in your QROPS if you have to return to the UK?

QROPS.net advisers can help you to plan for your future abroad and if/when you return to the UK. Contact QROPS.net today to find out more

Gold is the most favoured asset class for investors across the world as they take the view that the more the markets are wary of paper money, the better value gold becomes.

Silver also climbed to $44 – the highest price since 1980.

Speculators are piling in to precious metals, and prices are expected to keep going up until the US debt crisis is resolved.

In 12 months, gold prices have climbed 5.3%, while the US dollar has tumbled 4.8% against major currencies like the Pound and Euro.

Leading the charge to plough money in to gold are Hong Kong, Singapore and the United Arab emirates (UAE), according to the latest study by friends Provident International.

The report explains Hong Kong investors are choosing gold because they are concerned about inflation and are less likely to hold cash than their counterparts in Singapore or the UAE.

The market for gold and silver is surging ahead because investors feel that debt is out of control in the US and is rendering the dollar worthless.

The US Treasury had set a $14.3 trillion debt limit that is likely to be breached within a month leaving a real risk of default that will undermine the global economy.

The outlook for US sovereign debt was marked down from ‘stable’ to ‘negative’ by ratings agency Standard and Poors, sending a shockwave through stock markets as shares slipped back.

The last time the US economy was in such a position was 1941.

The main problem in the US is seen to be a lack of fiscal control as the government struggles to implement austerity measures that are already in place in other leading economies.

The worsening financial problems in Portugal and Greece are also adding to the gloom.

Portugal is nudging closer to a financial bail out and Greece is looking an evens bet on defaulting debt arrangements.

The code explains the inner workings of a Guernsey QROPS offshore pension and details the level of service a consumer should expect from a provider on the Channel Island.

The document contains no great surprises from the draft code published earlier this year.

The main points for consumers considering a Guernsey QROPS transfer are:

 Guernsey QROPS providers require new clients to take ‘suitably qualified’ advice, including a transfer value analysis for a defined benefits pension transfer and an explanation of any lost guaranteed annuity rates for a defined contribution scheme transfer.

 Guernsey QROPS will follow the island’s income tax office rules that set the maximum pay out of a tax-free lump sum – currently set at no more than 75% of the fund value

The last point puts a Guernsey QROPS at odds with Isle of Man QROPS providers who interpret how much tax-free cash is available to a pension member.

The Isle of Man 50(c) schemes suggest up to 30% of the initial transfer fund value plus a higher percentage of any accrued interest can be paid tax-free.

Guernsey does have a law change in the pipeline to increase the tax-free fund pay out to 30%. The legislation is set for approval on April 27 and will apply to the entire 2011-12 tax year.

The code of practice is voluntary, although drafted with the help of Guernsey QROPS regulators.

The code is the first voluntary consumer safeguard scheme implemented in any of around 50 QROPS offshore financial centres worldwide.

The code does not offer any financial guarantees or formal complaints procedure, but clearly lays out how a responsible QROPS provider should operate.

GAPP expect most Guernsey QROPS providers to sign up to the code.

Click here to download a copy of the code

Both will also scrap retention taxes on savings that have let Channel Islands and the Isle of Man tax authorities deduct tax on interest rather than the saver’s national tax authority for European Union residents since 2005.

Now tax offices in European Union member states will be told how much interest was earned gross; names, addresses of savers and if the financial institution has one, their tax identification number or date and place of birth.

The change results from both offshore centres adopting the European Union Savings Tax Directive (ESD) from July 1.

The directive requires member states to exchange financial information about individuals receiving an income from savings or investments in one European state when they live in another.

Although the Channel Islands and Isle of Man are not EU member states and are not subject to the directive, as UK crown dependencies, both have opted to join the ESD.

HM Revenue and Customs is known to cross check account information supplied under international agreements against self-assessment tax returns to make sure the figures tally.

Savers resident in the UK are strongly urged to contact their tax office to fully disclose any past interest they may have received, as HMRC is currently running a tax amnesty before implementing more severe non-disclosure penalties later this year.

Any savers living in the European Union receiving interest from accounts in the Channel Islands or the Isle of Man are affected. Nationality is not relevant – it is where an individual is resident for tax that is important.

For instance, a UK ex pat living in France receiving interest from an Isle of Man savings account will have the payment details passed to their tax office in France, not the UK.

ESD information has freely passed between European member states since the directive was introduced in 2005.

New Zealand has 50 QROPS registered with the UK taxman, according to the latest list on the HM Revenue and Customs web site.

Only one firm is withdrawing from accepting international clients. The scheme is closing because the provider’s ratio of international to local New Zealand clients is out of synch.

New Zealand QROPS are popular with ex pats because some schemes offer a ‘cashing in’ facility that lets pension savers convert their funds to cash before the scheme’s retirement age.

Many cite this as a legal issue that threatens New Zealand QROPS. The fact is the strategy is allowed by HMRC and within the rules of some New Zealand QROPS schemes under certain circumstances, like injecting capital in to a business or personal financial problems.

New Zealand QROPS are not a retirement solution for every client, but some with specific financial goals/issues might find they can benefit from liquid funds rather than having them locked in a pension.

An alternative is some Guernsey QROPS that let pension members borrow against their funds.

QROPS.net is a ‘whole of market’ advisory firm, which means our advisers are not restricted to a narrow range of QROPS schemes – neither in New Zealand nor elsewhere.

As long-standing leading QROPS advice professionals, QROPS.net views New Zealand QROPS as a versatile option under the right circumstances. As all transfers, careful planning is required.

The problems come when advisers and clients try to distort the purpose of a pension transfer – for the adviser this is often a commission-driven issue and for the clients, an attempt to subvert tax rules.

No one should have a problem with transferring funds to a New Zealand QROPS if they are following HMRC’s guidelines.

If you are considering a New Zealand QROPS transfer and need reassurance over the status of the provider, call QROPS.net on +44 (0) 203 111 9785 or email info@qrops.net

The slump in annuity rates and rising cost of living are the main culprits stopping people retire.

For those who want to retire overseas, the depressed pension picture is altogether different, providing they take action early enough.

One of the recognised problems with having enough cash available to fund a comfortable retirement.

Latest figures from the Prudential and Axa Wealth both show up to 38% of savers cannot afford to retire and will have to stay in their jobs up to six more years to put together enough cash to give up work.

Ex pats and international workers need not suffer the same fate.

