New tax rules came in to force on April 6, closing 358 out of 3,008 QROPS schemes worldwide – and 304 of the schemes removed from the official QROPS list were based in Guernsey.

The action has sliced 11% of all QROPS schemes from the market as another 30 have been added since April 6, 2012 giving a net loss of 328 schemes.

The latest QROPS list shows 2,680 are offered worldwide across 49 countries.

HMRC singled out Guernsey by drafting even more new pension rules outlawing the Channel Island’s S157E QROPS pensions, which were designed to comply with the new legislation.

Although Guernsey lost the most QROPS, out of those opening in the past month, nine have been added in Guernsey.

The other main losers under the new HMRC qualifying rules for QROPS were the Isle of Man and New Zealand.

The number of Isle of Man QROPS dropped from 191 to 173, with 18 pensions removed from the HMRC list. Eight schemes have been added this month, making the net loss 10 QROPS.

New Zealand lost more than a third of QROPS schemes – dropping from 63 to 23 QROPS, while a further two have been added back. One scheme closed in Malta, leaving 10 Malta QROPS open for transfers.

Other countries opening QROPS scheme are Canada, adding 10 to make a total of 106 and Italy, adding 1 to move up to 39 QROPS.

The QROPS market seems to be rebalancing after the HMRC action, with no more closures since April 6.

The country with the largest number of QROPS schemes remains Australia, with 930, followed by Ireland with 654 and the Isle of Man with 181.

Switzerland (159), Jersey (138) and Canada (106) are the other countries with more than 100 QROPS schemes.

These six countries offer 2,168 QROPS between them – 80% of all QROPS pensions on the market.

The Centre for Economics and Business Research is one of those killjoys. The think tank has said that the effect of bank holidays is that the economy takes a hit, but the extent of the damage depends on which industry you are in. 45% of businesses suffer, losing £2.3 billion. Apparently, the biggest challenge that bank holidays cause is that businesses lose momentum. If we scrapped them, the think tank claims, the country’s output would go up by £19 million per annum.

England has nine public holidays this year, including the Queen’s Diamond Jubilee. There are regional variations but most developed nations have a similar number. So how can you measure how much they really cost British businesses? And is this figure outweighed by the level of happiness that they cause?

If they do cost the economy as much as £2.3 billion (and, as always, such figures are always subject to dispute), there may be a number of different ways to mitigate their effect. Rather than scrapping them completely (which would surely be electoral suicide for any government that took that measure) the CEBR suggests spacing them out throughout the year, so that the economy does not grind to a halt for too many consecutive days.

Of course, for some businesses the bank holidays are a boom time. Brits traditionally use bank holidays to catch up on DIY and make purchases related to gardening and entertaining outdoors. So hardware stores benefit, as do supermarket and off licences as families gather together with friends on their time off. The spare time is also used for visitor attractions. In all, the CEBR estimates that 15% of the economy comprised of leisure providers benefit from bank holidays.

Facebook lets families and friends stay in contact with messages and photos – but many are switching on to online video conferencing services like Skype.

Twitter, Flickr and YouTube also contribute to ex pat well being in a big way.

By plugging in to technology 70% of ex pats are banishing home sickness, which they claim is the biggest draw back to living overseas.

For years, not seeing family and friends was at the top of ‘miss list’ for many living and working abroad, but the advent of social media technology has seen this slip back to an issue for around four out of 10 ex pats.

Other issues like love of the British countryside and cultural heritage have also disappeared as reasons for homesickness – leaving going to the pub as the main drawback of living abroad for many ex pats.

Dave Isley, Head of NatWest International Personal Banking, which compiled the statistics, said: “Five years ago, home sickness was a factor in the decision to stay or go abroad. But Brits are now finding it easier to up sticks thanks to the plethora of internet tools available.

“While moving abroad either to work or retire used to mean missing those milestone family events, the reality is that technology has lessened the extent of the emotional trauma or guilt of not seeing an important family event.

“Our report demonstrates that ex pats are continuing to move abroad and are experiencing new cultures, traditions and customs. Over two-thirds are successfully immersing themselves in their new society which is hugely encouraging. Integrating with local communities is key to making the most of their move.”

Beneath the move is a long held wish of the Chinese to move the stability of their currency away from the vagaries of the dollar.

The first step more open trading of the yuan – sometimes called the renmimbi as well – was taken with the announcement from the People’s Bank of China that the daily trading limit with the US dollar eases the exchange rate between the two currencies. The yuan can rise and fall daily by up to 1% in value against the dollar, up from 0.5%.

The change appeases complaints by the US and other governments arguing argued an undervalued yuan gave China’s exporters an unfair price advantage.

China claims the yuan has gained 30% in real terms since 2005.

Generally, markets have responded well to the change – with no real fall-out for the yuan or the dollar.

Chris Towner, currency specialist at HiFX, said: “As the Chinese economy has grown, there has been growing pressure to liberalise their currency so that it flows freely within the international foreign exchange markets, which amount to a daily volume of approximately 4 trillion US dollars.

“Given the robust growth levels of China (8.1% at the latest reading) it is often presumed in foreign exchange markets that if the Chinese yuan were to be allowed to float freely then we would see a strengthening in this currency. However we also note clever timing here as the Chinese authorities have recently downgraded their forecasted growth levels to 7.5% from 8%, thus allowing some doubt as to whether this currency would strengthen and indeed in reaction to the news, we have actually seen the yuan weaken.

“The reason for this ‘safe and gradual’ approach is to buffer the potential for any damage to the Chinese economy.”

Contact QROPS.net to find out more how transfering your UK pension to a QROPS can give you a currency advantage.

The campaign tackles a broader issue than one man’s fight against bureaucracy – an individual’s right to vote in the country of their birth.

Harry Shindler’s case has been before the ECHR since 2009 – and he has been told a ruling is on the way.

The decision could affect a million or more British expats living around the world who lose their right to vote in the UK when they have been absent from the country for 15 years or more.

To add insult to injury, many countries also withdraw voting rights to ex pats, leaving them with no electoral voice in the country of their birth or the country where they choose to live.

Mr Shindler moved to Italy in 1982 to live closer to his family. He lost his British vote in 1997 and has no vote in Italy.

“I want to vote in Britain. I fought in the war alongside many brave boys who died to protect their home and their rights,” he said.

“Most expats are not the wealthy who spend their time relaxing in the sun on beaches but ordinary working folk like me and it’s not fair we have no right to have a say in the government that makes decisions about our lives.”

In fact, Mr Shindler points out that the fight could be taken to the United Nations. His lawyers claim the UN’s universal declaration of human rights states everyone has the right to take part in the government of his country.

If he loses in Europe, Mr Shindler intends to go to the UN Human Rights Council to demand an inquiry in to a violation of human rights by removing his right to vote.

Transfers are termed ‘authorised’ and unauthorised’

An authorised transfer is simply switching pension rights form a UK pension scheme to an offshore scheme.

These recognised pension transfers are green lighted by HMRC and do not involve any tax issues for the retirement saver.

Unauthorised withdrawals from a pension scheme occur when a retirement saver diverts funds from a UK pension fund away from a recognised offshore pension – of which a QROPS (qualifying recognised offshore pension) is one.

These transfers trigger tax inquiries and severe penalties that start at around 55% of the value of the fund transferred out of the UK pension.

Any onward payment from the QROPS to the pension investor that falls outside of an ‘authorised’ withdrawal is likely to set off similar alarm bells with HMRC.

One worry many expats have is that switching to a QROPS will wipe out pension relief on contributions to date in the UK. Tax relief on contributions does not change – the tax man views switching the fund between providers as a relocation of the funds and not a tax trigger.

Other pension limits remain much the same as if the fund remained in the UK:

• Annual allowance – Treated the same as a UK to UK registered pension transfer
• Lifetime allowance: A benefit crystallisation trigger, but payments from the transferred amount in to a QROPS are outside the rules
• Member payment charge: Payments to investors that are outside of normal UK pension rules are also likely to be outside the QROPS rules as well
• Inheritance Tax: QROPS pensions are outside of UK IHT rules as the pension investor can opt to set up the offshore pension as a discretionary trust.

For more informationa and advice about QROPS, contact us today.

The answer is sometimes confusing because tax law and financial advisers wrap the definitions in jargon.

The April 2012 QROPS rules say an offshore pension has to pass four tests to qualify as a QROPS by being:

• A pension scheme
• An overseas pension scheme as defined by QROPS rules
• A recognised overseas pension scheme
• A qualifying recognised overseas pension scheme – the full name for a QROPS

These are not ‘either…or’ tests – the scheme has to pass all four to qualify as a QROPS.

A pension should offer benefits for retirement, ill-health, death or similar circumstances. If not, it’s unlikely to be a pension so won’t be a QROPS.

Overseas to meet the second rule means based outside the UK. The location of the QROPS’ registered office is generally the same place as the offshore centre where the pension is deemed based. If the QROPS has no registered office, the main administration centre is the headquarters.

A recognised pension is a scheme that meets the tax rules of the country where the QROPS is based – so, for example, a Guernsey QROPS has to abide by Guernsey tax rules.

A qualifying scheme is one that is open to residents and non-residents of the country where the QROPS is based and the members pay the same rate of income tax regardless of if they live in that country or elsewhere.

One point to watch with a QROPS is that passing the four tests does not give the scheme the same tax exemptions as a registered pension in the UK.

This specifically affects income from property, corporation tax or capital gains on unauthorised unit trusts.

Another question to tidy up for expats is firms marketing a QROPS as having ‘approved’ status. HMRC does not approve a QROPS. The providers self-certify their schemes meet the rules and HMRC publishes a list of schemes that have given notice they meet the four tests.

The list is published monthly or so and is available from the HMRC web site.

The list was suspended on April 6, 2012 – any list published before that date includes schemes operating under the old rules that may now fail to qualify.

The government has published a bill proposing to upgrade existing pension rules to match the latest HMRC guidelines – and hopes the parliament will rubber stamp the blueprint by the end of June 2012.

Gibraltar’s last government put the fledgling industry on hold because of issues with HMRC over 0% tax paid by pensioners – but the new government intends to rebuild the country’s QROPS pension template to comply with HMRC rules.

Guernsey’s QROPS trade could effectively close on May 23, 2012, when the UK introduces new regulations that outlaw the Channel Islands’s S157E pension schemes designed to profit from the offshore pensions market.

HMRC delisted 300 Guernsey QROPS when introducing the last round of QROPS rules on April 6, 2012, and has issued the new regulations to keep the market closed.

The Gibraltar Ministry of Financial Services indicates that they wish to avoid any confrontation with HMRC and the UK by devising a QROPS that is tax compliant with the current law.

The new Gibraltar QROPS laws propose:

• A maximum tax-free commutation of 30% of the pension fund.
• A minimum retirement age of 55 except in chronic ill health
• Taxation of 2.5% on distributions from the fund to beneficiaries of the imported pension scheme
• Requirements to prevent an imported pension scheme being transferred to another scheme outside Gibraltar which does not comply with the original requirements
• Retrospection to 6 April 2006 to enable the small number of pension schemes imported into Gibraltar since that date to comply with the requirements of other jurisdictions which allow exporting of pension funds.

Minister for Financial Services, Gilbert Licudi, said: “This is an important piece of legislation for those in the finance centre industry involved in the administration of pension schemes. It opens up a line of business which has previously, in effect, been out of reach for Gibraltar. It will create work for pension schemes administrators and will also create income from taxation for Gibraltar in respect of distributions from the imported pension schemes.

“This bill has been eagerly awaited by the Gibraltar pensions industry.”

Malta based QROPS offer safe secure schemes with similar benefits to Gibraltar. To discuss your requirements in looking at transfering your UK pension, contact us today. As one of the leading international pension advisers, we can offer schemes at the lowest charges.

A survey of US and foreign banks revealed 40% were having problems meeting the deadline and many were finding setting up systems to meet the new law ‘challenging.’

FATCA is an anti-tax evasion law that requires financial institutions worldwide to register and report client transactions and holdings.

Many US expats are finding that foreign banks and financial firms dealing with small numbers of American clients are shunning them as customers rather than investing in upgrading their systems to comply with FATCA.

Some financial firms are also divesting US assets so they do not have to meet the FATCA rules.

A survey by global accountancy firm KPMG asked key bank executives about readying for FATCA.

“Around 28% of the respondents with US-based banks and 36% of the respondents with foreign banks did not believe the majority of banks impacted by FATCA would be ready to comply in time,” said Mark Price, of KPMG.

“It’s clear to bank executives that FATCA is an operational change – and more than just a tax issue – for foreign and domestic banks alike.

“Bank executives also are learning it is critical to coordinate many areas – operations, tax, IT, legal and money laundering departments – to successfully address FATCA’s significant compliance, reporting, and monitoring risks.”

Identifying account holders was cited by just under a third of banks as the biggest compliance challenge, while reporting requirements came a close second.

The FATCA laws came to the US statute book last year as part of the HIRE Act (Hiring Incentives to Restore Employment), which demands foreign financial firms register with the US tax authorities if they have American clients or assets.

Contact us today to find out more about how we can help you as a saver/investor.

The International Consortium of British Pensioners (ICBP) wants state pension payments to more than 500,000 ex pats to be aligned with the amount paid in the UK.

A court fight demanding pension parity was lost in the European Court of Human Rights last year, ending the legal campaign, but the ICBP is still lobbying for action.

The full index-linked state pension is paid in the UK, all European Union member states, the US, Switzerland, Iceland, Norway, Turkey and Liechtenstein.

Elsewhere, the pension is paid at the prevailing rate, so a pensioner retiring 20 years ago when the payment was £54.45 a week still receives that amount.

The ICBP claims this is unfair to pensioners who have retired overseas, but the government argues that upgrading pension payments for ex pats is too costly.

To counter the claim, the ICBP is seeking a gradual thaw of frozen pensions, starting with ex pats over 85 years old, as the oldest pensioners receive the smallest payments.

ICBP spokesman John Markham said that giving state pension parity to the over 85s would cost £100 million a year.

The Treasury reckons granting parity to all pensioners would cost around £665 million a year.

The call for parity has become more desperate after the government announced a flat-rate index-linked state pension of £155 a week starting in April 2015.

Fluctuating currency exchange rates also lessens the spending power of British ex pats as the state pension is paid in Sterling and often has an unfavourable exchange rate.

Inflation in the UK is also higher than that in many destination countries for ex pats.

Almost half of ex pat pensioners are based in Australia, where inflation is lower than the UK.

After quizzing more than 450,000 adults in 151 countries representing 97% of the global population over three years, the survey gives some definitive insights in to why people want to upsticks and move across the world.

The simple answer is opportunity – a chance to earn more money and experience a better lifestyle,

The world sees the US as the land of opportunity.

Opportunity is defined as a chance to join family who have already moved to another country, somewhere to invest in a career or business, a place with religious or political freedoms, or simply to live somewhere that respects children.

Given the chance, 150 million people would move there – that amounts to around one in eight of the 640 million who express the desire to leave their home countries for good.

The next most popular choice for 45 million is the UK, and just behind comes canada with 42 million votes.

France is the destination of choice for 32 million and Saudi Arabia makes up the last of the top five with a score of 31 million.

Russia and Sweden are the least popular countries, amassing 6 million votes each.

One insight from the research is millions want to move to the US from emerging nations with fast-growing economies as well as large numbers from poorer nations.

The US was the most popular destination from China (22 million), Nigeria (15 million), India (10 million), Bangladesh (8 million) and Brazil (7 million), while from less rich countries, the figures were significantly higher – 37% of adults from Liberia and 30% from Sierra Leone would move permanently to the US if they could.

More than 20% of adults in the Dominican Republic (26%), Haiti (24%), and Cambodia (22%) would also vote with their feet.