They can opt for a QROPS offshore pension that gives them more flexible investment options and allows them to consolidate UK pension funds in to one investment pot.

QROPS retirement savers have to ensure they qualify for the scheme; otherwise they risk severe tax penalties.

Taking control of your financial destiny with a QROPS or SiPP

For those who fall outside of QROPS pension planning, other options, like a self-invested pension plan (SiPP) offer enhanced investment returns and UK tax relief on contributions.

If the SiPP saver decides to retire overseas later, the fund can easily switch in to a QROPS to maintain tax efficiency.

The government emphasis on pension planning is to encourage savers to put small amounts of money away for the long term.

For many heading for retirement, this strategy is too little, too late, but other options are available that can boost their pensions.

The message is not to leave pension planning to chance and to take charge of your own financial destiny because you cannot rely on the government to provide anything other than a basic safety net.

A QROPS or SiPP are the ideal pension vehicles for someone who wants to take control and manage their funds to give a better return on investment.

The first thing to look at is a firm’s expertise. A general independent financial adviser may have been suitable for your onshore financial decisions, but getting advice from them for your offshore plans is like asking your General Practitioner to perform open heart surgery at your local clinic.

Experience is also important, because the lessons that an adviser has learnt from placing hundreds of thousands of pounds’ worth of investments before yours can be applied to finding a profitable home for your own money.

Given that financial products can be complicated, it is also a good idea to find an adviser who can explain them in layman’s terms. After all, although it is the adviser who will be sifting through the complex regulations and tax implications of a particular investment decision, you need to be sure about the charges and potential gains that an investment will accrue.

Speaking of charges, do you know how much your adviser will cost you? Some advisers charge an hourly rate, so you know where you stand (and hope they speak quickly!). Others are paid a commission by the financial institutions whose products they sell. This typically means that the investor does not pay anything to them directly, although of course there may be an inbuilt cost in the product that you purchase to cover this.

The range of products you have to choose from is important. Accordingly, ask your adviser or broker whether they are tied to any financial institution or whether they can choose from the whole of the market. Whole of the market advice may offer the best deal from an investor’s point of view.

Finally, if you travel around regularly, you may wish to choose an adviser with international coverage, so their advice and support will be with you wherever you end up.

More than 700 legal firms have joined the CQS scheme – and mortgage lenders are making membership a condition of acting for them for every buy to let purchase.

Property investors who want to opt for another lawyer outside the scheme will face their purchase blocked by lenders. Cash buyers are not affected by the ban.

From May 2011, the Law Society is starting an advertising avalanche urging landlords and homebuyers to check if their conveyancer is a CQS member – and if not, to choose another firm.

CQS is the result of the Law Society tightening controls on conveyancers after police inquiries highlighted that many mortgage frauds involved legal professionals to falsify documents to lenders and the Land Registry,

Dozens of lawyers have faced a reprimand or have been struck off for their involvement in mortgage frauds over the past two years, confirms the Law Society.

Law Society president Linda Lee said: “In our ongoing talks on the wider issue of membership of mortgage lender panels with the CML and major lenders, it is clear that there is support for the CQS. Not only will it help deter fraud, it also drives up practice management standards and provides a beacon of quality for home buyers.”

The Council of Mortgage Lenders (CML) has also confirmed banks and building societies will not instruct conveyancers outside the scheme.

Michael Coogan, director general of CML, said: “The CML has worked closely with the Law Society as it developed CQS to ensure conveyancing standards are improved for consumers and lenders alike.

“Any conveyancing firm which wants to continue to act on behalf of lenders should expect the CQS to become an important new criterion for panel management, and expect to be asked by their clients whether their firm has been accredited.”

Lawyers registering with CQS undergo staff identity and financial checks, while the Law Society will carry out random visits to assess standards are maintained.

The latest figures from the Treasury show 6,263 pensions were transferred in to QROPS in the 2008-2009 tax year, followed by another 5,659 in 2009-2010.

The favorite QROPS destinations for ex pat and international worker funds are Guernsey, the Isle of Man (IoM) and New Zealand.

More than 2,000 QROPS pensions from around 50 different countries are available to ex pats.

QROPS – qualifying recognised overseas pension schemes – were introduced in April 2006 to let retirement savers leaving the UK to retain their pension benefits while living permanently overseas.

QROPS popularity comes from tax breaks and flexible investment options that are unavailable to UK pension savers.

These benefits include:

• More opportunities to in equities and commodities in currencies other than Sterling
• No obligation to buy an annuity
• Any funds remaining on the death of the pension member are outside of UK inheritance tax rules
• Up to a 30% tax-free lump sum drawdown based on the value of the QROPS fund. Some instances it can be more. Contact QROPS.net for more information
• Pension benefits paid gross in the currency of choice for the investor

Choosing the right QROPS offshore pension scheme is important.

Three main issues need consideration before signing up for a scheme:

1. Is the adviser regulated and offering the best tax and financial advice?
2. Does a QROPS offer the best financial solution for an individual’s personal retirement plans?
3. Does the financial centre where the QROPS is based ‘match up’ with the tax laws of the country where the pension investor lives?

Making a mistake with any of these factors can cause problems years down the line that can cause heartache and financial problems for a QROPS investor.

QROPS.net is a leading QROPS independent, regulated financial advice firm with a track record of successful offshore pension transfers.

For the best QROPS advice and up-to-the-minute tax and product details, call us on +44 (0) 203 111 9785

SuperLife has been in the superannuation business for over 12 years and has over 55 staff. Their main office is in Mt Eden, Auckland and have Sales and Service Consultants throughout NZ.

The directors and senior people are market leaders in the superannuation industry with an average experience of over 30 years.

They have a reputation for quality and innovative thought. Applying that expertise to help you save for your retirement and manage your money and investments is our core business.

Contact QROPS.net for more information and advice about transferring your UK pension to a New Zealand QROPS

The government is adding a new clause to the Finance Bill currently before Parliament to “prevent tax avoidance through the interaction of relief for pension savings and the provisions of certain double taxation arrangement.”

This corrects a new double taxation agreement that would let UK taxpayers with Hong Kong domiciled QROPS receive benefits from the pensions taxed at a top rate of 15% and to receive lump sum payments tax-free.

The basis of the scheme is that QROPS are only based in countries that have double taxation relief treaties with the UK.

These treaties remove double jeopardy on paying tax both in the UK and the tax jurisdiction where the QROPS is based, but the arrangements with Hong Kong let some QROPS investors pay tax at a lower rate than HM Treasury envisaged.

The new rules take effect from today (April 6, 2011).

Exchequer Secretary to the Treasury, David Gauke MP said: “The government has set out a clear strategy on preventing tax avoidance. We will not hesitate to take action to stop those who seek to take unfair advantage of unintended tax loopholes. Today’s measure demonstrates our commitment to act quickly to close these.”

The government often announces law changes to take immediate effect to avoid giving any warning to taxpayers who could benefit from the loophole.

Any new clause in the Finance Act is expected to detail how pension payments will be taxed between the UK and overseas jurisdictions.

QROPS investors will not lose the benefit of double taxation schemes.

“In the event that tax is paid in the other jurisdiction, appropriate credit will be available against the UK tax chargeable,” said HMRC.

Contact QROPS.net for more information

The Stoxx Europe Christian Index is open to companies which hold values which are aligned to the core principles of the Christian religion. Put into practical terms, it is open to companies whose revenue does not come from birth control, tobacco, gambling, or pornography. The committee that decides which companies may be admitted to the exchange includes advisers from the Vatican, so the exchange’s Christian credentials are as solid as it gets.

The committee screens companies that are already listed on the Stoxx Europe 600 Index, and carries out a strict test of the organisation’s practices to see if they measure up.

Demand for such ethical investments is said to be growing since the global financial crisis has shaken up the way we look at our investments. Banking and speculation have been demonised as reckless and greedy pursuits.

According to the Investment Management Association, during the fourth quarter of last year £62.2million was invested in so called ethical funds.

However, investors must read the prospectus carefully of any ethical fund that they are considering, because one man’s ethical company may not match up to another’s standards.

The difference is clear when you look at some of the Stoxx Europe Christian Index through the prism of an environmentalist’s perspective. BP and Royal Dutch Shell clearly make their money from petrochemicals, but are proudly present on the Christian exchange.

Initially viewed as a niche market, ethical investing is becoming much more of a mainstream issue. Indeed, and ICM poll recently showed that 13% of ISA investors had specifically requested that their ISA funds be diverted to sustainable and green funds.

The aim is to make a profit from Japan’s expected economic bounce-back following the earthquake and tsunami disaster – but the ongoing nuclear problems at Fukushima may yet scuttle their plans.

Investors ploughed about $1.8 billion in to ETFs within two weeks to take advantage of the 20% Nikkei drop following the tsunami. Their reward was a 7% day gain on March 16 and an average 12% gain since.

The time for opportunist investors to sink money in to the Nikkei may have passed – but the ETF remains a great tool for investors who self-manage their funds.

An ETF is a security that tracks movement on an exchange, commodity, or other assets.

For investors, they offer extreme flexibility as they are traded on stock exchanges with a continuously changing price.

Free ETF data for investors

Buying in is as quick and easy as purchasing shares. A broad range of ETFs means investments can easily be diversified and instant exposure to the chosen market.

Investor demand has led to thousands of products hitting the markets, which in turn makes selecting the right ETF a challenge for most investors.

Tracking ETFs is no longer a real problem with the publication of a free comprehensive directory of all 3,649 Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) with 7,610 listings, assets of US$1,542.7 billion from 174 providers on 52 exchanges around the world.

The ETF Landscape: Global Handbook provides a central source of the key data on all ETFs and ETPs listed globally, as at the beginning of March 2011 including Bloomberg and Reuters tickers, average daily volume, dividend status, fund structures, replication method and exchange listings.

BlackRock is a leader in investment management, risk management, and advisory services for institutional and retail clients worldwide.

A judge in the High Court has set a four-week deadline for HM Revenue and Customs to present their case.

The move came after Equity Trust, a trustee of delisted Singapore QROPS provider Panthera challenged HMRC’s decision to remove the coveted QROPS pension status from the firm.

HMRC banned all Singapore QROPS in 2008 on the grounds the Panthera QROPS failed to meet the conditions of the recognised offshore pension scheme.

The two sides are arguing over a condition in QROPS rules that states a scheme must set aside 70% of the fund to provide investors with income for life and that any pension benefits must not be paid before the normal minimum pension age.

Now, HMRC must provide the court with evidence supporting the ban. Equity Trust has 14 days to respond and the judge has set the earliest available date after May 17 for a full hearing.

The judge commented the case had continued for too long and should be resolved.

Bethell Codrington, managing director of Panthera, says: “What the trustees have always aspired to do is protect the investors, and the only option open to us to try to resolve this was through the High Court.”

When a QROPS scheme is deregistered, transfers of funds in to the scheme become ‘unauthorised’ payments and attract a tax penalty of 55% of the fund value.

The Panthera Singapore QROPS was the first scheme to lose HMRC status. Since then other schemes in Hong Kong have also been banned.

HMRC and other jurisdictions are also though to be locked in negotiations over perceived QROPS infringements.

Gibraltar QROPS providers have tried to start schemes since the end of 2009 in a disagreement over tax rates for pensioners.

In a long-running tax case, Grace has claimed non-residency since 1997 when he considers he moved his main home to South Africa.

HM Revenue and Customs have long argued that although he has a home in South Africa, he is still UK resident for tax purposes.

The argument balances on the definition of residency for tax.

The First Tier Tax Tribunal, which decided his case, felt Grace could not prove he had broken all his ties with the UK because he still regularly flew in and out of Gatwick as a pilot and stayed in a house near the airport that he owned.

In the eye of the taxman, this means he still has significant personal and financial ties with the UK that makes him a resident.

The fact that he spends at least as much time in South Africa as the UK was considered irrelevant.

The tribunal gave more weight to the evidence that showed the amount of time he spent in the UK, that he was employed by a British airline and that he stayed at his home rather than a hotel when in the UK.

Patricia Mock, a director in the private clients practice at Deloitte, who represented Grace at the tribunal, said: “The Grace case is the latest in a string of claims for non-UK residence which have been decided in favour of HMRC. The cases, which include Shepherd v Revenue and Customs Commissioners, and Robert Gaines-Cooper v HMRC (although this case is still under appeal), all demonstrate the increasing scrutiny paid by HMRC when considering the tax affairs of those who claim to have ceased to be UK resident.

“The fact pattern is all important, and this case underlines the need for those wishing to be treated as non-UK resident to be able to demonstrate that contact with the UK has been severed in favour of new ties with another country.”