HMRC published a tax information and impact note (TIIN) introducing a ban on S157E Guernsey QROPS that were designed to circumvent new offshore pension rules that came in to force on April 6, 2012.

The TIIN follows the closing to new business of 300 QROPS schemes on Guernsey that HMRC judges fail to meet the new qualifying conditions because they failed to offer the same tax benefits to resident and non-resident retirement savers.

A further round of QROPS tax changes coming in to force on May 23, 2012, rubber stamp the HMRC ruling against Guernsey pensions.

The accompanying paperwork explains HMRC thinking behind the Guernsey QROPS ban.

“This measure will ensure a fairer tax system by making changes to the system of transfers of pension savings from registered pension schemes to QROPS,” said the TIIN.

“This will ensure that the system continues to be used for its intended purpose of allowing individuals who intend to leave the UK permanently to take their pension savings with them, free of UK tax, to their new country of residence in order to continue saving to provide an income in their retirement.”

Industry insiders suggest the statement means HMRC is pursuing a policy that only allows expats or international workers with UK pension rights to take their funds to their new home overseas and not to a third-party QROPS.

A third-party QROPS is where a pension is hosted in one country while the retirement saver lives in another country.

However, QROPS.net asked HMRC if third-party QROPS were banned when the rules changed on April 6, 2012.

Then, a spokesman said: “It is still possible for an individual who is a member of a QROPS to be resident in a different country to the one in which the QROPS is established but the benefits tax relief test must be met. How the benefits tax relief test will apply in practice will depend on the tax rules in the country in question.”

The benefits tax relief test calls for:

• Tax relief to be available to pension members in the country where the QROPS is based

And

• That tax relief must have applied regardless of the country where the pension member lived when joining the QROPS or at any time they were a member of the QROPS

HMRC has been asked to clarify the apparent TIIN policy statement, but no response has yet been received.

Several key factors must be considered before making the investment decision and pressing the switch to transfer your UK pension.

Malta schemes certainly tick many of the boxes but the most important rule any independent financial advisor should follow is fitting the best product to the needs of the client rather than fitting the client in to a misshapen hole.

In many cases Malta QROPS will score the same as most other QROPS – that’s inevitable because all QROPS have to comply with the same rules and regulations laid down by HM Revenue & Customs.

The recent problems that have pulled the rug from under the Guernsey QROPS market has more to do with manipulating QROPS rules to gain a competitive advantage.

Malta QROPS are aligned to the HMRC rules, which were a blueprint for the island’s regulators and QROPS providers. The result is an ultra-compliant QROPS jurisdiction backed by strict local regulation on UK Financial Services Authority lines and a robust framework of tax treaties as anyone would expect from a full member of the European Union.

That’s the main reason why Malta schemes are winning so many plaudits – they offer everything an investor should expect from a QROPS in terms of tax efficiency and flexible investments coupled with robust regulation.

Whether a Malta QROPS offers the best offshore pension solution to a retirement saver comes down to the specific scheme offered by a provider not the jurisdiction. So it is important to take professional advice.

QROPS.net head office is based in Malta and we are at the forefront of offering QROPS schemes based in Malta. As the leading advisory firm we can offer the lowest charges for Malta QROPS due to our unique terms of business we have with the largest Malta QROPS providers.

Contact us today to discuss your requirements and to find out more.

Guernsey can now only provide QROPS pensions to UK ex pats and international workers living on the island.

Financial providers on the Channel Island were gearing themselves up to launch a formal complaint against HM Revenue & Customs effectively closing Guernsey’s lucrative QROPS market to new business with pension law changes on April 6, 2012.

However, HMRC has launched a pre-emptive strike with new legislation aimed at outlawing Guernsey’s S157E QROPS pensions that were rushed through the island’s parliament in time to capitalise on the changes.

HMRC has already removed more than 300 Guernsey QROPS from a list of providers published each month, leaving just three Guernsey QROPS available to accept transfers from UK pensions.

The latest official figures showed Guernsey was receiving one in three of all pension transfers in early 2011 to become the most popular QROPS destination in the world.

The new law says S157E pensions are barred from qualifying as a QROPS pension if they are open to Guernsey non-residents. The rule is effective from May 23, 2012.

“This measure will ensure a fairer tax system by making changes to the system of transfers of

pension savings from registered pension schemes to QROPS,” said HMRC.

“This will ensure that the system continues to be used for its intended purpose of allowing individuals who intend to leave the UK permanently to take their pension savings with them, free of UK tax, to their new country of residence in order to continue saving to provide an income in their retirement.”

The move has repercussions for other financial centres offering QROPS.

Jersey announced a QROPS law change along the lines of the Guernsey S157E that has hastily been pushed on to a backburner. Jersey pension providers and government officials have opened discussions aimed at bypassing legal problems with the scheme.

MPs argued changing the law would lead to a free-for-all for land – which is in short supply for building in the Gulf state.

The decision means real estate laws stay the same in Bahrain – which means Gulf Co-Operation Council (GCC) nationals can still buy, which leaves residents from Saudi Arabia, United Arab Emirates, Qatar, Kuwait and Oman in the clear.

“Under current legislation approved by the GCC, the government is obliged to treat Gulf nationals as Bahrainis and not expatriates,” said parliament financial and economic affairs committee vice-chairman and secretary Mahmood Al Mahmood.

“If we open the door for expatriates to purchase residential plots in Bahrain then a new market will emerge in which GCC nationals purchase bulk plots and then sell them off to the highest expatriate bidder.

“This in return will affect the availability of residential plots for Bahrainis, which are at the moment limited, and also prices would go up and this means that many Bahrainis will be unable to afford to buy residential plots.”

Al Mahmood is also worried the bill would harm Bahrain’s efforts to attract foreign investors because the country has too little land for building.

“It will be easier and more profitable for owners of large land to divide it into smaller plots and sell them and this harms moves to attract foreign investment,” he said.

The proposal before parliament would have allowed ex pats buy residential plots of up to 2,000 square metres, providing the land was not sold for four years.

Bahrain is a popular destination for ex pats, especially those working in oil and gas, despite recent civil unrest.

The economy was a key issue in the run up to the election. Former president Sarkozy had presented himself as the only person who was capable of steering France through the economic crisis. But voters had become fed up of his austerity measures, which were perceived to have failed by the outside world looking in – given the country’s downgrading from its AAA rating.

A decade ago, freshly elected European leaders might have hoped to enjoy a honeymoon period. But Hollande does not have this luxury. The problems he faces are grave and urgent, and must be started on before he has unpacked his suitcases. In just over a week’s time he has the meeting that will shape his economic policy – round one with Germany’s Chancellor Merkel.

During his election campaign, Hollande claimed that he would be seeking to renegotiate the recent financial deal with the others in the Eurozone – effectively seeking to soften the austerity package that France is committed to.

But whilst Merkel has given Monsiuer Hollande a diplomatic welcome to his new position, she has already indicated in no uncertain terms that the pact cannot be renegotiated.

So what else does Hollande plan for his time in office? Sarkozy had taken the unpopular step of raising the state retirement age from 60 to 62. Hollande intends to reverse that change as soon as possible.

Another headline grabbing plan of Hollande’s is to impose a tax bracket of 75% on people earning more than a million euros per annum.

Unemployment is also a major problem, with nearly 10% of people of working age out of work. The new president intends to add 60,000 to the payroll in the next few years by hiring this many teachers.

Frustratingly for him, it is the outcome of Hollande’s meeting with Chancellor Merkel that may influence where or when he can get his hands on the money to finance his planned spending spree.

Contact us today to look at how transfering your UK pension to a QROPS can benefit you while in France

With UK private pensions, most savers will only be able to access their pension funds at the age of 55, or later. Of course, some wealthy investors may be able to “retire” from work before that age, having recourse to income and capital that are not strictly speaking pension funds. But for most people who have saved privately, retirement will not happen before the magic age of 55 has been reached.

The UK state pension age is a moving target, and not only depends on when you were born, but also on what the government of the day has in mind. The current government has said that it sees state pensionable age eventually rising to 70.

Default retirement ages were considered to have been abolished recently by equality laws, which meant that workers could not be discriminated on the grounds of age. It was thought that employers could only dismiss older workers in the same way that any other worker could be dismissed – managed out on the basis that they were no longer competent of doing the job.

However, according to a recent UK Supreme Court ruling, firms can impose a default retirement age on their workers, and force them to leave once they have hit a particularly significant birthday.

In the recent court case, solicitor Leslie Seldon was asked to leave the firm of solicitors where he was a partner when he turned 65. The firm justified this request on the basis that the rule showed younger employees that there was room at the top for new partners, and that the firm felt this policy reduced the chances of them having to manage people out for poor performance later. So it seems that such justifications can counter the claim of age discrimination

So if you are an employee who had planned to work as long as you felt able, it may be worth checking through the fine print of your contract. Such default retirement ages that were previously thought unenforceable are being implemented by employers who are keen to trim their wages bills. The question is: will the courts allow employers to impose default retirement ages that are different from the state pension age and leave older workers a gap in their income?

The British romance with property and desire for a more laid-back lifestyle are still alive despite difficult financial times, according to a survey of ex pat property attitudes by currency exchange firm HiFX.

France is the favourite destination for Brits, with Spain a clear second. Group closed behind are the US, ahead by a nose from the close pack of Australia, New Zealand, Germany and Italy.

More than a third of buyers (35%) look to France as their new home. Spain collars 16% of the vote, then comes the US with 8%. The rest average between 4% and 6% of the vote.

The findings also showed 25% of Brits believe owning and running a property overseas is cheaper than in the UK

Investment was not a primary concern for homebuyers abroad, claims the survey – 74% of Brits rated lifestyle as the most appealing factor, followed by the weather (66%), while only 6% considered rental returns.

HiFX director Mark Bodega said: “France remains a safe bet for Brits. Sun and lifestyle are a big pull but buyers are now also able to get better value for their money and take advantage of the weakening euro.

“Spain continues to attract Brits who are hoping to take advantage of depressed property prices. The average property price in the country is down almost 30% since the market peaked in 2007, yet while there are discounts to be had buyers need to pick carefully.

“The recent gains made by the Pound against the Euro can be felt throughout Europe, but Spain and Portugal have also seen costs and prices fall for a variety of goods and commodities unlike other parts of the Eurozone, notably Italy.

“I advise buyers looking for a bargain in these countries to do their research and take on board the risk of buying in economically uncertain times before making any important decisions.”

As concerns grow about the effectiveness of the European Central Bank’s bail out scheme for the eurozone economy, Elliott has looked at the four likely scenarios that will play out to end the crisis.

The fear is the ECB has bought some time by pumping €370 billion in to the eurozone banks, but the day of reckoning has yet to come.

For ex pats, the crisis has resulted in falling property prices, recession, fewer jobs, low interest rates on savings and unpredictable currency exchange fluctuation.

He argues one of four likely outcomes will eventually succeed:

• Creating a ‘eurobond’ and a wider pan-eurozone economy calling for more fiscal and political union, but, Elliott claims, Greece and other peripheral eurozone members would pick up a line of credit funded by Germany and would go on a spending spree.
• A weaker economy calls the bluff of France and Germany and steps outside the eurozone. The more weak countries that leave, the stronger the remaining eurozone would become, which could damage exports.
• Governments spend to create growth with infrastructure projects – the problem with this, says Elliott, is once the project finishes, the job ends as well and everyone is back where they started.
• More cuts and austerity to control debt, while encouraging jobs and growth

The last solution is the only plausible solution, explains Elliott, which implies that the crisis will rumble on for some years.

The prognosis for economies in Europe? At least another two years of economic upheaval and much of the same in way of low interest rates and property prices.

As Elliott said: “Europe is caught in a trap rebalancing the economy and no one is quite sure how to pull out of the eurozone crisis.”

The Mediterranean island’s courts are expected to face a huge backlog of cases as the writs are all heard 30 days after issue.

Lawyers are warning property owners that failing to acknowledge the write within the time limit or not filing a defence with a further 14 days will lead to an automatic judgment with no prospect of appeal.

The next step would see homes repossessed if owners failed to agree a debt repayment schedule.

If selling the repossessed property failed to clear the debt and court costs, owners could see the banks trying to repossess their homes in the UK to settle the outstanding amounts.

Judgments in Cypriot courts are also enforceable in the UK.

Lawyers are also warning that homeowners in mortgage arrears are receiving termination notices from their lenders, which will trigger a writ if the property owners do not respond.

The action by Cypriot banks is a reaction to the fall-out from the Greek economic crisis.

Many of the banks have made substantial losses on the write-down of Greek bonds – the goverment fears up to €2.5 billion will have to be pumped in to the Cypriot banking system to shore up their balance sheets.

The banks are desperately looking to call in bad debts to cover their exposure to the crisis.

Sales of repossessed homes are considered unlikely to cover mortgage debts, as a flood of properties hitting the market will deflate prices, but the banks cannot afford to hold on to them for an unlimited time.

“We strongly advise that any recipient of such writs or termination notices act to address the matter and not simply ignore the service and the potential implications to the same,” says Cyprus-based law firm Judicare.

Malta is becoming the destination of choice for billions of pounds locked in UK pensions as 300 QROPS schemes on Guernsey were forced to closed by the new tax rules introduced on April 6.

Many blame the closures on Guernsey’s attitude to building an offshore finance centre based on exploiting tax loopholes.

Malta has a fledgling QROPS market that was untouched by HMRC’s crackdown and is seen as a safer for bet for offshore pensions money than Guernsey and many other tax havens.

Bethell Codrington, who runs QROPS provider TMF International Pensions Solutions, claims nine out of 10 Guernsey’ pension providers are leaving the Channel Islands to reinvent their businesses in Malta following HMRC’s assault.

“Malta is a popular choice for QROPS because investors can take effective tax decisions knowing that double taxation agreements between the island and other major countries mean they only pay tax in one jurisdiction,” he said.

Top rate taxpayers pay 35% in Malta, but wealthy non-residents can reduce this to around 15% under certain circumstances.

Other plus points for Malta include:

• Every QROPS has the same tax benefits and flexible investment options offered by any other qualifying recognised offshore pension scheme.
• Malta is part of the European Union and pension firms are subject to rigorous regulation
• The islands pension providers build their products according to the HMRC QROPS template, so automatically qualify as QROPS, removing any doubts about what happens if UK tax rules change
• Many of Malta’s tax treaties are with fellow European Union members

Malta’s ascendancy as a leading QROPS market comes as Guernsey’s providers and financial regulators are still reeling from HMRC’s action.

In an attempt to rescue their business, Guernsey Qrops providers have been asked for £1,000 each to fund a £20,000 complaint against HMRC for ‘illegally’ delisting their schemes.

The Guernsey Association of Pension Providers (GAPP) has written to members about lodging the formal complaint led by lawyers that would claim compensation for ruining the island’s QROPS market.

QROPS.net can offer Malta based schemes at the lowest cost avaiable. Contact us today to speak to one of our experts

Expats who move for to further their career or maximise their earnings, often as a contractor, by working overseas are in the category who can pay their way – often the help of benefits that come with the job.

Although not immune from financial problems in Europe, many are heading further afield – to the Middle East and beyond.

It’s the rest who are struggling – like the pensioners on a fixed income that no longer pays the bills because inflation, currency exchange rates and other financial woes erode the value.

Worst off are the lifestyle expats who moved for a better and more laid back standard of living who are too young to retire but victims of economic turmoil.

These are the ex pats scraping a living who can no longer find work or customers. They are caught between a rock and a hard place – they can’t sell up because no one can afford to buy and they can’t stay because they don’t have enough money to live.

The answer for some is long-distance commuting.

Even a police constable in Market Bosworth, Leicestershire, is flying in to walk the beat each week from Frankfurt, Germany.

Pc Sean Hannigan, 45, made the choice to jet in each week and live in digs when his wife was faced with redundancy as her German employers were relocating away from the UK.