The Global Financial Centres Index list the top 75 international finance centres by assessing infrastructure, competitiveness and ease of doing business coupled with a customer survey.

Top of the list come London, New York, Hong Kong and Singapore, who keep their places from the last survey.

Jersey comes in at 23, slipping one place from the previous table.

Other popular offshore financial centres from QROPS pension transfers and investments are:

• 27 Guernsey (Down one place)
• 28 Dubai (No change)
• 35 Isle of Man (Down 3)
• 38= Cayman Islands (Down 4) and Wellington, New Zealand (No change)
• 40 British Virgin Islands (No change)
• 56 Gibraltar (Down one)
• 59 Malta (Down four)

Bottom of the table are Athens (73), Talinn, Estonia (74) and Reykjavik (75).

Jersey Finance – which promotes the island’s financial services industry – said the slight downward trend in ratings for offshore centres might be due increased scrutiny following the financial crisis, which onshore jurisdictions have not experienced.

Geoff Cook, chief executive of Jersey Finance explained the Channel Island had performed well in holding its position as the top offshore centre, which it has now held for four consecutive surveys.

He added the report highlights how Jersey is regarded on the global stage as a market leading international finance centre and that it is recognised as one of the top 10 centres to grow in significance over the next few years.

Highest climbers in the survey, both up eight places were Seoul  (16) and Warsaw (59). Biggest loser was Bahrain, down seven places to 49.

The report comments that few people surveyed could distinguish any significant difference between London, New York and Hong Kong, and that many believed the centres worked together for their mutual benefit.

The report also highlighted the rise of Asian financial centres – with eight centres in the top 20 compared with six from North America and five from Europe plus Sydney, Australia. When the survey started in 2007, Asia had just three representatives in the top 20.

For most people who live in the country of their birth, this is not a problem, but for ex pats and international workers, the tax you pay depends on where you live.

And closely related to tax comes whether you can benefit from transferring your UK pension in to an offshore QROPS scheme.

The rules for tax residence are simple – most people think the 183-day rules about how much time they spend in the UK count them in or out as UK residents, but they are wrong.

The real issue is where you intend to live when you leave the UK and whether you have broken your ties with the country.

This means living in a country is more than staying there for a while. You can live in a place without putting down roots.

Breaking ties and becoming a non-resident means giving up your UK home, transferring your financial affairs overseas. Little things like cancelling your TV licence count for a lot.

The rules have recently come under stringent tests in court as HM Revenue and Customs has pursued ex pats for unpaid tax. The two most notable cases involved airline pilot Lyle Grace and businessman Robert Gaines-Cooper.

Although both have lived overseas for many years, they retained a home in the UK that the taxman argued meant they had not permanently left the country. The conclusion was then that as Uk residents, they owed unpaid tax.

Making a mistake over residence could also be expensive for anyone making a QROPS pension transfer. The schemes are only open to non-residents or people intending to become non-resident.

If a ‘non-resident’ is later found not to be so, then any pension transfer is against tax rules and will incur a penalty of 55% of the transfer fund value.

So, it’s important to know exactly where you live – and leaving the decision to chance can cost a lot of money.

The European Supreme Court has rejected their argument that not linking their pension payments to inflation rises when other pensioners enjoyed the increases breached their human rights.

The group of 13 had battled the British government for eight years in a bid to upgrade their payments.

The case arose from an appeal against an earlier decision by the European Court of Appeal on 25 June 2009, who also ruled against the pensioners.

The ruling brings the fight to an end and means around 500,000 British pensioners living permanently outside the UK have no hope of receiving index-linked payments.

Right for indexation is linked to living in an EU state, says judge

The International Consortium of British Pensioners, that backed the court conflict, says this means a pensioner in Australia drawing a pension since 1981 receives just £29.60 a week instead of the current rate of £97.65, adding up to lost payments of around £100,000.

The challenge was against EU regulations restricting UK state pension indexation to pensioners living in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland. Pensioners living in other countries do not receive indexed payments.

Lady Hale, sitting as one of the ESC judges ruling on the case, said indexing benefits against inflation was linked to the right to live in an EU member state, not to live anywhere in the world.

She told the pensioners that this is a fairly clear indication that it is open to member states to make entitlement to such benefits dependent on the right to reside in the host country, even though, of necessity, such a right will be enjoyed by all nationals but only some non-nationals.

What does offshore mean?

Investing offshore is when a UK resident or ex pat invests money with financial providers who are based outside the UK – and that includes places like the Isle of Man or Channel Islands.

Is offshore investing legal?

Yes. You can invest your money with offshore banks, insurance companies and other financial providers – but you must declare any earnings worldwide on your UK tax return while you are tax resident in the UK.

If you do not pay tax in the UK, then you should follow the tax laws of the country where you live.

Who can invest offshore?

Any adult. Choosing the best financial centre depends on your domicile and where you are resident for tax.

In simple terms, your domicile is your country of birth or your father’s country of birth. Where you are resident for tax depends on where you live permanently.

If you live in the UK for more than six months, you are probably UK resident for tax.

Why should someone invest offshore?

This depends on each individual’s personal financial circumstances. In general, many offshore investments defer tax by delaying the trigger date until profits or other benefits are taken.

Is a QROPS an offshore investment?

Yes. A QROPS is a pension specifically for UK ex pats or international workers with UK pension rights who live permanently overseas.

How can I find an international financial adviser?

Many firms offer offshore investment advice and tax planning on the same basis as a UK independent financial adviser. The market is more complicated because you have to consider how cross-border tax rules might affect your finances.

A firm like QROPS.net have a specialist team of regulated and highly experienced pension’s adviser.

Who regulates offshore financial centres?

They are self-regulating. Most financial centres have a regulatory body that is equivalent to the UK’s Financial Services Authority. Some centres have a better reputation for safeguarding your money than others – that’s why former British protectorates are so popular with offshore investors.

Those with the highest reputations – especially for QROPS pensions – are the Isle of Man, Guernsey, Jersey, Gibraltar, New Zealand and Malta.

Once again the website will be having further development work in the quest to continually bring you a better service. We are welcoming feedback from all of our visitors to the site.

If you would like to take part then please contact us via the contact QROPS.net form.

Thank you all for your input, we have already received some great comments and welcome many more.

Yours Sincerely

QROPS.net Team

QROPS sellers and providers are striving to differentiate their products by highlighting costs and how they safeguard client investments, but these are not necessarily the key factors that should influence a buying decision.