Jetting to work has long been the reserve of City rich kids, but more ex pats are balancing the need for cash against a better lifestyle, and deciding that they are not financially equipped to leave the rat race that many despise so much.

Barclays and Lloyds TSB International have quietly notched up massive increases in profits from serving high net worth Brits and ex pats over the past year.

Barclays Wealth posted a 30% increase last year, while Lloyds TSB International profits surged by 45%.

HSBC is busy reorganising, announcing the loss of around 2,200 jobs in the UK and realigning branches overseas as the bank targets wealthier clients and ditches general financial advice.

So who are these rich list clients so desired by the banks?

Lloyds TSB International focus on three clients – the mass-affluent, affluent and high net worth.

The bank won’t reveal to customers how they classify them, but different teams and managers will deal with those with between £100,000 and £1 million to invest, those with £1 million to £2 million and those with more than £2 million.

Banks are focusing on their rich list customers because they have the cash to pay for their services and the administration charges on managing their funds bring in big profits.

Banks are retrenching back to the days of serving the haves and have nots.

If wealthy customers need a mortgage, investment advice or credit, then they roll out the red carpet and get the deal done.

Someone with little or no financial resources stays in limbo.

HSBC and Lloyds TSB International are both singing from the same song sheet – tailoring services to the wealthy wherever they live, not by location.

If you are one of the estimated 5.5 million Brits living abroad and have £100,000 or more in spare cash, you could be the target for QROPS pensions, offshore bonds and other tax and investment strategies.

Remember, if you are caught in the banks’ sights, their problem is they are likely to advise on their own products and not offer best advice over a range of providers, unlike an independent financial advisory firm such as QROPS.net

At least one in three Brits would sell if they could and leave for the UK – but many are financial hostages as their homes are worse less than their mortgages after values have plummetted 25% from their peak in 2007.

To add to their problems, the country has dipped back in to recession, unemployment is running at 25% and property prices are still falling as banks try to divest their balance sheets of repossessed homes.

Many Brits overseas are concerned that bank or financial institution in the Eurozone may collapse, leaving them wiped out of savings.

Financial advisers suggest ex pats share their cash between a number of banks to make sure they benefit from the €100,000 money protection limit offered on their accounts.

The pitfall comes by putting cash in to different banks that are not owned by the same company, as the limit applies to all accounts with one bank not per account.

“It is best to spread your savings over as many savings institutions as possible – never holding more than £85,000 in each. If you are one of the many people concerned, you could consider limiting your exposure to the Euro by bringing some of the funds held in Euro bank accounts back to the UK,” said mark Bodega of currency exchange specialists HiFX.

“Alternatively if your funds are in the UK, and you’re used to sending one larger amount each year to a Euro bank account to cover the costs of a property or life abroad, you might want to consider sending smaller amounts to the eurozone more frequently to allow you to take advantage of future Euro weakness.”

S&P ratcheted Spain’s rating down from A to BBB+ on Friday – and a few days later flagged that many major banks were going to follow suit.

Spain’s biggest bank Banco Santander, was revised down, and this will concern ex pats with accounts taken out in Spain.

Some of the other banks downgraded were Banco Bilbao Vizcaya Argentaria, BBVA and the Spanish arm of Barclays. Bankia, Spain’s third-biggest bank, faces “creditwatch with negative implications”.

Most of the coverage of this downgrade relate’s to Spain’s long-term credit status, but the real issue for ex pats is the short-term effects.

Government austerity programs to deal with sovereign debt are long-term issues that cover several years.

The short-term issue covers money market fundings, which cover how lenders raise money to lend and interest rates and investment returns to savers.

The real problem for Spain – and Italy that suffered a similar downgrade earlier – is top line money market funds cannot inject cash in to grade 2 rated credits.

In the real world, A grade money market funds have already cut their links with lesser rated countries and their financial institutions to demonstrate prudence governance.

The difference this week from last week is now the credit ratings are officially downgraded, they have no choice about who they do business with – they have no option other sever links with B grade institutions.

In the short term, retirement savers and investors may see no difference in rates and returns because the European Central Bank’s bond program will take up the slack in the system.

Overall, Spanish and Italian banks will see the cost of borrowing on the wholesale markets rise, restricting how much they can borrow and increasing the rates they charge for lending. Interest rates on deposits are likely to languish at the bottom of rate scales with meagre returns.

Analysts calculate a final-salary pensions black hole at the FTSE 350 companies has expanded from £20 billion to £80 billion in the year to the end of March.

Despite the mushrooming problem, the Pensions Regulator has turned a blind eye to quantitive easing and told the fund trustees to ignore the effects on investments in their calculations.

The result is many retirement savers are not quite sure about the future values of their pension funds as quantative easing is distorting the underlying figures.

The pensions industry has called for the regulator to allow schemes to make an allowance for low gilt yields and the effect of quantitative easing in the assumptions they use.

The request was objected because including quantative easing would reduce pension fund liabilities – with the regulator explaining inclusion was not a prudent approach because it seeks to second guess future market conditions.

The regulator has agreed to consider additional flexibility in recovery plans where employers are genuinely struggling to support their scheme.

Pensions Regulator chief executive Bill Galvin said: “There are a number of economic factors impacting gilt yields, such as quantative easing and demands for UK sovereign debt from the international banking sector.

“We have been in a low interest climate for some time. Yields have fallen further in the last nine months, and it is unclear when and to what extent there will be a market correction. The net effect across defined benefit schemes is not uniform and will vary greatly depending upon the extent to which their risk-management, investment and contribution strategies have insulated them from the effects.”

The Pensions Regulator polices the administration of work-based pension schemes in the UK to protect benefits and to reduce the risk of a fund failing.

Ex pats need to consider the religion and burial beliefs of their new home – and often they are not compatible with those in the UK.

However, some countries are beginning to adapt to cater for their new citizens from overseas.

The first crematorium has opened in the United Arab Emirates, and the development includes another first – a non-Muslim graveyard.

Under the country’s official religion, Islam, burial is the only option on death, so the crematorium indicates a huge culture shift for the UAE.

Abu Dhabi and Dubai reckon 85% of their population are ex pats – and last year around 4,500 of them died in their new home.

The problem for the authorities, families and friends, was how to handle the bodies.

Despite the number of deaths, building and fitting out the crematorium is only viable thanks to state funding. Buying the land and building the crematorium cost an estimated $10 million – with the furnace for disposing of the bodies adding another $2 million.

Meanwhile, around the time the crematorium opened, Al Shindagha Trading in Dubai triggered public protests by putting up the price of basic wooden coffins by more than 90%, to Dh2,300 from Dh1,200.

When adding in the other costs of handling a body in Dubai, many poorer ex pats could not afford to shift their loved ones home.

If an ex pat dies in Dubai, family or friends must pay for embalming (Dh1,010), an ambulance to transport the body (Dh210), a death certificate (Dh70) and cargo charges calculated on the destination and weight of the body.

After complaints, the cost of a coffin was reduced to Dh 1,500 – with the firm explaining prices had not changed for 30 years despite costs of labour and materials rising.

Dubai headed the UAE hotspots as the city identified by more than a third of ex pats (37%) in the region as the place they aspired to live.

Recruiters Gulf Talent queried 35,000 professionals in the Middle East for their annual report on ex pat life.

The findings revealed although the UAE suffered in the wake of the credit crisis and recession, “a rebound in business confidence, declining rents and the country’s high level of political stability” is attracting ex pats.

However, Saudi Arabia headed the league for job creation, with almost two thirds of firms taking on extra staff.

Oil, gas, health care and retail were the largest recruiters across the region, but construction, banking and finance are still struggling to make up ground lost in the economic downturn of recent years.

Nevertheless, most economies saw a revival.

The highest salaries were paid in Oman, while those in the UAE and Bahrain increased the most, mainly due to inflation.

Employers found recruiting from the US and Europe was tougher as workers feared the region was politically unstable and were concerned about personal safety following the Arab Spring uprisings in Egypt and Libya. Closer unrest in Bahrain also affected recruitment prospects.

This was balanced by more international workers, especially from Asia, filling posts.

Meanwhile, Dubai has put plans to charge expats housing fees on hold as talks with utility companies delay collecting the monthly charge.

Around two thirds of expats are paying the charge as part of monthly utility bills.

The housing fee is calculated as 5% of annual rent for tenants or 5% of the property’s annual rental value.

The culprit is associated company rules that split reliefs and result in paying up to £6,000 extra corporation tax a year per company.

The entrepreneur relief is the seed enterprise investment scheme (SEIS).

The potential is saving 50% of income tax due in the year – up to a maximum of £50,000 and deferring capital gains tax on gains rolled over in to a SEIS this tax year.

Even though raising investment for a new company from a SEIS may incur extra corporation tax under the associated company rules, incorporating to grab the tax reliefs is probably still worthwhile.

SEIS tax breaks for the 2012-13 tax year are far better than any other reliefs – tax savings could add up to a massive 78% of a £100,000 investment by combining the income tax and CGT reliefs to the max.

However, investing in a SEIS means complying with some strict rules, both as the business receiving the investment and as an investor.

To test whether the saving is worthwhile, compare the personal tax saving against any projected corporation tax increase through the associated company rules.

Tax experts often reckon saving a £1 on personal tax is worth a saving of just 50p on corporation tax.

Many SEIS investors will disregard setting up the new enterprise as a division of an existing business because this will exclude SEIS tax benefits.

Chancellor George Osborne set up the SEIS scheme from the start of the 2012-13 tax year to collar funds for greenshoots firms mainly in the technology sector. His vision is to finance new starts that may grow in to a British Facebook or Google.

The choice depends on a number of factors – including whether the final retirement destination is outside the UK.

Ex pats intending to return to the UK after a short period working overseas should consider an onshore pension like a self-invested pension scheme (SiPP).

Those looking at a permanent move away from Britain have several options -

QROPS – Qualifying Recognised Overseas Pension Schemes

These are the most popular overseas pension  scheme with literally billions being transfered into QROPS. These schemes are attracting HMRC’s attention after some firms and advisers tried to manipulate the rules to give offshore retirement savers enhanced tax benefits. This is seen as a good thing by advisers as it prevents miss selling and gives the individual protection.

QROPS as a pension product are not a problem, providing they are properly set up and managed within pension and tax rules.

ROPS – Recognised Overseas Pension Schemes

Another scheme policed by HMRC that is available in more tax jurisdictions than a QROPS. Retirement savers looking for advice about ROPS should find a suitably regulated and qualified independent financial adviser.

QNUPS – Qualifying Non-UK Pension Schemes

Confusingly all QROPS are QNUPS, but not all QNUPS or QROPS. Like ROPS, the difference involves availability in tax jurisdictions that do not have double taxation treaties with the UK.

Section 615 Pensions

Section 615 schemes are for UK companies with employees who have duties outside the UK. Every scheme is approved by HMRC, taking away any fears about benefit payments on retirement.

The key to the best pension advice for ex pats and international workers is independent advice. Banks and financial institutions are likely only to offer their own products and services, while the wider market could provide other pensions providing better options and returns.

Contact QROPS.net today for the most up to date information and the best advice for your situation

Incumbent Nicolas Sarkozy and socialist rival Francois Hollande are both campaigning on key tax and economic issues.

Sarkozy is claiming the French economy is safe in his capable hands despite the shambles of his involvement in the Eurozone sovereign debt crisis.

Hollande says Sarkozy is shamelessly manipulating the economy for his own personal gain.

The issue for ex pats is which will represent their interests best after the May 6 vote?

As with all elections, the bigger political issues like foreign affairs go by the way and more personal factors like jobs and money in the bank come in to play.

Hollande has already hinted at upping income tax for the wealthiest earners – those pulling in around 150,000 euros a year or more. He wants a 45% rate for the highest earners.

Currently, France differentiates the wealthy as those who earn 250,000 euros or more a year for a special tax of 3% of income between 250,000 and 500,000 euros and 4% at more than 500,000 euros.

A 41% income tax band already kicks in at earning £70,830 euros a year.

Other changes involve inheritance tax – with Hollande ready to slash the allowance to children to €100,000, making an extra €60,000 per child taxable on a parent’s death.

Sarkozy chooses to act as an international statesman and talks about his reputation, but his star has waned with the French public even though the nation suffered less at the hands of post-recession austerity than many.

As a result, Sarkozy is widely tipped to lose power in the election – perhaps heavily.

His cause was not helped by his predecessor right-wing Jacques Chirac publicly backing Hollande – despite their political beliefs seemingly lying poles apart and his wife Bernadette campaigning for Sarkozy.

The Euro has slipped against the US dollar against rumours that the European Central Bank (ECB) may have to kick start government bond purchases as stresses over sovereign debt intensify.

The Pound is hovering around a three-month high against the Euro, and trading may see the euro fall in value to 80p or less.

The ECB revealed funding to Spanish banks surged in March – average net borrowing climbed by 75 billion euros to 227.6 billion euros from 152.4 billion euros in February.

The fear is the Eurozone may have slapped a lid on the region’s economic problems, but the underlying issues are still bubbling away.

Meanwhile, a general strike in Portugal that has brought the country to a standstill threatens to take a firmer grip as the nation protests against austerity measures.

The airports closed, trains and buses stopped running and demonstrators took to the streets as the 600,000-strong General Confederation of Portuguese Workers (CGTP) downed tools for 24-hours.

A strike is planned every Thursday for next few weeks.

The ECB indicated Eurozone inflation will stick around 2% in the coming months, leaving no real opportunity to drop interest rates.

The remaining tool is quantitive easing, which offers banks cash for bonds, and effectively has the same result as dropping interest rates.

For ex pats living in the Eurozone relying on funds from abroad, currency exchange rate fluctuation and inflation is eating in to fixed incomes with no respite on the horizon.

“This is a continuation of a theme we’ve seen since the middle of last year as wealth holders and managers of money with exposure to the euro zone have been putting their money to work in other currencies, including the pound,” said Michael Derks, currency strategist at FXPro.

“This is ongoing and should pull the euro down towards the 80 level,” he said, adding there have also been “some encouraging signs on the UK economy.”

The latest research shows the old favourites of US, Australia and the UK still head the list of favourite destinations, but some new countries are moving up the list.

The outsider that has entered the list for the first time is Africa, as China and other leading industrial nations invest in commodities and infrastructure, according to research by global recruitment firm Hydrogen.

Finding work overseas is tougher for ex pats due to the downturn and companies holding back on recruitment, but although jobs are hard to find, plenty are still available.

The data also revealed many ex pats are not truly global workers but prefer to stay within their home nation’s sphere of influence.

For instance, French ex pats opt for Brazil as a first choice destination, reflecting the country’s 350 companies and 25,000 French nationals already there.

Singapore is another example, as ex pats like to ship to Hong Kong, China and Australia, falling in with the trend of Asian ex pats staying closer to home.

Hydrogen’s client services director Dan Church believes the most significant impact of global economic problems has been that migration is spread across a wider number of countries than ever before.

“People now need to go where the revenue is,” he said. “Five years ago this might have been New York, London and Hong Kong; now it is also Shanghai, Houston, Vietnam and so on.

“While the latest research found the three most popular places for expats to live and work remained the US, the UK and Australia, their dominance is waning. Last year 18% chose the US as their number one destination; this year it was 13%, a 27% fall in only 12 months.”

The UK and Australia also dropped back in popularity with falls of one and two percentage points respectively.

The aim is to bring offshore pensions that include tax-relieved contributions from the UK in to line with onshore pensions to remove any tax advantages for non-residents.

The Finance Act 2011 stripped away restrictions on lump sum and drawdown payments along with the obligation to buy an annuity.

A key change was new legislation that gives an option for flexible drawdown of unlimited sums from their pension fund – providing they can prove they have a secured personal pension income of £20,000.

This figure is set to stop anyone with a pension from drawing and spending all their retirement savings and then claiming state benefits.

These rules applied to UK pension schemes, but not registered overseas schemes like QROPS.

This changes when the Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) (Amendment) Regulations 2012 come in to force.

The regulations change tax rules for offshore pensions to make sure funds that have benefitted from tax relief in the UK meet European Union laws.

The overall result is payments from a QROPS or other offshore pension picks up similar tax treatment to any onshore UK scheme.

The new rules are backdated until April 6, 2011, so apply to the tax year that ended on April 5, 2012.

HMRC reckons the change does not affect any individual’s tax liability.

The changes are in line with other recent QROPS rule changes aimed at aligning the tax benefits of offshore pensions that have received tax relieved contributions from a UK fund.

Chancellor George Osborne stated in Budget 2012 that he would enact retrospective anti-avoidance rules to plug loopholes exploited by retirement savers trying to avoid tax with offshore pensions.

Contact one of our expert QROPS advisers today to find out more information

Many ex pats wrongly believe waving their European Healthcare Insurance Card (EHIC) at doctors ensures free medical treatment.

The Foreign & Commonwealth Office is warning ex pats that the EHIC comes with a list of restrictions.

The EHIC entitles Brits in Europe to free or reduced cost state healthcare, and some insurance companies may reduce or waive their excess costs for cardholders, depending on the terms of their insurance policy.

An EHIC card does not always offer free cover or pay out the full costs of medical treatment in Europe, nor is the cost of medical repatriation included.

The EHIC is valid in the European Economic Area (EEA) – all 27 members of the European Union plus Iceland, Liechtenstein and Norway. The EEA also has a special arrangement with Switzerland which allows an EHIC issued in any EEA member state t access healthcare there.

FCO spokesman Lynda St Cooke said: “It is worrying that so many British EHIC holders are not aware of what the card entitles them to. If you are travelling in Europe, you should definitely take your EHIC. It is also important to take out comprehensive travel insurance before you travel.”

The EHIC does not replace comprehensive medical insurance for ex pats – but EEA residents may find a claim against this cover may be rejected if they don’t have an EHIC.

Travel insurance is also limited and is not sufficient to cover an ex pat’s healthcare needs.

The FCO is also warning ex pats not to fall for EHIC scams, which involve companies charging fees for arranging the card. UK residents can obtain a free card from the NHS web site

Ex pats no longer qualify for NHS treatment under normal rules, unless they receive a state pension or some benefits, so have to apply for an EHIC in their EEA country of residence.

The government wants to offer entrepreneurs a ‘start-up visa’ to attract ex pats with the skills to set up companies the can succeed globally while offering jobs for Canadians.

The program will have a 2,750 a year immigrant cap and run for five years – allowing a potential 13,750 ex pats in to the country.

“Our government is committed to strengthening the immigration system to make it truly proactive, targeted, fast and efficient in a way that will sustain Canada’s economic growth and deliver prosperity for the future,” said Immigration and Multiculturalism Minister Jason Kenney.

“Canada cannot afford to lose out in the competition for foreign entrepreneurs among immigrant-receiving countries. We need to proactively target a new type of immigrant entrepreneur who has the potential to build innovative companies that can compete on a global scale and create jobs for Canadians.”

Meanwhile, government research in New Zealand has revealed 94% of skilled ex pats moving to the country are in work three years after migrating, and earning on average NZ$30 an hour.

“Migrants with higher qualifications are rewarded with significantly higher earnings, suggesting they’ve managed to successfully use their skills in their jobs in New Zealand. For instance, those with a degree earned a third more than the few skilled migrants with no post school qualification,’ said Vasantha Krishnan, Department of Labour head of research.

“Skilled migrants who were awarded points for a job offer were also found to earn at least as much as skilled migrants who were already working in New Zealand when they applied for residence. Despite not having New Zealand experience, migrants with a job offer were able to quickly and successfully settle in to work in New Zealand.”

The Isle of Man was the third biggest loser in the QROPS tax shake-up – losing 16 schemes but retaining 173.

In comparison, Guernsey had to close 300 QROPS leaving just three open and New Zealand lost 41, leaving 23 trading.

All the Isle of Man’s 50c schemes were removed from HM Revenue & Custom’s QROPS list as they failed to meet the new qualifying rules.

Association of Pension Scheme Providers (APSP) chair Stuart Clifford explained providers were disappointed but relieved.

“There was some disappointment at the apparent curtailment of a development opportunity but few, if any, of our members are reliant on international QROPS for a living,” said Clifford.

“Schemes written under our 1989 Act are still all there on the HMRC list and we have one of the best regulated pension environments in the world, as has long been the case. Our industry has always been about international pensions of which QROPS is a strand. We carry on pretty much as before.”

Clifford disclosed that providers and lawmakers assumed the 50C schemes would fail to meet stringent HMRC qualifying conditions as soon as the UK government released the draft rules for consultation in December.

“They were never going to pass the proposed new HMRC Benefits Exemption test. The question was always whether or not we should make changes to 50C to make it compliant,” he said.

IoM QROPS providers and the government decided to delay action, unlike Guernsey which quickly passed laws aimed at bypassing the new QROPS rules before April 6, when they came in to force.

“The happy outcome is that our member’s businesses do not appear to have been unduly disrupted and our pensions industry will continue to go from strength to strength,” he said.

The government let rich foreigners pay for their residency by tying up £5 million in the country for at least five years – with up to £1 million set aside for buying a home.

Locals fearing a huge inrush of ex pats have forced the government to back-track on the policy.

Protestors claimed a sudden surge in the number of rich foreigners would throw the economy out of balance by contributing to rising house prices and disrupting their standard of living by adding to calls on the health service and schools.

To curb the number of ex pats buying homes, the government slapped a 10% increase on stamp duty by foreign purchasers.

Singapore is regularly rated as one of the best places to live for ex pats in surveys by recruitment and benefits firms.

The government had already doubled the financial qualification to the Financial Investor Scheme (FIS) from £2.5 million in 2010 to put a brake on the number of ex pats moving in.

Wealthy ex pats still have a quick route to residency even though the FIS will disappear, but they may have to act quickly.

The Global Investment Program (GIP) lets entrepreneurs bank roll Singapore businesses with a turnover of at least £15 million by pumping in at least £1.25 million in cash.

The government is rumoured to about to announce changes in the GIP within a few days as well.

Singapore has a population of 5 million – and 20% or one in five were born elsewhere, while the number of millionaires per capita is higher than any other country, according to the Boston Consulting Group.

The latest well-known bank to pull the plug on offshore customers is AIB International.

Branches in Jersey and the Isle of Man will shut by the end of 2013.

Despite a recent letter to customers from AIB International chief David MacGregor promising better service and improved savings plans, CEO Joe Moynihan announced the U-turn with a statement.

“Ongoing uncertainty in financial markets has had implications for the business and created difficulties that challenge the viability of the offshore business model for AIB. The decision was taken after lengthy and due consideration. The orderly winding down of the business has started,” he said.

The decision comes just weeks after AIB International was voted the best offshore bank.

The move affects around 20,000 ex pat customers and around 165 jobs are likely to go.

Spokesman Niamh Hennessy said: ‘Every customer will get a letter. Included in that will be communication of the contractual obligation and terms and conditions of any account.

‘What we will be doing is facilitating people with banking services until they have found alternative arrangements. No new business will be taken on by the Isle of Man or Jersey operations.’

Other consolidation in the sector has led to HSBC announce the sale of branches in Pakistan and South Korea.

A South Korean wealth management business for wealthy nationals and ex pats is also for sale – the combined assets in Korea are worth around £16.5 billion.

The Pakistan sale is expected to raise around £350 million.

Also under threat are branches in New Zealand, Sri Lanka and Bangladesh as HSBC concentrates on the US, Europe and China.

Those in Mauritius, Slovakia, the Middle East. Japan and Thailand have already gone.

HSBC has divested offshore banking in 23 countries since implementing a global cost-cutting plan that has seen 11,000 jobs go.

The UK government has plugged a tax loophole that let expats take 5% or more of the value of the bond as cash each year without paying capital gains tax.

If the expat returned to the UK, the partial withdrawal could then count as a tax set-off against other chargeable gains, like the sale of shares or investment property, even though no tax had been paid on the original transaction.

Now, expats can still make the partial withdrawal, but the resulting transaction cannot be set off against other capital gains when the ex pat returns to the UK.

The move is part of tax anti-avoidance laws to stop ex pats and non-residents benefitting from tax advantages while overseas.

Scrapping the relief stops UK tax payers from declaring themselves as temporary non-residents to gain unfair tax advantages over investors who remain in the UK.

The long-awaited but much delayed statutory residence test is expected to make temporary exits from the UK for tax purposes harder. The legislation was intended to start from April 6, but is now pencilled in to begin from April 6, 2013.

The rules are intended to clarify the difference between an expat who is temporarily living outside the UK but still resident and non-residents.

The proposals in Budget 2012 for GAAR – the general anti avoidance rule – for tax is also expected to tie in with the statutory residence test.

Julie Hutchison, head of international technical insight at Standard Life, said: “All these measures are targeted at individuals escaping to low tax jurisdictions but will also catch many others who have become non-UK resident with no thought of avoiding tax.

“These individuals will need to consider the tax consequences in the country they are moving to. It highlights the need for those expecting to become non-UK resident to seek advice on their investments before leaving the UK.”

Investors collect enhanced tax incentives from sinking their money in to VCTs – like 30% income tax relief, tax-free dividends and CGT exemptions when disposing of shares.

The government is also encouraging more investment with a ‘lite’ scheme – the seed enterprise investment scheme (SEIS) – and by proposing to raise caps on funding limits.

Despite the cash input registering as the sixth highest since VCTs started in 1995, the total is £35 million down on the previous tax year and the lowest raised since 2009’s miserly £158 million.

Ian Sayers, AIC director general said: “This is the third year in a row that the VCT sector has surpassed the £300 million mark, reflecting a strong demand from investors. Capital raised by the VCT sector is filling an important funding gap for UK smaller companies, and supporting UK enterprise.”

Government cuts in subsidies to the solar energy industry are cited as partly responsible for the fall back in investment in the last tax year.

The move led to several firms cancelling or delaying forays in to the market, with a subsequent hold on promised investment.

Although last year’s VCT investment sounds disappointing, the current trend over the past three years is for average annual inputs of £346 million. Before the trend, investment hit peaks and troughs – ranging from £50 million in 2003 to £779 million in 2005.

SEIS schemes started on April 6 and offer among the best UK tax reliefs for wealthy investors, with tax reductions and reliefs of up to 78% for a maximum annual investment of £100,000 in the tax year.

As ex pats know, a decent salary and low tax is a real incentive to moving overseas, but other financial issues need careful consideration as well – like day to day living costs, inflation and healthcare charges.

To help out, insurance firm Staveley Head has set up a petrol price comparison chart for fuel costs in the USA, UK and Europe.

The shock result is the UK is not the most expensive place to fill a tank, despite the cost of filling the average family car adding up to around £70.

The data helpfully compares fuel tax per litre – with UK motorists contributing 59p to the Treasury’s coffers for every litre they buy or roughly 40% of the price per litre, plus another 20% for VAT.

So here’s the run down of the cheapest places for ex pats to fill up their tanks:

• Caracas, Venezuela – 2p per litre
• Riyadh, Saudi Arabia – 8p per litre — 20% of the world’s oil reserves
• Tripoli, Libya – 9p per litre —
• Ashgabat, Turkmenistan – First 120 litres a month free then 12p per litre
• Manama, Bahrain – 13p per litre
• Kuwait City, Kuwait- 14p per litre
• Doha, Qatar- 15p per litre
• Cairo, Egypt- 19p per litre
• Muscat, Oman – 20p per litre
• Algiers, Algeria – 20p per litre
• The most expensive fuel in the world is in Oslo, Norway – £1.64 per litre
• London is the third most expensive at £1.35 per litre

The reason why some countries are cheaper or more expensive simply comes down to the way the government taxes fuel.

All the cheapest countries are oil producing nations with government subsidies, while all the most expensive nations are taxed more.

Delisting a QROPS leaves someone saving for retirement in limbo – so here is some information about QROPS that are no longer open for business:

Why was my QROPS delisted?

Because HMRC changed the qualifying rules for a QROPS – short for qualifying recognised offshore pension scheme – that meant the scheme no longer meets the criteria.

If the scheme qualified prior to April 6, 2012, the QROPS is still a pension in the country or territory where it is based, but stops being a QROPS.

Will delisting affect my QROPS pension fund?

HMRC have stated that any pre-April 6 2012 QROPS will continue as usual without any changes or penalties, so your investment should be safe. However, some providers may have clauses in their contracts that change charges and investment returns in the event of delisting, so check out your QROPS contract.

Should I switch my QROPS?

Don’t jump in and transfer your QROPS pension fund without conducting a review. Some QROPS schemes have expensive exit fees that could make transferring out more expensive than its worth. It is likely that a switch will be needed, so contact us today. As the leading QROPS advisory firm, we have access to the latest QROPS schemes that other advisory firms do not.

Can I still transfer a UK pension in to a delisted QROPS?

No. A delisted QROPS is not a qualifying scheme, so any transfer in is considered an unauthorised withdrawal from the originating UK pension scheme, attracting a tax penalty of 55% of the value of the transferred fund.

Does the 10 year reporting rule apply to a delisted QROPS?

No. A pre-April 6 2012 is not a QROPS so the new rules do not apply. However, the five-year reporting rule requiring the fund administrator to report any withdrawals or payments to HMRC does still apply.

Should I still transfer a UK pension fund in to a QROPS?

This depends on your personal financial circumstances. If you already have a QROPS, you may end up with two pensions – a pre and post April 6, 2012 QROPS. Speak to one of our advisers as soon as possible to find out how we can help you. The rules are complex and proffesional QROPS advice is required.

The island’s tax authority and financial firms face a stern test over the next few months tackling attacks against the way they do business with non-residents investors and companies.

Big earners for the island have been decimated in recent weeks.

The latest issue is the 0/10 corporation tax regime aimed at attracting companies to headquarter on the island.

The European Union code of conduct group on business taxation has classed part of the scheme as ‘harmful’.

Under Guernsey’s zero-ten regime, all companies are taxed at 0%, except for the profits of specified banking activities which are taxed at 10%.

The UK government has also pulled the plug on other tax avoidance schemes in recent weeks:

• Banned – Low Value Consignment Relief (LVRC) offered companies exporting goods valued at under £15 from outside the EU to the UK, like CDs and books. HMV and Amazon both had large operations on Guernsey.
• Banned – QROPS offshore pensions offering tax perks to non-residents. Around 300 pensions for ex pats and international workers living off-island were closed for new business overnight

Guernsey’s outgoing treasury minister Charles Parkinson has already warned the island must change its image as a tax haven with the rest of the world.

The issue for ex pats and international works is whether Guernsey is a good place to keep money.

The perception of foreign tax authority’s and governments is Guernsey exploits tax loopholes to gain make profits from business.

In the current economic and political climate, that attitude presents a short-termist business strategy that does not sit well with investors and savers looking for a long-term home for their money.

QROPS investors are looking further afield for better deals.

HM Revenue & Customs has made clear tax abuse will not be tolerated and investors ploughing cash in to these schemes will face tough penalties.

Malta and Cyprus are cited as two possible winners from Guernsey woes, however Cyprus is tainted with sovereign debt issues that may yet drag the economy down.

Malta offers a better offshore pensions solution as a full EU member with a more robust economy and sterner financial regulation.

Owning an island is not as hard as many believe – specialist estate agents deal in islands and a surprising number are for sale across the world.

Islands come with their own sun, sea and sand – and a busy local wildlife.

Like buying a home, islands come in all shapes and sizes with location factoring high in determining the price.