Over recent months, firms in the Isle of Man and Guernsey have conducted a public game of one-upmanship to try and persuade QROPS investors that each financial centre has a better QROPS set up than the other.

Now providers are stepping up the pressure by cutting set-up costs.

First in line is Close Brothers – whose QROPS and offshore business was bought last week by private bankers and investment firm Kleinwort Benson in a £27 million deal.

Close Brothers is slashing access costs to QROPS.

Make a QROPS transfer based on long-term performance

Fees will start from as little as £300 with a £300 annual charge – although many QROPS will cost more like £750 to set up with a £1,000 administration fee.

Although set-up costs are an important consideration when switching pension funds in to a QROPS,   other factors should feature on the transfer checklist as well.

Top of the list comes the suitability of any QROPS to the investor’s personal financial circumstances and goals.

Regardless of running costs, if a QROPS scheme fails to deliver fund growth and restricts investment options, then the pension is not the right one for the investor.

Much better is finding a financial advisor who puts together a short-list of QROPS pensions that primarily matches investment objectives – and then set-up and running costs are factored in to arrive at the most suitable provider.

Many investors might well suffer higher running costs to reap more rewards later because the overall QROPS package is an overall better deal when headline marketing ploys are disregarded.

Internationally recognised as one of the leading centres for QROPS, Guernsey looks set to stay at the vanguard of ex pat financial services for some time.

Here, we look at what makes Guernsey a leading jurisdiction for QROPS:

• Guernsey has well-respected and tightly regulated trust practitioners who administrate QROPS pensions under the watchful eye of the Guernsey Financial Services Commission (GFSC)
• Guernsey has strong ties with Britain, speaks English as the main language and has a legal system based on the British system
• Guernsey QROPS providers have produced a code of practice to reassure ex pats that rigourous rules safeguard their money
• Only QROPS schemes that fully comply with HM Revenue and Customs rules are allowed to register and base themselves in Guernsey
• Guernsey financial firms have managed personal pensions for more than 25 years, including RATS (Retirement Annuity Trusts)
• Guernsey is an OECD white list tax and financial centre
• The island has double taxation treaties and tax information exchange agreements with other key financial centres
• All the Channel islands, including Guernsey have a reputation for political and financial stability

Besides the reputation for political and financial stability, Guernsey QROPS offer all the tax and investment advantages that can be found in almost every other scheme.

The main competitor is the Isle of Man QROPS, but that seems currently embroiled in a quagmire of legal doubts and insecurities surrounding the 50c QROPS.

The 50c scheme lets QROPS investors draw more than the 25% tax-free sum – and Guernsey is waiting for legal ratification of pension rules that will let the island’s providers compete with their Irish Sea rivals in April.

Other than that, everything else a QROPS investor would expect from a market-leading offshore pension is available from a Guernsey provider.

This includes QROPS benefits paid gross, no need to buy an annuity, inheritance tax protection and no limits to fund accumulation.

According to a Google report, this shift in behaviour is due to the greater sense of control that investors seek over their own financial destinies.

In 2009 alone, Google claim that searches for financial terms alone grew by 19% year on year. Despite the perceptions of many financial advisers, there is growing evidence that more high net worth individuals are going online to get information and access the professional services of advisers.

When you are choosing an IFA online, the same considerations have to be born in mind as selecting someone offline. And when it comes to financial advice on offshore issues, independence is the key. A truly independent adviser can access the all of the offshore financial products that the world has to offer and give you an honest assessment of them, unlike a tied agent who may be forced to sing a product’s praises from the corporate hymn sheet.

Likewise, an adviser who is a specialist in your chosen field of investment is also a must, so that you get the right information about complex issues such as tax, projected returns and regulations.

When it comes to offshore issues, a firm that has international reach is also important. After all, if you are an expat who accepts a new posting somewhere else in the world, you will need an adviser who can adapt to your changing requirements.

Given the results of the Google report, the public’s appetite for online information about financial matters is sure to grow. This is a positive thing, as long as internet users learn how to find high quality advice and advisers.

Private bankers and wealth managers Kleinwort Benson already have established bases in Guernsey and Jersey.

Close Brothers explain the sale will streamline asset management and is consistent with the group’s strategy to focus on core businesses.

The sale is subject to regulatory approval and is expected to complete by the end of the current financial year.

Close Brothers has 350 employees  in Guernsey, Jersey, the Isle of Man and South Africa

The offshore business recorded an after tax profit of £0.7 million in the year to July 31, 2010.

The sale is expected to generate a loss on disposal of approximately £24.7 million, including costs of sale and an £11.2 million impairment of goodwill. A £4.5 million provision for a long-term lease commitment will also be recorded.

In July, the business had gross assets of £622 million, £474 million of funds under management and £566 million of customer deposits.

The disposed business currently has approximately £400 million of these deposits placed with the group’s UK bank.

Excluding the loss on disposal, the sale is not expected to have a material impact on Close Brothers’ earnings, funding position or capital ratios in the financial year to 31 July 2011.

The purchase increases the size of Kleinwort Benson’s private wealth assets under management to around £7 billion and gives the firm a presence in the Isle of Man and South Africa.

Kleinwort Benson already employs 358 people in the Channel Islands, and 271 in the UK.

A Kleinwort Benson spokesman said the acquisition was in line with the company’s strategy to develop in offshore financial centres.

Tax is the first thing that springs to mind, as reducing one’s tax bill is what triggers most people to look offshore. However, it is not as simple as finding a jurisdiction that is generous to non-residents and moving your money or assets there.

Firstly, since the legal judgment was handed down in the Gaines-Cooper case earlier last year, it is essential to get the issue of your residence sorted if you are a UK citizen. Her Majesty’s Revenue and Customs used to abide loosely by the rule that anyone who spent less than 90 days in Britain was not resident for tax purposes. However, the Gaines-Cooper case seems to have moved the goal posts, and instead of being able to determine your residence by looking at your diary, the taxman wants to ascertain which country is your “centre of gravity”.

This concept may be difficult to apply without professional advice, and as the consequences of getting it wrong could be expensive. You need to determine your residence before either you or your money moves anywhere.

Aside from the tax advantages of investing offshore, if you are open minded about where your money or assets are held you will benefit from an array of choice when selecting a product. If you are planning to invest money abroad for the long term, you will be looking for a destination that is well established, stable and well regulated. This explains the popularity of Crown Dependencies like Jersey, Guernsey and the Isle of Man. Notwithstanding the small geographical area that these islands cover, financial institutions of all kinds operate out of them, offering virtually any product you should care to name.

Finally, in addition to the choice and tax advantages of investing offshore, you may also benefit from the privacy that offshore investing can afford. Whilst interest from some savings products may have to be reported to your resident tax authority, other products can be kept confidential.

On the other hand, the cost of keeping an increasing aging population in retirement is growing all the time.

The current state pension age for men is 65, and 60 for women. Those figures will be equalised by 2020, and may even be raised to 66 if the coalition’s current proposals go ahead. Such proposals are difficult to keep up with, as a new set of plans seems to hit the news every day. The current government has not ruled out the possibility of the state retirement age eventually reaching 70.

The Pensions Policy Institute has been the latest body to put forward its proposals, with the suggestion that the state retirement age should be at least 72. This, it claims, is necessary to maintain the affordability of a state pension system. Not only would less money be paid out in pension payments, but the change would also lead to increased tax revenues as more older people would have to remain in retirement.

The proposals make sense in the context of the proposed abolition of a default retirement age.

Groups who represent older people appear to be split on the issue. Some would welcome the move if it would secure a comfortable retirement when they eventually give up work. After all, older people are fitter and healthier now than ever before, and bring wisdom and experience to the workforce.

However, it would take a seismic shift in cultural expectations to get the baby boomers to accept that they will not be retiring in their sixties. There is also the fact that unfortunately this is exactly the time when a person’s health may begin to decline.

The plan stretches over three years, and aims to put the Cayman Islands on an even keel again when that timescale is up.

Why are there no direct taxes on the islands? Historically, thanks to eighteenth century rescues of British shipwrecked crews, the British monarchy is said to have promised never to impose direct taxes. However, Gordon Brown had considered reneging on that deal, and one wonders how much longer the situation can continue.

Nevertheless, the Caribbean paradise continues to be one of the world’s most successful international financial centres, attracting investment from all over the globe. Not only can it boast a virtually tax free environment, but a highly sophisticated network of law firms and investment houses operate there, bringing decades of financial knowledge to the golden beaches.

Nevertheless, if no direct taxes are forthcoming, how will the Cayman Islands fill its funding gaps? Like every other country, there will be cuts in its public sector spending. The government also intends to raise the fees that are levied on financial firms to operate in the area.

The Cayman Islands is also reported to be looking for people to become tax resident in the area. Like other offshore investment destinations, it has been keen to clean up its act regarding tax evasion and money laundering that takes place on its shores. Having voluntarily signed up to the European Savings Tax Directive (albeit under pressure from the UK government), the Cayman Islands have entered into a number of Tax Information Exchange Agreements with other countries.

HMRC is monitoring the activities of  some irresponsible international firms offering ex pats advice about switching pension funds from the UK to offshore schemes.

Investigators are building evidence against schemes thought to abuse tax rules with a view to removing them from the HMRC list of registered QROPS pensions.

An HMRC spokesman confirmed the move but declined to comment about any particular schemes under investigation.

Since QROPS started in 2006, offshore pension schemes have been closed down in Singapore and Hong Kong, leaving investors facing tax penalties of 55% of the value of the pension fund transferred in to the scheme.

Further tax charges are also expected as the pension funds are no longer exempt from inheritance tax as they were within a QROPS scheme.

Recently, a couple who transferred more than £250,000 offshore to avoid tax have had to pay £86,000 in penalties after the taxman objected to the scheme, reducing their retirement savings to £145,800.

Neil and Megan Gratton were hoping to save tax and avoid buying an annuity with their pension under a scheme devised by Malcolm Tune, a financial adviser later convicted of fraud.

Regulators in Spain and Dubai are also cracking down on advisers offering dubious offshore financial advice.

The issue is not QROPS offshore pensions – the investment vehicle is robust and regulated by HMRC – but unscrupulous advisers charging high fees for strategies that break the rules and leave customers high and dry facing fines and reduced retirement savings.

The message from regulators is clear – if you transfer pension funds to a QROPS check out that your adviser and provider are regulated and are part of reputable and experienced firms who can demonstrate a track record of successful QROPS transfers.

Nearly EUR 5.6 billion has been raised in taxes and (reduced) penalties, as the duration of the amnesty was extended from mid December 2009 to the end of April 2010.

But the figure that is more interesting from the point of view of future tax revenue is the percentages of assets that were repatriated to Italy. Only 2% of the assets that were subject to declarations were regularised (i.e. the asset stayed put but the taxpayer paid the appropriate amount of tax), compared to the other 98% of assets that were brought back into Italy. That 98% is estimated to be worth around EUR 104.5.

When the amnesty was first muted in Italy the concept was a controversial one. After all, doesn’t it reward tax evaders by offering them lower penalties than they would have to pay had they been hunted down in the usual way? And what about the crime of false accounting that was necessary to hide the assets? The amnesty gives immunity to this.

The Italian government decided to overlook these questions in the light of the large scale of tax evasion it is a victim of. The amnesty that has just passed was the third in eight years, which shows how concerned the government is about the issue – and how successful amnesties are thought to be.

So where had Italian (non)taxpayers put their assets? Most of the funds and assets that were declared were in Switzerland or Luxembourg.

Thanks to the OECD’s campaign to reduce tax evasion, Tax Information Exchange Agreements are springing up between countries day by day. The agreements permit one tax authorities to disclose information about individuals and companies to another – but only if the one seeking the information has particular suspicions. So-called “fishing expeditions” are not permitted, which means that amnesties may continue to be necessary.

The university workers’ scheme is a final salary one, although among the proposals which are on the table was the proposition to offer new entrants to the profession a career average scheme instead.

The problem, like all final salary scheme and particularly those in the public sector, is that increased longevity and poor stock market returns have combined to form a “perfect storm” for defined benefit schemes.

The Universities Superannuation Scheme is said to have a deficit of £17 billion, and these are figures that are tending to go up and up each time they are reported.

If the scheme’s trustees proceed with their current proposals, they will align the indexation provisions that the final salary calculations are made by with the Consumer Prices Index rather than the Retail Prices Index, subject to a cap of 5% for those that are already in payment.

Deferred members (who have not yet taken any benefits) may get a worse deal – the proposed cap is 2.5%.

The current retirement age is 60, but that seems out of step in a country whose government is mooting an eventual retirement age of 68 or beyond. Employees who are under 55 may see their retirement age rise to 65.