For US$30,000, Isla Gatun is a 3,000 square metre man-made island in one of the country’s largest lakes – advertised with cellphone coverage and electricity only 100 metres away. The island is advertised as perfect for a house, pier and boast dock.

If you can afford $1 million, larger islands in Canada, Florida and Australia are available – some already developed with homes and air strips.

Hick’s House Island on the Great barrier reef is in a stunning location on one of the world’s most beautiful natural wonders.

$1 million buys a one acre home 600 kilometres north of Cairns, Queensland. Supplies are ferried in by a weekly mail plane.

If money is truly no object, then the 643-acre Greek island of Patroklos, complete with 5,000 olive trees and 150 goats. Around 275 acres are under cultivation – the rest is rocky outcrops and wonderful beaches.

Far enough from civilisation to offer peace and solitude, but close enough to have mains water and power, Patroklos is 30 minutes from Athens airport.

If the Caribbean seems more stylish, then Ronde is a 2,000 acre tropical playground.

The development potential is estimated at a $1 billion to entice a mega-rich developer.

Ronde Island is carpetted in tropical jungle and the estate agents claim: “Dramatic underwater topography includes breathtaking drop-offs over ‘bottomless’ vertical walls, coral-encrusted canyons – and even a swim-through cave which opens to an underground cavern decorated with stalactites and quartz crystals.”

A snip at $100 million – and interested buyers have to show they have at least $25 million in cash to book a viewing.

Shares in OIB had risen to a 15 week high on news of the merger, but fell back when the details of the deal were announced.

HSBC’s Omani business will take a 51% stake in the new bank – called HSBC Bank Oman SOAG.

OIB is the state’s fifth largest bank, with assets of assets of £2 billion and the nation’s second largest branch network.

The move is seen as part of HSBC’s global consolidation plan to enhance retail businesses in growth areas while ditching branches and jobs in other areas.

Earlier in the week, HSBC announced the closure of branches in Pakistan and South Korea.

Offshore banking has come under stress since the US and European nations tightened up tax avoidance controls and pressured offshore havens in to releasing information about non-resident account holders.

After a series of double taxation treaties and stand-offs, traditional secret banks in centres like Switzerland, Liechtenstein, Guernsey and the Cayman Islands are ‘co-operating’ with tax authorities.

The blitz against ex pat banks has led to many to reconsider their business strategies, with the result many are closing.

The problem for ex pats and the banks is governments and tax authorities see the main reason for offshore banking is tax evasion and avoidance.

On the other hand, ex pats view them as convenient and accessible places to keep their money.

While many banks are considering closure, some are expending to service wealthy ex pat clients. Lloyds TSB International is one UK bank expressing a keen interest to develop offshore facilities.

However, AIB International, the Irish bank, has announced offshore branches in Guernsey and the Isle of Man would close next year with the loss of around 200 jobs.

In a candid and sensational speech to the Channel Island’s chamber of commerce, Treasury and Resources minister Charles Parkinson urged the businesses and the government to reposition the economy.

Parkinson, who retires at the end of the month, said Guernsey had a reputation as an offshore tax haven and the newly-elected States – the island’s parliament – should promote more traditional industries, like tourism.

He blamed the island’s financial culture for a series of tax broadsides launched by the UK government that are devastating the island’s jobs market and economy.

The latest was pulling the plug on the multi-billion pound QROPS offshore pensions industry that has seen a thriving market of more than 300 QROPS reduced to just three as the UK government introduced new tax rules on April 6.

Earlier this year, the UK government legislated against a VAT loophole exploited by UK traders like Amazon and HMV, who set up massive warehouses to supply mail order gadgets and goods at cheap prices.

Guernsey has also come under fire for offshore bond taxation.

“I’m afraid we will have to expect this to continue, at least for as long as we are seen to be a tax haven or, as George Osborne put it in his budget, facilitating ‘aggressive tax avoidance’. We urgently need to reposition ourselves as a different type of economy,” Parkinson told his audience.

Guernsey has a pro-active financial media relations policy, with regular delegations to other countries to explain the tax benefits of business on the island.

Although the island promotes the economy as a safe, reliable and well-regulated financial centre, many see the States and financial firms who manipulate tax loopholes for profit.

The recent QROPS debacle that saw Guernsey reinvent offshore pensions to try to take a marketing position at the forefront of the UK government’s new QROPs regime is seen as a typical example of how the island works.

Around one in five (19%) are ready to book tickets to a new life as an ex pat – and many are key workers and entrepreneurs with £250,000 or more in savings who can afford to start a new life.

While Chancellor George Osborne tries to buff up the nation’s reputation as a safe financial haven for ex pats looking to move to Britain, he is also fighting a rearguard action to try to keep those who plan to leave.

The research by bank Lloyds TSB International reveals just about anywhere else is considered better than staying in Britain, with favourite destinations like France, Spain, the US, Australia, New Zealand and Canada beckoning a welcome.

“A significant and growing minority see opportunity and a better quality of life overseas,” said the bank’s wealth director Nicholas Boys Smith.

“Our research suggests the number of wealthy people leaving the UK is set to increase in the next two years. Clearly there’s a growing minority that is worried about the outlook; infrastructure, crime, antisocial behavior, tax, red tape and do believe that there are better options abroad.

“What’s interesting is one of the highest proportions of people looking to leave are wealthy people living in London, and the highest proportion of wealthy people looking to leave are aged 25-34.

“It is people who are out there with a career in front of them, looking to go out and make money, do things and make their own impact in the world, not just people retiring to France or Spain for a place in the sun.”

About 500,000 people have more than £250,000 in savings or investments other than property.

More than 60% said better infrastructure would make the UK a better place to live, while around half demand less red tape for businesses and lower taxes.

Jersey QROPS are long-established – but are only open to residents, which lets them fully comply with UK QROPS laws.

Around 138 different schemes run on the island.

Just last week, Jersey QROPS providers went public with plans to launch offshore pensions for non-residents with new tax laws for the scheme to go before the island’s parliament within a few weeks.

Less than a week later, the pension blueprint has been moved to the back burner pending talks with HM Revenue & Customs, who police tax abuse in the QROPS marketplace.

“Our position is that we don’t fully understand HMRC’s position, so we haven’t made a decision either way yet,” said Wendy Martin, Jersey’s director of tax policy.

“The legislation recently lodged was for an international pension scheme. While it was assumed that initially transfers would come from the UK, it is intended for wider use. As a result, the recent announcement by HMRC does not necessarily mean this law will not be implemented.

“We are going to meet with HMRC, and have been in contact with them already, to talk about it and to see what their problems are, and whether it’s something we can resolve.”

A few days ago, HMRC told the Guernsey tax authority that new laws for pensions claiming to meet the QROPS rules amended on April 6 were unacceptable – and emergency legislation to ban them would go ahead if providers did not withdraw the schemes.

The result was 302 of Guernsey’s 305 QROPS closed for new business. At this time, it’s not known if they will reopen.

Ex pats and international workers with UK pension rights looking for offshore pensions still have plenty of choice in the QROPS market. Long-term favourite Isle of Man QROPS have escaped the HMRC cull relatively unscathed with 173 of 189 schemes still open.

Newcomer Malta QROPS is tipped by many as a safe haven for UK pension funds as the island is a full-member of the European Union, strict financial regulation and tax treaty ties with many countries.

The biggest impact is on Guernsey – where the number of QROPS open for transfers in from UK pension funds has plunged from 305 in March to just three in the latest list of schemes open for business published by HM Revenue & Customs.

Meanwhile, 41 New Zealand QROPS have pulled the plug, bringing the number down to 23 from 64, and the Isle of Man has lost 16 QROPS, leaving 173 open.

Malta closed one QROPS, leaving the total at 10 offshore pension schemes, Cyprus (4) and Hong Kong (25) held steady.

Guernsey QROPS providers were forced to put up the shutters at short notice after a warning from HMRC that new 157e schemes designed to meet the laws failed to pass the test of qualifying as a recognised overseas pension scheme.

The Channel Island’s tax authority issued a lengthy statement claiming the UK government planned to bring in emergency legislation to ban the schemes.

“HMRC’s list of approved QROPS will only include a Guernsey scheme if HMRC is satisfied that the scheme is for residents-only,” said a Guernsey government spokesman.

“HMRC indicates that it will seek to revise its regulations further to disqualify 157E schemes from QROPS listings.”

The new rules are part of a global clamp down on QROPS pension tax abuse by the UK government.

New Zealand was the only country specifically mentioned in legislation as banned from running QROPS unless they met strict tax rules.

HMRC has confirmed that QROPS investors with schemes that fail to meet the new tax rules will not suffer any financial penalties as a result of their closure to new business.

To clear up the confusion, QROPS.net asked HM Revenue & Customs why some QROPS providers were having to close to new business.

Here’s an explanation that tells any ex pat retirement saver what they need to know about third party QROPS pensions.

What is a third party QROPS?

A third party QROPS is simply a pension based in one country while the pension member lives in another country.

Typically, an ex pat could live in Spain and have a QROPS pension in Guernsey.

Why do some people say third party QROPS are banned?

It’s a misunderstanding. Although HM Revenue & Customs is policing tougher QROPS tax laws, third party QROPS have not been banned.

Some third party QROPS pensions in Guernsey have been warned they do not pass HMRC’s ‘benefit tax relief test’ and as such, cannot be sold as QROPS pensions. Other jurisdictions are voluntarily withdrawing some QROPS over qualification doubts as well.

What is the benefits tax relief test?

The latest HMRC QROPS guidance has an extensive explanation of the benefit tax relief test.

The aim is to equalise tax benefits for residents and non-residents paid from a QROPS.

The test calls for:

• Tax relief to be available to pension members in the country where the QROPS is based

And

• Must apply regardless of the country where the pension member lived when joining the QROPS or at any time they were a member of the QROPS

If a country’s tax regime does not meet these conditions, then pensions based there cannot become a QROPS.

HMRC gives an example:

Country X does not tax benefits paid out of a scheme established in Country X if they are paid to a non-resident.

Residents can claim exemption from tax on such benefits provided they did not contribute to the scheme in any period in which they were resident in Country X.

As the exemption in relation to residents is qualified, the benefits tax relief test cannot be met. The scheme cannot be a QROPS.

What does HMRC say?

“It is still possible for an individual who is a member of a QROPS to be resident in a different country to the one in which the QROPS is established but the benefits tax relief test must be met. How the benefits tax relief test will apply in practice will depend on the tax rules in the country in question,” said an HMRC spokesman.

“QROPS are intended to be the equivalent of UK registered pension schemes, the normal tax-favoured pension schemes established in other countries. It was never intended that those transferring their UK pension savings should gain tax advantages that were not available in the UK.

“From April 6, 2012 one of the conditions a pension scheme must meet to be a QROPS is that if there is a tax relief for non-residents on benefits paid from a pension scheme then the same, or substantially the same, tax relief must be available to residents. This is known as the benefits tax relief test.

“A pension scheme that can have only residents as members will meet the benefits tax relief test. Pension schemes will need to meet the new conditions to be a QROPS.”

Help and Advice

Here at QROPS.net we offer you the most up to date advice available. It is important to be aware of the latest rules and regulations, and we are at the forefront of these developments. If you are looking at transferring your pension, or have already done so, please contact us via the contact form here and one of our advisers will contact you as a priority.

HM Revenue & Customs has outlawed Guernsey’s 157e QROPS just 96 hours after new expat pension rules came in to force at a minute past midnight on April 6.

HMRC has reportedly told Guernsey that only resident-only pensions will be recognised as QROPS when the new list of schemes and providers is published on April 12.

The action indicates a clear policy from the UK government against QROPS schemes that break pension rules.

The issue is ‘third party’ QROPS, where the pension investor lives in one country but the QROPS pension is set up and administered in another.

Until the 157e laws came in to affect, offshore financial centres like Guernsey would charge residents one rate of income tax on pension payments and non-residents a different rate – generally 0%.

Guernsey QROPS close for Non Residents

The UK government legislated to stop this ‘abuse’ and Guernsey brought in the 157e rules to run a two-tier pension system.

Although 157e pensions are equally open to residents and non-residents, one set of pensions gives residents tax relief on contributions, while the other meets QROPS rules and does not offer pension relief to non-residents.

HMRC has yet to issue any statement and has a policy of not commenting on QROPS providers or the country where they are based.

However, the UK view seems to be that this is not a satisfactory solution and that QROPS should be open to residents only and not non-residents.

Guernsey Treasury and Resources Minister Deputy Charles Parkinson said: “We have asked HMRC to come back to us with detailed information about their position on 157e schemes. When we have that we will communicate it with our pensions industry immediately.

“While we are disappointed that the UK has taken this action, we are relieved that pension schemes which have already been established in Guernsey will be largely unaffected, except in respect of any further transfers of assets from UK pension funds into those schemes.

“We are working to ensure that future transfers into schemes established for the benefit of Guernsey residents will not be affected by the change in the UK’s stance.”

Contact us now for a free review of your current QROPS

There is a wide spectrum of financial scams out there. At one end of the scale are the emails that appear in your inbox, asking for an administration fee to help release the sender fortune which is trapped in a bank account in a far off land. But at the other end of the spectrum, normal investors lose up to half a billion pounds a year in the UK alone to credible fraudsters.

A growing type of fraud is the boiler room scam. Fraudsters organise call centres where operatives join together to sell bogus shares schemes. To the uninitiated, they appear professional and weave a credible tale about the investment prospects of unknown companies. So what can you do to protect yourself against such fraud?

The first step is to use a regulated adviser, who should know better than to be drawn in to a fraudulent investment. But there is also no substitute for proper due diligence on the part of the investor. Investors can check accounts and returns at Companies House, and read business plans. For small private limited companies, you can also meet and question the officers of a company. Any director who is seeking investment should be enthusiastic enough about the venture to be able to tell you anything you need to know.

Another type of fraud is a Ponzi scheme. Named after a famous fraudster from the 1920s, scammers promise unachievably high returns on investments, and use the capital sums of later entrants into the schemes to pay “dividends” to the first investors. The schemes cannot last forever and of course the waterfall effect must eventually slow down, so that the last people to join may end up losing their money.

The common theme that runs through boiler room scams and Ponzi schemes is that if it appears to be too good to be true, then it probably is!

George Osborne assumed in his recent Budget that the global economy, including the Eurozone, is on the road to gradual recovery. So are we nearly there yet?

The stories coming out of Greece have attracted much press attention, as pictures of middle class unemployed professionals queuing up in soup kitchens have highlighted the plight of ordinary people affected by the deep austerity measures.

With public sector job cuts and pay reductions, the austerity measures have been forced on a reluctant population as conditions of a mega bailout from the ECB and the IMF. Both bodies needed to see evidence that the country was taking some positive steps to get its finances under control before they put their hands in their pockets. Private investors must have also insisted on significant conditions to agree to the “haircuts” which reduced the debts owed to them.

But what have these cuts done to the long term prospects of the troubled nation? The continuing readiness of the healthier Eurozone countries to prop up Greece show that it would have been unthinkable to allow the country to default on its debt repayments.

The unions in Greece have indicated that they would have rather watched the defaults than suffer the consequences of the austerity measures. The country’s leaders found it particularly difficult to sign up to the measures given that there are elections in the coming months.

But perhaps the most frustrating thing for those looking on is that the cuts have only prevented default: they have so far not encouraged growth. The same story is repeated in Ireland, Spain and to a lesser extent Italy. All of this means that patience among the peoples of those countries, and the organisations who bailed them out, is wearing thin.

Crowdcube is promoting a new web site where start-up businesses seeking small amounts of funding can pitch to armchair dragons.

The idea is small start-ups can raise seed capital from a large number of investors.

Some companies will accept investments for as little as £10 in return for a thank you note – while others offer shares and perks for help with reaching larger targets.

Few of these companies could attract serious business entrepreneurs as investment levels and returns would fail to meet their investment strategies.