There are also plans to raise the levels of contributions among members of the final salary scheme, in order to reduce the deficit.

How will these proposals go down with the scheme’s academic members? Two years of talks on similar proposals have just broken down. A new period of consultation has begun, but it is argued that there is now a feeling that public sector pensions have reached “crisis point” and that something must be done to protect the scheme.

The government has launched a commission which is looking into public sector pensions. It will be interesting to know whether it distinguishes between those who have shown willing to compromise on their current entitlements and those who have resisted, when it gives its views on where the axe will fall.

Unlike regular public sector schemes which the Treasury forks out for, the BBC set-up is funded. But given the figures that have emerged, the scheme is not funded enough.

One thing that it does have in common with private sector final salary schemes is a significant deficit – estimated to be £2 billion at 1 April 2009. This figure is unlikely to have improved when the 2010 figures are available given the poor performance of bonds.

Trustees of the scheme will no doubt hope that the trend does not continue – the deficit was “only” £470 million in April 2008.

So what can be done about it? To maintain the current level of benefits that the scheme promises its members, the trustees will have to find some money from somewhere. And in the current environment of cuts left right and centre, that somewhere will not be the government.

License payers already believe that they pay quite enough, so there is unlikely to be a rise in the cost of the fee to plug this pension hole. In any event, such a move would be highly unpopular given that the public’s perception of public sector pensions being cushy perks.

Other possible sources of funding could include the BBC itself, which is also unlikely, and the employees themselves. But in a world where pay freezes or tiny pay rises are becoming the norm, who can afford to make higher contributions into their pension scheme?

 The BBC seems to have chosen the other path: to tinker with the benefits that will be paid to staff. Current accrued benefits will be maintained, but future benefits will be worked out according to a different formula.

So what happens at your first meeting with your adviser? It would be helpful if you could bring the details of your current scheme, this is important for two reasons.

Firstly, your adviser needs to check to see whether a transfer to a foreign scheme is permitted by your current scheme’s rules. Some members of UK schemes that are already in payment may find that their trustees do not permit transfers after benefits have been taken.

The second reason for examining your current scheme’s details is to see what kind of a deal you already have in place. If your scheme is a defined contribution one (where no particular payment has been guaranteed) then you may have as good a chance as anyone of finding a QROPS that can better or match your current deal. However, if you have a final salary pension scheme guaranteed by a reputable scheme, you may be well placed already, in which case the financial professional’s advice may be that you should stick with what you have.

Once you have decided whether or not a QROPS is possible or desirable, your QROPS adviser will look at a few schemes and choose some that may be appropriate for you.

The issues that will be taken into account may include:

• tax implications;
• flexibility of investment choices;
• availability of lump sums; and
• the possible or likely investment returns.

Once your decision has been made, then the adviser should give you a release paper to sign, in order for their firm to be authorised to deal direct with the QROPS providers. Within a few short weeks, your pension should be out of the UK taxman’s reach.

The government is making a play to become the home of 15 tax exiles every year by offering attractive low rates on worldwide annual income of more than £625,000 (US$1 million).

Treasury Minister Philip Ozouf intends to drop income tax rates to 20% on the first £625,000 of worldwide earnings and just 1% on the rest – down from 20% on the first £1 million and 1% on any other income.

These super rich ex pats will have to pay a minimum £125,000 income tax per year and a 20% rate on any income earned in Jersey.

Currently, they pay £200,000 income tax on the first £1 million, 10% on the next £500,000 and 1% on any other worldwide earnings plus 20% on any Jersey earnings.

The new tax regime will save the ex pats at least £75,000 a year in income tax.

New rules will affect tax on QROPS benefits for some

The Jersey government wants to increase cash coming in to the Channel Island – but find they have to change controversial zero-10 tax rules in line with neighbouring Guernsey.

The European Union are at odds with Jersey, Guernsey and the Isle of Man over corporation tax laws that mean local firms pay 10% tax while firms from overseas relocating on the islands pay zero.

Guernsey has already agreed to revise company tax to remove the anomaly, while Jersey and the Isle of Man are trying to hang on to the laws that other countries complain give companies an unfair trading advantage.

These tax changes will not affect the benefits of a Jersey QROPS for ex pats – but will change the income tax on any payment of benefits from a QROPS for ex pats resident in Jersey who are caught by the proposed changes.

This impacts on payments from QROPS based in any jurisdiction, as the tax is dependent on the residency status of the pension scheme member, not the residency of the QROPS pension.

Over one thousand people took part in the survey, which revealed that people’s reasons for thinking about a new life on foreign shores were not just money related – although almost a third of those questioned were worried about the economy.

Reasons for wanting to leave the UK ranged from worries about job prospects (23%), tax rises (9%) and a small proportion were just fed up of the weather (4%). One in ten simply cited the pace of life in the UK as being too stressful.

The survey was taken before the general election, which 19% of respondents were concerned about.

The results of this year’s survey were almost the polar opposite of the last one (which was taken five years ago), when only 25% of those questioned were thinking about emigrating in 2005. Who knows what the result would have been if the questions had been asked after the election, with £6 billion of public spending cuts hanging over the respondents.

Where would the would-be escapees go? The austerity measures that have recently been announced in Southern European countries like Greece and Portugal seem to have put people off those traditional British expat locations. Dubai, which had once been a popular British retirement location has suffered from its recent economic troubles and fallen off the wish list. In fact, the disillusioned Brits want to get as far away as possible, with locations on the other side of the world like Australia and New Zealand coming top of the wannabe expats’ wish list.

Canada was also a popular choice, proving that Brits prefer to relocate to English-speaking destinations.

QROPS transfers often involve a lot of money – probably second only in value to a house purchase – and it’s right and proper the investor should be confident in the abilities of their adviser.

Guernsey QROPS providers have taken a leap forward in customer service by focusing on these issues by compiling a voluntary code of conduct that lays out the standards of advice an investor should expect.

The code of conduct announcement is widely reported – but here QROPS.Net puts the details under the microscope with how Guernsey QROPS providers handle advising clients:

Do I need an independent financial adviser to make a QROPS transfer?

Guernsey QROPS providers will not accept direct applications for a transfer from a pension investor. They want to make sure every prospective new client has had a detailed pensions review recommending a QROPS as a suitable investment.

What factors does a pension review cover?