Eight companies benefitted from a combined £2.2 million investment in the past year, although 40 other companies have failed to reach their funding targets.

Out of that total, Crowdcube picked up £300,000 from 162 investors.

“The UK could be the first in the world to reform regulation and provide the right kind of regulation which will allow the world leading innovative businesses we have in the UK to flourish,” said Crowdcube managing director Darren Westlake.

The firm has already sat down at round-table talks with ministers and civil servants at 10 Downing Street to discuss investment incentives like the new Seed Enterprise Investment Scheme (SEIS).

“There will be a big push to promote this initiative and increase awareness of it and we’ll be helping to do that. It fits incredibly well with Crowdfunding and I’m sure will encourage less experienced investors to start to participate in investments in startups and growth businesses,” said Westlake.

The SEIS scheme starts from April 6 and offers start-up business investors tax breaks of up to 78% on investing a maximum £100,000 in a company during the next tax year.

Top targets are anyone failing to make tax returns – followed by selected professions who work across borders and those with undeclared income from investments in offshore tax havens.

The strategy at raising more tax from those who are already on HMRC’s radar rather than chasing those who are off the system.

HMRC is threatening to unleash a host of technology traps for anyone letting property or doing business on line.

Property investors letting in the UK as non-resident landlords and UK landlords with holiday lets overseas are prime candidates for attention as their homes are advertised on specialist web sites.

Also on the hit-list are self-employed consultants and professionals working in the UK and overseas who have more complicated financial affairs.

Marian Wilson, of HMRC’s Risk and Intelligence, said: “Most people pay their taxes in full and on time, so it is right that HMRC works hard to secure payment from those who have not come forward.

“Using new technology, we have been able to analyze returns to HMRC covering a range of taxes and to cross-reference these with other information to build a picture of where we believe we have taxpayers with missing returns

“We will use the same technology to analyse information gathered to support the following two campaigns and for each campaign, after the opportunity has closed, we will use the information we have to pursue those who choose not to use the chances we provide to put their affairs in order.

“We are offering all the people targeted the opportunity to come forward. Penalties will be higher if we come and find people after the opportunity. A criminal investigation may also result. I therefore urge them to disclose unpaid tax voluntarily.”

HMRC estimated £650 million in tax has already been raised from similar campaigns plus around £3 billion from tax cheats in Switzerland and Liechtenstein.

Ministers are talking about cutting relief on contributions for 50% taxpayers and restricting the current £50,000 annual allowance.

The change would cost a top rate taxpayer at least £25,000 in potential relief .

HM Revenue and Customs reckons 70,000 top rate taxpayers have already applied for fixed protection – which effectively removes them from pension saving as cannot make any further contributions from the start of the next financial year.

High net worth retirement savers have until April 5, 2012, to apply for fixed protection, which secures a lifetime allowance of £1.8 million.

The strategy for many is to maximise contributions now by fully investing this year’s allowance, along with any unused allowances from the three previous years.

An extra incentive is pulling back next year’s allowance by manipulating pension input periods.

This could add up to a one-time contribution of £250,000 attracting 50% relief – providing the contribution does not exceed total gross relevant earnings.

Due to the flood of fixed protection applications, it’s a good idea to send instructions by recorded delivery to confirm pre-deadline delivery as HMRC is notorious for ‘losing’ time sensitive paperwork.

The risk is losing a potential £165,000 fixed protection benefit, calculated as £1.8 million – £1.5 million lifetime allowances, which equals £300,000 x 55% tax charge.

Pension expert Adrian Walker, of Skandia, said: “It is interesting the high numbers who have already applied for fixed protection, as it is still early February. We normally expect to see a spike in these sorts of applications as tax year end approaches. The latest rumours surrounding the allowances are bound to have an affect and change people’s behaviour.

“People are urged to act now, as the new reduced pension allowances could come into force from Budget Day on March 21, not tax year end on April 5. If people have built up large sums of money, then applying for fixed protection will offer further tax advantages on their existing savings.”

HM Revenue & Customs has tightened the rules for providers but pension investors will see little difference.

Most of the changes are behind the scenes and make designing QROPS schemes meeting HMRC approval harder.

As a result, some offshore centres may stop offering QROPS – New Zealand was specifically named in the new UK laws as one country where QROPS cannot be sold except under special circumstances.

Expats with a QROPS may find their provider closes for new business – and the best way forward is to review the pension to see if a better deal is available elsewhere.

If they stay put with their current QROPS, HMRC has promised not to impose any penalties if the pension no longer meets rules to trade as a QROPS. However this will require further financial planning to be completely sound.

The most noticeable difference for ex pats setting up a QROPS after April 6 will be choice – most pensions will offer the same maximum 30% tax-free lump sum drawdown and continue to provide tax effective and flexible investments outside the reach of UK inheritance tax.

The most noticeable change will be for expats living in one country while their QROPS is hosted in another.

For some, notably with Guernsey QROPS, income tax paid on pension benefits will not change. Finer details will be issued soon.

Others may have income tax deducted at source or may have to reconcile income tax paid in both the country where the QROPS is hosted and the country where they live.

This complication arises from a new rule that forces QROPS providers to pay net pension benefits to residents and non-residents at the same tax rate rather than gross benefits.

Besides the issue over income tax, it’s business as usual for most QROPS investors despite the rule changes – the losers are firms and investors who seek to manipulate QROPS to illegally avoid tax.

Research seems to show that the more money the rich have, the more they find it can’t buy them love as one in eight millionaires with £10 million or more disinherit relatives, dropping to 5% of those worth between £1 million – £2 million.

Money is the root of family arguments – with more than a third (37%) of wealthy individuals quizzed by Barclays Wealth confessing disagreements over cash had triggered conflict with loved ones.

However, relatives and loved ones are not cut out of wills from spite – the more likely reason is to protect their fortunes as the rich believe children will only fritter away their wealth rather than protect their inheritance.

Some (6%) are not passing on their wealth because they believe their loved ones will better appreciate money they earn.

The British results were at odds with those from similar wealthy individuals around the world.

The wealthy from the Middle East, Africa or Latin America have more trust in their children, leading Barclays experts to surmise that Britain’s less stable family relationships and high rate of separation and divorce breeds more resentment between parents and children.

“As second and third marriages become more common, this is thought to lead to more complex relationships with both children and stepchildren in relation to wealth and inheritance planning,” said Catherine Grum, of Barclays.

“In the case of wealth that has been inherited, tensions around entitlement may lead to disputes.

“However, it is surprising just how many wealthy respondents report experiencing such conflict and the impact that source of wealth can have on this, with wealthier respondents more likely to have encountered such conflict.”

The report also revealed the way wealth is acquired affects family thinking about inheriting wealth.

Those who inherit old money are more likely to see themselves as custodians rather than owners, while those who have earned their wealth tend not to plan for succession.

Vince Cable and his cohorts want to tax wealth, while Prime Minister David Cameron and his cronies want to remain true blue and tax income rather than assets.

But there is another way for a brave politician to go – and recent Tory governments, including the coalition, have already successfully tried it out.

Tax consumption. Pay as you spend rather than pay as you earn.

That way everyone can decide how much tax they want to pay by the way they spend their money.

The system is a winner. Those that want to save pay no tax on the cash they bank roll the banks and business as investors. Those who want to spend pay tax – like VAT – and if someone doesn’t want to pay, they can control their tax through their spending.

The debates about tax – whether to go for a mansion tax on wealth and property or whether to keep the 50p income tax band on earnings over £100,000.

Effectively, the government already taxes consumption in a half-hearted way by lowering income tax rates but increasing VAT. They may not have been the plan, but it’s certainly the result.

The problem with tax is no one has ever sat down and worked out a plan. It’s more Heath Robinson and sticking plaster over the gaps.

Income Tax started as a way to pay for equipping and training the Army, and was only intended to stay on the statute books for a few years. More than 200 years later, we still have it.

Along the way, successive governments have had good, bad and distinctly ugly tax ideas that have been picked up, dropped and legislated beyond recognition.

Look at the office of Tax Simplification and how many reliefs have been scrapped over recent years – like the one for importing angostura bitters that no one remembers or cares about.

The point is that tax seems a good idea at the time as a specific measure to deal with a specific issue, but that way of legislating just bloats the statute book and the reasons get forgotten.

It’s time to ditch the lot and start again to make tax fairer for everyone – failing to do so is just a case of tax avoidance by politicians.

Almost half of wealthy entrepreneurs said they were considering leaving the UK – and 21% blamed the weather for their dissatisfaction, closely followed by 20% who are seeking a better standard of living.

Other reasons included the rising cost of living (11%) and paying higher taxes (10%).

The desire to leave the UK was not matched by millionaires in other countries – with just one in 10 in Italy, France and Dubai looking to live elsewhere, according to the latest Millionaires’ Monitor from investment firm Skandia.

The report offers a financial profile of millionaires mainly living in the UK, plus in France, Italy, Hong Kong, Singapore and Dubai.

Many UK millionaire’s are suffering as the economy slows down – 34% have seen their wealth shrink over the past year, while falling confidence leads 24% to believe they will end up poorer in another 12 months.

Many seem keen on property investments.

More than half of UK millionaire’s (55%) intend to sink more cash in to property this year.

On average, most millionaires around the world hold a third of their wealth in residential or commercial property – except Hong Kong, where the average dips to 20%. Italians tend to invest at home – with 56% holding portfolios within the country, while the wealthy in Dubai are more likely to buy overseas.

The research also gives an insight in to how the wealthy made their money – in the UK 30% of millionaires made their cash from starting a business with a third of them making a million before they were 30.

Around 53% started trading before they were 25 and 60% making their fortune in less than 10 years.

The sectors generating wealth are manufacturing (21%), IT/telecoms (21%), finance (18%) and service industries (17%).

HM Revenue and Custom’s revamp of QROPS rules has levelled the playing field for providers and clients alike – and the result should shake-out the rogue schemes set up as tax avoidance vehicles.

The overriding aim of the new rules is to remove the perceived benefits of switching pension funds to a specific country offering tax and other financial incentives.

New tax rules are a game changer for QROPS.

New Zealand QROPS are no longer an option (unless resident in NZ) – HMRC has specifically named and shamed the country for abusing tax rules and effectively closed the door on some schemes that offered up to 100% payment of transferred funds.

Other offshore financial centres will have to up their game as well.

Guernsey is already upgrading pension rules on the island to meet the qualifying test imposed by HMRC that states a QROPS pension must be open to residents and non-residents – and that both should pay the same rate of tax on benefits.

The Isle of Man is also ready to move to change pension legislation to meet this rule as well.

This is in part thanks to doubling the reporting rule for ex pats shifting their pension cash around offshore.

QROPS providers now have to tell HMRC about every transaction for 10 years – and the tax man has threatened closer scrutiny of suspected tax abuse. This however doesn’t affect the QROPS member as the standard 5 year rule stays the same.

The April 6 shake-up doesn’t really mean much to expats moving their UK pensions to a QROPS for the right investment reasons – the losers are those bending the rules and operating in the grey areas.

Contact us today to find out more how we can help you.

The claim follows HMRC extending an amnesty for offshore tax cheats until 2016.

The Liechtenstein Disclosure Facility was launched in 2009 after data about UK taxpayers with accounts in the offshore tax haven was sold to the tax man.

Around 2,000 taxpayers have owned up to secret offshore bank accounts under the amnesty that gives them a fine of 20% of the tax owed over 10 years rather than the 100% over 20 years the law says they should pay.

Permanent secretary for tax Dave Hartnett said: “As the number of disclosures already exceeds the total we originally expected for the whole period of the facility, we have agreed with the Liechtenstein government that it makes sense to extend the facility by one year to April 5, 2016.”

Anyone with undeclared offshore assets can take advantage of the amnesty by transferring some of them to Liechtenstein before March 31, 2015.

Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA) complains HMRC should make wealthy tax cheats pay what they owe.

“If estimates of the amount stashed away in Liechtenstein are correct, HMRC could have uncovered an extra £1.5 billion of tax and be well on its way to meeting the government’s target of finding an additional £8 billion tax revenues during this Parliament,” he said.

“They should prosecute these people for deliberate tax evasion, not offering them an amnesty. Instead, HMRC seems to prefer to prosecute softer targets such as people who get their tax computation wrong, file late or did not realise that profits from car boot sales may be liable to tax.”

HMRC has also announced a new double taxation agreement with Liechtenstein to promote easier sharing of financial information about UK residents with holdings in the country. The agreement closes a gap which made Liechtenstein the only European Economic Area country with no double taxation treaty with the UK.

Exchequer Secretary David Gauke says: “This government is committed to ensuring that offshore income is properly taxed.

“The agreement takes that commitment forward by providing greater transparency and certainty to the taxpayers of both our countries about how their incomes and gains will be taxed.”

Typically, companies look for new rounds of funding from venture capital trusts (VCT) at the end of the tax year – April 5.

Start-up and small companies are pitching for millions in hard cash from investors and in return the tax man offers 30% tax relief to anyone keeping the shares for five years.

However, buying secondhand VCT shares can also offer tempting returns as any dividends are collected tax free and the five year holding limit does not apply.

Although investors miss out on upfront tax relief, VCT shares are traded at a discount.

This is worked out as the net asset value – the value of a fund’s assets minus any liabilities. This discount varies between funds – but can range from 8% to 30% or more.

The benefit is dividends are paid on the share’s gross value, not the buying price, so a 12.5% discount means investors buy £1 shares at 87.5p but still pick up tax-free dividends on the whole £1.

Buying secondhand VCT shares can also offer a hedge for risk, as the companies have already produced accounts for five years, they are more of a known quantity than buying in on day one.

Healthy trading of VCT shares in a secondary market also offers an exit route for investors.

Access to the market is available through trading platforms and funds wrapped in a SiPP, QROPS or other flexible investment vehicle.

For firsthand investments in the coming financial year, consider a seed enterprise investment scheme (SEIS) or a standard enterprise investment scheme (EIS) as well as a VCT.

The best tax relief package is bundled in a SEIS, which offers up to 78% tax relief on a £100,000 investment.

Although Chancellor George Osborne did not mention the move in his speech, documents published with more details of the Budget highlight the proposal.

Osborne wants to disqualify Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT) opened as tax avoidance exercises rather than genuine investments.

Both investment schemes will have a new clause inserted that bans companies offering EIS or VCT opportunities that:

• Disqualifies companies set up as tax avoidance vehicles
• Bans the acquisition of shares by a qualifying company in another company
• Bars many feed-in tariff energy businesses

The news was not all bad for EIS and VCT investors as the Budget increased the investment limit from £7 million to £15 million, and the number of employees from 50 to 250.

From April some other restrictions on qualifying shares and types of investor for an EIS and the £1 million limit on investment by a VCT in a single company.

The Association of Investment Companies (AIC) welcomed the changes.

“We are delighted that the chancellor recognises the role that VCTs have to play in delivering increased economic growth and employment. The proposed rule changes allow VCTs to invest in a wider range of companies, which is a welcome boost to the sector and businesses desperately seeking finance,” said Ian Sayers, AIC director general.

“The chancellor’s removal of the £1 million limit on VCT investment in a single company will ensure more efficient support to smaller businesses in the UK,’ he said. ‘Due to the withdrawal of banks from small business lending, there is an increase in the range of companies which are unable to secure development capital from traditional sources. VCTs are able to help address this issue, stimulating enterprise.”

We will keep this page update with the latest news, so please check back for further updates

Please feel free to contact us for more information

The High Court banned the schemes in December after the Pensions Regulator stepped in to freeze more than £1 million in fees charged by Ark Business Consulting Ltd and two associated companies.

Judges decided ‘unlocking’ schemes that maximised pension values for retirement savers aged under 55 years old contravened pension rules.

Typically, reciprocation schemes let savers who could not legally draw down funds from their pensions access the cash with complicated cross-loan schemes between several funds held under a master pension scheme.

This way, up to 50% of the pension cash was loaned back to a retirement saver.

The judgment hit around 400 pension savers with funds totalling around £25 million.

Judge Bean found that the trustees had no power to make the loans and deemed them void as they were unauthorised pension withdrawals.

He also remarked that the loans were a ‘fraud on the power of investment’ and that the regulator’s intervention was ‘plainly justified’.

Commenting on the court case, the Pension regulator’s chief executive Bill Galvin has said: “The regulator is working with HM Revenue and Customs and the Financial Services Authority to monitor business models and will use our powers to disrupt them if necessary.

“The court has supported our view that this business model was an attempt to subvert pension law and a threat to members’ pension benefits.

“In this case we were able to identify the risk quickly and step in to prevent more individuals from being taken in, but, sadly, more than 400 members are affected and some will face substantial losses as a result of being misled in this manner.

“It’s vital the members understand the risks: if an offer on a website sounds too good to be true, it invariably is. Operators will often charge substantial commission, and other charges, and members run the risk of having to pay unauthorised payment charges to HMRC.”

He also warned more of the same is on the way for some of the country’s top earners.

The iron fist is wrapped in a velvet glove that delivered a 5% cut in the rate of top rate income tax from 50p to 45p from April 6, 2013.

However other top-end tax changes were designed to claw some of the cash back.

First comes a new two-tiered rate of stamp duty for homes worth £2 million or more -

• 7% for individuals buying
• 15% for companies buying

Both rates are effective immediately and are aimed at stopping the wealthy buying homes with an offshore company to avoid stamp duty.

Next, offshore companies selling or otherwise disposing of homes worth £2 million plus will pay tax on any capital gain.

The Chancellor also warned that a ‘mansion tax’ is on the way as an annual charge on these expensive homes. The details will be thrashed out in consultation to be released at a later date.

Tax avoidance and evasion also came under fire in the Budget.

“I find tax evasion and avoidance morally repugnant,” the Osborne told MPs in a crowded House of Commons.

He then outlined a general avoidance rule (GAR) to be introduced in the next Finance Bill and action by HM Revenue and Customs to reduce tax evasion, including a new taxation treaty signed with Switzerland in recent days.

Little changed for investors, with the only cheer for business being new research and development tax credits and a doubling up of the cuts in the main rate of corporation tax to settle the rate at 24% from April 1, followed by two more cuts to bring the rate to 22% by April 2014.

The intention, he explained, was to align the basic rates of income tax and corporation tax.

Finally, the Chancellor explained that tax cuts and increasing allowances need balancing with a reduction in reliefs, so anyone claiming £50,000 on uncapped tax reliefs will have the claim limited to no more than 25% of their income.

Property people have campaigned for years to add residential property in to retirement portfolios, but although pension legislation dating back to 2006 has homes written in to the small print, the then Labour government had cold feet and pulled back from activating the clause.

The fear was the wealthy would manipulate pensions to include their own homes, with all the attendant tax reliefs, and that this favoured treatment would trigger a furore among less well-off voters.

However, the Chancellor needs to promote housebuilding as the nation faces a dire shortage of suitable homes.

His lightbulb moment was for a revamp of real estate investment trusts (REITs) to entice homebuilders and institutional investors to team up to kick start the market.

The idea, according to the latest leaks, is to invite investors to form REITS for buy to let homes by scrapping the 2% capital gains tax discouragement from transferring property in to the investment wrapper.

The proposal seems well-received by Britain’s biggest corporate buy to let landlord Grainger.

A big clue that the firm is in cahoots with the government in discussions over housing policy come from Grainger’s own publication of a rental review for 2012.

MP Clive Betts, who chairs the Communities and Local Government Select Committee writes in the report: “We have heard that large-scale financial institutions and pension funds are actively considering investment in the sector. The committee will be considering what the barriers are to attracting such investors, and how they can be overcome.

“REITs have been effective for commercial property, but have not taken off in the residential sector. The Treasury has made some proposals that may help to support residential REITs and we are taking evidence about their likely effectiveness.”

Prophets of doom, forecasters and best-guessers are all lining up to sieve through every gesture and words of wisdom imparted by Chancellor George Osborn as he readies his speech for the big day.

Despite the last-minute please for cutting or raising various benefits and taxes, most people would be really worried if he had left it this late to make the final decisions.

For investors, it’s a time to focus on what is known rather than what might be.

One of the main ‘knows’ is the small enterprise investment scheme that comes in to force from April 6.

A SEIS, as it’s termed for short, is a venture capital lite scheme that encourages an investment of £100,000 with a bonus 50% income tax reduction regardless of the rate paid – which means everyone investing the full £100,000 saves £50,000 off the tax they pay and pro rata for smaller investments.

As an extra boost to kick start the scheme, capital gains tax at 18% or 28% is also reduced in full on disposals in the year that are rolled in to a SEIS.

One of the major tax breaks for property investors is a heavy hinted ‘don’t know’ touted in many of the Tory papers.

The Chancellor appears to be considering cutting the 2% CGT bounty on transferring property portfolios in to a Real Estate Investment Trust (REIT) to encourage corporate and institutional buy to let investment.

How low down the investment chain this perk will drop is yet to be seen – but many buy to let investors with property portfolios valued at £1 million are hoping for some crumbs dropped by those feasting at the Budget top table.

They quickly acted to reverse the error – the documents were published at 1 am and gone by breakfast.

The only clue that they had been online was a broken link in a HMRC news feed to journalists.

The error came to light when QROPS.net contacted the HMRC press office pointing out the broken link and requesting a copy of the documents.

HMRC then admitted publication was in error.

“It was our fault the documents were posted early on the web site,” said an HMRC spokesman.

“Someone pressed something they were not supposed to. The documents will be reposted, but I cannot say when. It could be before or after the Budget, but the QROPS rules are tied in to different legislation, so it could be any time.”

HMRC rarely signposts changes to QROPS rules or action against abuse.

The controversial new rules were published in draft before Christmas – and since consultation ended on January 3, nothing has been heard officially from HMRC.

QROPS providers in Guernsey and the Isle of Man have worked to realign their offshore pensions with extra conditions in the new rules.

The main changes in the consultation involved extending the reporting period to HMRC of withdrawals from a QROPS for ex pats from five to 10 years and a new rule scrapping two-tier income tax paid on benefits by some providers.

Contact us now for further information

The top-table coalition policy makers are Prime Minister David Cameron and Chancellor George Osborne for the Tories, and Deputy PM Nick Clegg and Chief Secretary to the Treasury Danny Alexander.

They are due to meet to agree the finer points of Budget 2012 when Cameron and Clegg on Friday (March 16) when they fly in from their trip to meet President Obama in Washington.

The Chancellor is expected to open consultation on introducing the 100 year, or perpetual bonds, and possibly bonds with no fixed maturity in the budget.

The bonds would let the government borrow on the ‘never-never’ by paying low interest rates over a long term. The bonds would appeal to institutional investors like pension funds and insurance companies seeking a consistent low risk return.

Britain has never offered 100-year gilts, but has about £2.7 billion perpetual gilts, which never mature. The 3.5% War Loan issued from 1917, makes up £1.9 billion of the total.

Meanwhile, the Chancellor’s promise to bring a stream of credit-easing business funding online before the Budget came a step closer as the European Commission approved the proposed National Loan Guarantee Scheme.

“Facilitating small business access to finance is a commission priority to overcome the credit crisis. This scheme will reduce borrowing costs for small businesses thanks to a state guarantee, without unduly distorting competition,” said Joaquín Almunia, vice-president of the commission in charge of competition policy.

Through the scheme, the government will underwrite up to £20 billion of lending by banks to small businesses at an interest rate of around 1% less than direct borrowing.

The commission also approved the Business Finance Partnership, a similar scheme to the loan guarantee for medium sized businesses that offers around £1 billion of government-backed credit.

This is the nub of the problem of taxation for Chancellor George Osborne.

Everyone is clamouring for the wealthy to contribute more in tax – but the means of collecting this money is to demand more from those earning higher incomes.

This is an anomaly because the wealthy are not necessarily high earners, because wealth lies in assets.

Wealth comes from keeping more than you spend and investing what’s left.

Income comes from the fruits of labour or earnings generated from investments.

Someone who marries in to a family with assets becomes wealthy, but is not necessarily a high earner.

The fight at the centre of the coalition is about how to tax wealth. The Lib Dems want to tax assets via policies like their mansion tax, while the Tories want to attack earnings with the 50p income tax rate.

Accepting the 50p tax rate as a way of soaking more cash from the wealthy does not wash. Britain’s richest man is reputedly the Duke of Westminster. He is not necessarily the country’s highest earner or anywhere near the summit.

His wealth lies in his family’s holdings of vast tracts of land and property.

Take the Sunday Times rich list as another example of the difference between wealth and earnings – the list measures wealth by net worth rather than income.

Many property owners are typically ‘asset rich and cash poor’ and represent the senior end of the age spectrum rather than the under 50s, while the ‘cash rich and asset poor’ are footballers, city young guns and entertainers pulling in vast amounts of money.

Many who have the trappings of wealth, like sports stars and entertainers are actually quite poor because they have signed tough contracts and taken large advances.

Just look at the number of high profile personalities who go broke when their career wanes against the number of asset rich investors who face bankruptcy.

A wealth tax is no doubt inevitable – but targetting the rich instead of high earners is no easy task for the Chancellor.

This is a significant bonus for companies and signifies a rethink of coalition policy towards how much tax businesses should pay.

Osborne announced in his first budget that corporation tax would go down on a sliding scale.

Corporation tax has two rates – small company rate for firm’s with annual profits of less than £300,000 and the main rate for companies with profits of more than £300,000.

The small company rate is already 20% – in line with basic rate income tax.

Osborne has not indicated whether the small company rate will also go down.

The main rate has dropped from 28% in 2010, down to 26% in 2011 and 25% in the coming tax year.

This was due to continue dropping over the 2013 and 2014 tax years to 23%.

Cutting the rate of corporation tax lets a business keep more of their profits – for big corporates this can add up to billions of pounds.

The government intention is to entice companies to the UK – and to keep those already here shackled to the British tax system.

The Chancellor’s thinking is more firms keeping more of their profits leads to more investment and more jobs.

The clever accountants and lawyers the firms employ are probably thinking the more profits they retain, the more money to pay dividends for shareholders.

Chopping corporation tax in Budget 2012 to 20% will make the British rate one of the most competitive for leading economic nations – way ahead of the US, Germany, France and other rivals, according to the latest OECD comparative figures.

For new QROPS investors waiting to switch their pension funds away from UK schemes, the changes mean that Guernsey pension schemes will be fully compliant with the new rules from April 6, 2012.

The last sitting of the Guernsey States approved a proposal to establish retirement annuity trust schemes (RATS) that follow QROPS legislation – the law just needs rubber-stamping for the new tax year.

The new RATS rules upgrade Guernsey pensions to meet condition 4 of HMRC’s QROPS update that also comes in to force on April 6.

The condition demands that retirement savers living outside the financial centre hosting a QROPS pay tax at the same rate on benefits as those living inside the financial centre.

Guernsey has a two-tier tax system for pensioners – those on the island pay income tax on benefits at 20%, while those offshore pay at 0%. From April 6, the 0% rate will apply to everyone receiving Guernsey pension benefits, regardless of where they live.

Other QROPS financial centres have yet to announce their strategy for dealing with the rule changes.

The Isle of Man confirms plans are ready to enact as soon as HMRC confirms the final details of the new QROPS rules in the Budget 2012.

He told the annual dinner of the EEF – the manufacturers‘ trade body – not to expect any tax giveaways, ominously warning that what he gave with one hand would be taken from somewhere else with the other.

Osborne toed the coalition line of everyone will share the pain of the country’s economic malaise and promised that Budget 2012 would reflect that policy.

Pressure groups are lobbying for various tax changes -

• The Lib Dems want a £10,000 income tax personal allowance for everyone
• The Tories and businesses want the 50p tax rate scrapped for high earners
• Labour want cuts in VAT and employer’s NI

Osborne told the EEF that not everyone can have what they want – and if changes are posted in his Budget speech, then he will claw back any lost revenue from putting up tax somewhere else or with more public spending cuts.

He did make one promise to business in his speech – a scheme to ease lending to small businesses will open before Budget Day (March 21, 2012) funded by £20 billion of public money.

The cash will filter to businesses through banks running the National Loan Guarantee Scheme.

“I can tell you we are not going to put credibility and stability and low interest rates at risk. Our action is bringing the deficit down – but it is still far too high,” said Osborne.

“The days of unfunded giveaways are over – and they’re not coming back in this Budget. Everything has to be paid for.

“What we want to do is use the hard-won low interest rates government can borrow at to reduce the interest rates that small businesses can borrow at – so we are launching the National Loan Guarantee Scheme.

“We are also launching a £1 billion Business Finance Partnership to help mid-sized businesses.

“Through this, the government will invest in funds that lend directly to mid-sized businesses, giving them new source of investment outside the traditional banks.”

OPES is a special type of pension that can be recognised as a QNUPS or a Guernsey RATS.

Guernsey RATS is a tax-free environment for pensions – with no tax on growth, benefits paid or funds transferred to the investor’s beneficiaries on death.

As a bonus, they are also exempt from South African donations tax.

One of the key attractions for investors is flexible investment options that can be adapted to protect capital, pay an income or attract growth.

The schemes also include currency options that look at maximising income in Sterling, US dollars or euros.

The idea behind a OPES scheme for South African investors is attracting a benign tax treatment from carefully setting up the pension to meet retirement income and succession goals while meeting compliance rules.

To make sure an OPES delivers, some providers have taken tax and legal advice from barristers in South Africa.

Key features

No tax relief is available on contributions – which have no cap – but most OPES offer a personal loan to the investor and will pay out up to a 30% tax-free lump sum on retirement.

Benefits are paid gross in a choice of currencies.

OPES/RATS also offer flexible contributions, no tie ins or penalties for halting contributions.

Providers also offer a global investment service for cash, real estate, fixed income, equities and alternative investment.

Depending on your personal financial objectives, an OPES can deliver capital growth, wealth accumulation, capital preservation or income generation within a tax efficient and cost-effective wrapper.

Succession planning

Assets held in a OPES stay outside the investor’s estate and do not attract inheritance tax. Investors can choose to draw all or part of their fund on retirement, leaving the balance for transfer to families or loved ones with tax.

Contact QROPS.net today to find out more about an OPES scheme.

If he or she gets it wrong, the island’s entire QROPS industry shudders to a standstill as new tax rules that bar current schemes from taking in new applications are introduced on April 6.

Guernsey is home to hundreds of providers offering 289 QROPS offshore pensions to thousands of investors. The funds hold billions of pounds of pension contributions.

To continue trading, each scheme has to self-certify that the new rules awaiting confirmation in the UK parliament are fully met.

These include extra reporting of withdrawals from QROPs pensions as HM Revenue & Customs has increased the time limit from five to 10 years after the pension member leaves the UK.

The Guernsey government also has to ratify income tax changes for pensioners so all pensioners in Guernsey or living off-island all pay the tax at 0%.

Getting it wrong could cost the offshore financial centre billions in lost funds transferred from UK pension schemes that go under management in Guernsey.

To meet the requirements of the new tax rules, Guernsey has designed a new pension. QROPS will automatically upgrade to the new scheme, providing they self-certify they meet the rules by March 16.

The lonely civil servant then has until April 5 to process the paperwork.

Richard Green, deputy director of compliance at Guernsey’s States Income Tax, warned that self-certification was necessary from industry.

“Our team on this is a team of one,” he said. “We don’t have the resources to put support into the application process – this must be self-certificating.”