First and foremost, the review sets out to establish whether a Guernsey QROPS is the right investment for an individual’s pension fund. 

Suitability includes looking at:

• Residence – both current and planned for the future
• Domicile for tax purposes
• Whether the investor intends to return to the UK
• Expected benefit needs
• Financial status
• The investor’s family status
• Investor’s health
• Inheritance tax and estate planning

Do I have to take a pensions review?

No one can force you take a pensions review – if you don’t, the QROPS provider may want a signed confirmation that you were advised to take a review and declined or may refuse to take your business.

Once I have a QROPS, do I need ongoing advice?

Yes, it’s a good idea to regularly review your finances in terms of income tax, capital gains and inheritance tax where you live and the underlying investment performance of your QROPS portfolio.

A Guernsey QROPS provider will expect a pensions review when a pension investor changes the country of residence for tax.

More information

To find out more about Guernsey QROPS transfers, contact QROPS.net for impartial, independent advice.

Guernsey QROPS providers have taken a leap forward in customer service by focusing on these issues by compiling a voluntary code of conduct that lays out what investments are allowed in a QROPS.

The code of conduct announcement is widely reported – but here QROPS.Net puts the details under the microscope with how Guernsey QROPS providers handle investments:

Who makes the investment decisions for a Guernsey QROPS?

This depends on the underlying terms of the QROPS scheme you join. Some providers only offer managed funds, while others let pension members manage their own investments.

If the provider manages the fund, the trustees must take professional investment advice unless they are qualified to offer this service.

What investments can I hold in my Guernsey QROPS?

The code of practise lays out five specific investments:

• Equities quoted on a recognised stock exchange
• Equities in an unquoted company, providing the pension member and/or his or her family hold 15% or more of the share capital and the QROPS investment is limited to 10%of the total fund.
• Any investment marketed by a recognised financial institution
• Loans to members of up to 25% of the QROPS fund
• Property let on a commercial basis that is wholly owned by the QROPS scheme

Can a Guernsey QROPS hold residential investment property?

No – not if the QROPS is an investment regulated pension scheme. HM Revenue and Customs (HMRC) will tax  any QROPS holding ‘taxable property’. This includes residential property, fine wines, art, antiques, jewellery and other assets like boats and aircraft.

Can I add this to my Guernsey QROPS when the five year reporting rule ends?

No. The five year rule does not apply to taxable property – QROPS trustees have to tell HMRC if these investments are added at any time during the life of the QROPS.

Is a Guernsey QROPS subject to any other investment restrictions?

Sometimes. Other tax jurisdictions may have pension investment rules, and if a pension member is resident in one of those places, the QROPS administrators may have to report details of certain  investments to them as well as HMRC.

More information

To find out more about Guernsey QROPS transfers, contact QROPS.net for impartial, independent advice.

Guernsey QROPS providers have taken a leap forward in customer service by focusing on these issues by compiling a voluntary code of conduct that lays out what pension investors can expect when drawing benefits from a pension from the island.

The code of conduct announcement is widely reported – but here QROPS.Net puts the details under the microscope, starting with how Guernsey QROPS providers handle benefit payments:

Do all Guernsey QROPS pay the same benefits?

Not necessarily. Some providers may have specific terms and conditions in their QROPS agreement that might lead to a different pay out than expected.

What happens if more money is taken from the QROPS than the rules allow?

It probably won’t happen but the rules say any pay outs that exceed those allowed under HM Revenue and Customs QROPS rules are ‘unauthorised withdrawals’ and face a tax penalty of up to 55% of the original value of the fund transferred in to the QROPS.

Don’t these penalties only apply to the reporting period?

It’s difficult to say because the reporting period from the inception of the first QROPS scheme has not passed yet, so a real-life case has not yet arisen. The reporting period lasts until the QROPS member has been a non-UK resident for five full tax years.

QROPS were first established from April 6, 2006, so the first five years is not up until April 5, 2011.

QROPS providers are not keen to breach these rules as they face stiff penalties and possible removal of their scheme from HMRC’s QROPS list.

What age can Guernsey QROPS benefits start?

Guernsey regulators state that other than retirement for ill health, pensions can start paying when the member is between 50 and 75 years old. QROPS rules state that benefits relating to a UK fund transfer must not start before 55 years old unless ill health issues are involved.

Guernsey QROPS tax free lump sums

A Guernsey QROPS currently pays a 25% tax free lump sum on retirement and 70% of the fund is retained for paying pension benefits. This should increase to a 30% lump sum when the necessary legislation is passed in Guernsey later in 2011.

Guernsey QROPS loans to members

Up to 25% of the total fund value is available as a loan with interest charged on a commercial basis. The trustees will want to hold security to cover the debt and the loan must be repaid before any pension benefits are paid

More information

To find out more about Guernsey QROPS transfers, contact QROPS.net for impartial, independent advice.

Guernsey QROPS providers have taken a leap forward in customer service by focusing on these issues by compiling a voluntary code of conduct that lays out what pension investors can expect when transferring a pension to the island.

The code of conduct announcement is widely reported – but here QROPS.net puts the details under the microscope, starting with how Guernsey QROPS providers handle transfers in to their funds.

Who can transfer in to a Guernsey QROPS?

Many providers will accept transfers from UK pension funds even if the scheme is already in draw down, but some schemes rules prevent considering a transfer after draw down.

How long does a QROPS fund transfer take?

The time scale generally depends on the UK  pension fund. The issues that slow transfers down are incorrect discharge paperwork from the UK fund and time limits on transfer values that mean new documents must be supplied especially when final salary schemes are involved.

Need for financial advice and a pension review

The code tasks all QROPS trustees to take all ‘reasonable endeavours’ to ensure potential members of a Guernsey QROPS pension take professional advice before applying to join a scheme.  This should include a review from a qualified pension advisor.

Transfer from defined benefits schemes should include a transfer value analysis and defined contributions schemes should have regard to guaranteed annuity rates.

Although Guernsey pension rules do not cover protected rights or guaranteed minimum pensions, investors transferring in need to confirm in writing that they understand this protection is given up when transferring to a Guernsey QROPS.

Additional contributions

A Guernsey QROPS can accept additional contributions, but HM Revenue and Customs rules set out restrictions on investments and benefit payments that may mean separate arrangements for these funds may a better pension option.

Informing the UK taxman

The pension provider will tell HM Revenue and Customs the following about every transfer in:

• Pension investor’s name, address, date of