Pension investors with funds already in a QROPs do not have to panic if the civil servant fails to meet the deadline – HMRC has confirmed that existing schemes are unaffected by the new rules.

The Anglo-Dutch oil company said that the move reflected market trends. No existing members are thought to be at risk, and in fact the Shell funds are well known to be some of the best funded.

Defined benefits schemes, where the scheme guarantees a certain level of payment on retirement, have suffered a dual blow in the last decade. On one hand, the population as a whole have been living longer. So rather than having to provide a comfortable annuity for a few years after several decades’ of loyal service, a retiree at 60 can expect to live for twenty further years after their last day at work.

As if this was not a big enough challenge, the added pressure of the global economic crisis has made the task of making pension fund assets swell to meet retirees’ expectations a near impossibility.

The alternative is a defined contribution scheme where members and employers typically contribute a percentage of the employee’s salary. Here the risk is shared. If the fund behaves well, the employee benefits from a decent pension scheme. But if not there is no guarantee that the investor’s pension will be enough to live on.

Defined benefit pension schemes are therefore seen as more favourable to employees than defined contribution schemes. However, fears are growing that the really good deals for both may be under threat thanks to a European directive known as Solvency II. The directive means that certain types of funds to hold reserves as a sort of minimum capitalisation requirement. This would offer some protection against investment risks.

Organisations like the National Association of Pension Funds are concerned that even if the new rules do not force schemes to close, the extra overheads will come from reduced contributions, which may affect investors negatively in the long term.

Seven out of 10 ex pats feel their lives are unaffected by issues that fill the headlines – although those who retired to France, Spain and Portugal have been hit the hardest financially and are the most likely to consider returning home.

Many ex pats in these countries have suffered from Eurozone debt problems and declining currency values against the Pound.

Canada remains out in front as the favourite ex pat destination – according to this year’s annual NatWest International Banking Quality of Life Index.

Ex pats have voted Canada as the country with the best quality of life for three years in a row.

Around 44% of all ex pats are cutting back on luxuries and trying to manage their money better, but that leaves more than half (56%) who have not to adjust their spending despite a rising cost of living.

Ex pats in China, the United Arab Emirates, Hong Kong and Singapore even report their standard of living haws improved ‘dramatically’.

Those in Australia, Canada, and New Zealand reckon their finances have also improved significantly, while ex pats in Western Europe, South Africa and the US are less enthusiastic about their finances.

NatWest’s Dave Isley said: “When the first index was carried out in 2007, confidence around the world was high as the global economy was expanding, household prosperity was increasing and global GDP forecasts were positive.

“Fast forward five years and it’s a very different picture however, it is the expats who are riding the storm with the majority planning to remain abroad. Those who are most likely to return home are those who retired to France, Portugal and Spain as their disposable income diminishes and the cost of living rises.”

A team of investigators tasked with tracking down advisers offering the unlocking schemes – often termed ‘pension reciprocation plans’ – has been set up by The Pensions Regulator, Financial Services Authority (FSA) and HM Revenue and Customs (HMRC).

The task force will follow up web promotions, cold calls or adverts encouraging savers to switch their pensions in to an unlocking scheme.

The unlocking schemes target pension savers under 55 years old to transfer their occupational or private pension so they can access cash or a loan through a complicated trust arrangement. The cash is often swallowed in dubious offshore property deals that fail to make adequate returns.

The plans offer no way of safeguarding pension funds if investments go wrong or the scheme collapses.

The tax man also warns that transferring pension savings in to an unlocking scheme can trigger penalties of 55% or more of the fund value.

The Pensions Regulator has closed two schemes recently:

• Ark Business Consulting – the firm ran a ‘pension reciprocation plan’ that made loans between pension schemes to unlock pension funds before retirement. In December, the High Court ruled that these arrangements were legally void.
• Hollywell Enterprises Pension Scheme – the firm tried to move a £2 million pension fund to a bank account in Germany and then Belize, placing members’ benefits at high risk.

Victoria Holmes, of The Pensions Regulator said: “These offers are typically advertised on websites or small adverts in newspapers. If the offer sounds too good to be true, it probably is. It may simply be a scam designed to get hold of your money. Transferring your pension to one of these questionable investment models could result in you losing your entire pension.

“Immediate financial gain may sound tempting, particularly in the current economic climate. But don’t be taken in – you are likely to face substantial tax charges and will be poorer in retirement.”

The UK Prime Minister used his veto to avoid committing Britain to a new fiscal treaty, the fallout from which will be felt for months if not years to come.

One of Cameron’s chief concerns was that the Member States were prepared to sign up and act together to strengthen the single market, and in particular increase the regulatory load on the financial services sector. This was not acceptable because the City of London’s freedom to do as it pleases is seen as one of its most marketable features.

Sarkozy is rumoured to have called Cameron an “obstinate kid” for insisting on safeguards for bankers at the perceived expense of the rest of the European population.

However, Cameron’s critics claim that his failure to sign up has brought about a two speed Europe, with the United Kingdom stuck in the slow lane. The summit which prompted calls for the treaty was called to impose some collective discipline on member states, although everyone around the table knew that the calls for such discipline were chiefly aimed at the Southern states whose warnings of defaults on sovereign debts threatened the euro.

But promising to cut deficits and pull belts in is one thing; deeper fiscal integration is quite another.

It is said that Sarkozy has tabled amendments to the draft treaty in circulation which would allow the participants to enhance the way in which the single market applies to them.

This is exactly what Cameron wanted to avoid. He is also resistant to suggestions that the institutions of the European Union should be at the disposal of the member states who will sign up to the financial measures, although the legal basis for challenging this is proving to be difficult to substantiate.

The EU is pumping €130 billion and writing down equally huge amounts of debt to save Greece defaulting on interest and loan repayments.

The deal was thrashed out at the 11th hour by EU finance ministers and the Greek government after months of dithering and wrangling that has seen violence and riots on the streets of Athens.

Nevertheless, as everyone breathes a sigh of relief over the deal, many cynics suspect all the EU has done is buy some expensive time and that Greece may well return to the brink again within a few months.

But if this happens, the Greeks have nothing left to cut but their own throats and the ties that bind them to the Eurozone.

International financial experts have already warned that Greece will need more cash to meet the debt reduction target.

European Commission chief Jose Manuel Barroso said the debt package would stop “an uncontrolled default with all its grave economic and social implications”.

Greece, he added, had no alternative but to pursue economic reform.

“The bailout bandage is on, but it won’t take much to unravel,” said David Miller, partner at Cheviot Asset Management in London, told Bloomberg. “The euro zone has done its best to ensure that Greece will deliver on promises, but there is considerable scope for backtracking on deficit reduction.”

Among the measures in place to keep the Greece bail-out online includes a special account that gives priority to keeping Greece solvent before releasing money for the country’s budget.

A European Commission task force will also move in to effectively take over financial control in Athens.

British Prime Minister David Cameron praised the bail-out, but warned eurozone economic problems still persist and the EU needs to bolster finances to see off any further debt issues.

The proposals are awaiting final clearance before the Channel Island’s parliament in March and are due to become law from the start of the financial year on April 6, when tougher restrictions on QROPS pensions are also likely to begin.

HMRC’s new QROPS rules have triggered the changes to make Guernsey pensions fully compliant with the new tax regime.

They have also sparked a review to improve offshore pensions offered to UK ex pats by Guernsey financial firms.

From April, Guernsey QROPS providers propose to:

• Vary existing pension trust deeds to bring them in line with the new rules – most retirement savers will have to do nothing
• Give current pension members the choice to opt out of their QROPS if they do not want to join the new pension scheme, but normal charges and transfer values will apply to their funds

The HMRC changes involve extending the time limit QROPS providers must report transfers out of a pension from five to 10 years and a new rule that QROPS benefits must be taxed at the same rate as any other pension scheme based in that country.

The overall aim of the Guernsey QROPS review is to give confidence to retirement savers that their money is safe on the island – and HMRC has confirmed that even if the new pension regime does not match the new QROPS rules, no investor will face fines or penalties for transferring their cash in to their current scheme.

The new Guernsey pension scheme will impose a 0% tax rate on pension benefits paid to anyone – whether they live in Guernsey or another country.

Guernsey is one of the largest providers of third-party QROPS schemes, where ex pats live in another country but base their pension on the island.

But keep your eyes peeled for initiatives aimed at helping the market for bananas grow around the world.

As fruit-based commodities go, bananas provide some astounding facts and figures:

• Britain alone swallows more than five billion bananas every year
• The banana plant is not a tree, it is the world’s largest herb
• Chemicals in bananas make you feel happier – they convert to serotonin, known to promote relaxation and improve mood
• A medium-sized banana contains only 95 calories, with no fat, cholesterol or sodium
• The inside of a banana peel will polish shores or, if rubbed on the skin, can soothe mosquito bites

As part of Fairtrade Fortnight, Oxfam and the Co-Op have teamed up to encourage investment in banana growing co-operatives of thousands of smallholders from Central and South America.

Oxfam chief executive Barbara Stocking said: “Already, 500 million small farms in developing countries feed and support nearly a third of humanity. Many via co-operatives, which enable them to pool resources, realise economies of scale and secure fairer prices.

“Over a million farmers are now involved in Fairtrade, largely via co-operatives. The encouragement of smallholder farmers – many of whom are women – offers the best route to sustainably feed the two billion extra people who will live on Earth by 2050.

“In the run-up to the UN Conference on Sustainable Development in June 2012, we call on the UK Government to champion the importance of increasing global food production in a sustainable and equitable way, and the crucial role that smallholder farmers and co-operatives can play.

“We ask that the UK promotes increased investment in sustainable smallholder agriculture in order to guarantee livelihoods for the poorest farmers, especially women.”

The fines related to misselling the Aviva Global Balanced Income Fund and Aviva Global Cautious Fund to customers between July 2006 and November 2008.

Despite the overall level of complaints falling at the bank, 7,194 customers complained about retail investments, pensions and insurance last year, compared to 4,067 the year before.

Life and pension complaints hit 4,511 in 2011, up 33% from the previous 12 months.

“The rise in investment complaints in 2011 was driven by complaints resulting from an FSA fine in January 2011 over the suitability of advice for customers sold the Aviva Global Balanced Income Fund and Aviva Global Cautious Fund between July 2006 and November 2008” said the bank.

“We have said we are sorry for this, we are focused on putting it right and we have taken steps to ensure it does not happen again.”

The FSA fined Barclays for misselling the investments to 12,000 customers.

Barclays retail and business banking chief executive Antony Jenkins said: “Tackling complaints is our top priority and today’s figures show real sustained progress on delivering on our commitments, with a reduction of over 30% in banking complaints.

“We can and will do more to improve service and go further and faster to drive down complaints. We are aiming for further significant reductions in underlying complaints in the first half of 2012 as we continue on our journey to get it right first time, every time, for our customers.”

The FSA has also fined Santander £1.5 million for selling £1.5 billion of ‘guaranteed’ bonds without telling customers they were exposed to limited compensation if the bank collapsed.

Santander is one of several structured products providers fined for failing to give customers the right advice over the investments.

The rules to apply seem simple – pick something with limited supply but high demand to sit back and watch your money grow.

So what investments have a limited supply and big demand is the key.

First step is to wipe out inflation – £6,000 cash in 1963 would be worth £100,000 now, so any investment yields need adjusting to remove the rise in the cost of living.

These figures are gross with no adjustment for inflation:

• Shares and equities are the first investment step for many – but they show a meagre return – £6,000 invested in the FTSE all-share index in 1963 was worth £407,000 last year – a 68 times increase
• Savings – a miserly return of £110,000
• Property has had ups and downs – one Chelsea home bought for £5,000 in 1958 sold for close to £10 million last year
• £6,000 bought 272 ounces of gold in 1963 – today’s value would be £290,768

For the big bucks dwarfing these kind of returns, investors would have to look off the radar at different commodities.

The price of a 3 litre V12 Ferrari 250 GTO sold in 1963 for £6,000. Only 39 were built. One sold recently for £20.2 million.

In 1964, Andy Warhol was paid $1,500 for a Campbell’s soup can canvas, last year, one of his self-portraits sold for $38.44 million – three years after the art market crashed and his pictures lost two-thirds of their value.

The best investments seem to follow the rule of supply and demand – no one’s making any more land, Ferrari 250 GTOs or Andy Warhol paintings.

Rare earth metals are 17 elements found in the earth’s crust – some are as common as other ores like copper, but mining is difficult because they not often found in concentrated amounts for economic exploitation.

Their importance to modern technology is what makes them vital to global trade.

Typically, rare earths are found in lasers, flat screen TVs, mobile phones, microwave technology, nuclear batteries, mercury vapour lamps and X-ray machines.

As a measure of their importance, President Obama has locked horns with the Chinese over unfair trade practices that restrict availability of rare earth metals to the west by imposing annual export quotas.

The World Trade Organisation has also upheld a complaint about China garnering supplies of natural resources like bauxite – for smelting in to aluminium – and zinc at the expense of other nations.

Now, the European Union is piling on the pressure to include rare earth metals in the ruling.

In a world where the laws of supply and demand can break an economy, access to rare earth metals is a battle being fought quietly by desperate politicians.

But relief might be at hand.

An Australian mining company may be able to release the Chinese stranglehold on rare earth metals with the opening of a new plant in Malaysia that processes small amounts of the elements from large supplies of ore – something Australia has in abundance.

The firm, Lynas Corp is ready to go online with the $230 million plant in Pahang. All that remains is sorting out whether the plant needs to raise safety standards to process radioactive ore.

The processing plant will only make a small dent in to the world supply of rare earth metals, but the move hammers home a message to the Chinese that those that smelt it need to make sure they give a fair deal as well.

For investors, Lynas Corp is one to watch as the rare earth processing plant gives them access to a lucrative market that is likely to pile on value to the corporation’s shares.

Zurich tops the list, nudging last year’s most expensive city, Tokyo, in to second place.

The survey monitors prices like food, transportation, utilities, private schools and domestic help around the world and compares them to the base cost of New York. Rents and property prices are excluded.

Each city is given a score, with New York at 100 – Zurich weighed in with 170 and Tokyo with 166, rating them 70% and 66% more expensive than New York.

The top 10 was split between Europe and Asia – Geneva and Osaka-Kobe, Japan, were evens in third, while Oslo, Paris, Frankfurt, Sydney, Melbourne and Singapore made up the rest.

New York was placed at 47, while London tied with Brussels, Wellington and Adelaide at 17th.

Karachi was ranked last out of the 131 cities monitored – scoring 46. Mumbai, New Delhi, Kathmandu and Dhaka, Bangladesh, were also in the bottom group.

Inflation and currency exchange rate fluctuations were cited as the main two drivers of changes in the table.

The report explained that Singapore was 2% cheaper to live in than New York just 10 years ago. Now, the city ranks 9th and is 42% more expensive.

A decade ago, Sydney was 25% cheaper than New York – and ranks 7th at 47% costlier than the US city.

If property was factored in to the costs the scores for Singapore and Sydney would be even more startling, explained the report, as in 2002, renting a one-bedroom furnished apartment cost $1,200 a month in Singapore and $730 in Sydney. Today, the same housing costs $3,000 in both cities.

Moody’s ratcheted down the ratings of Italy, Spain and Portugal and put the coveted AAA ratings of UK, Austria and France on probation with a ‘negative outlook’.

But the markets bucked the news and carried on as normal after a blip in early trading after a debt auction in Italy that remained more or less unaffected by the rating downgrade.

Europe’s main markets in London, Paris and Bonn all pushed higher after the announcement.

David Jones, chief market strategist at IG Index, said: “Investors still seem to be treating the pronouncements by the ratings agencies as something of a non-event. The agencies are not telling us anything new and the subject of downgrades now seems to have become a political football to be knocked back and forth.”

Governments have argued that tinkering with ratings over recent months by Stand & Poor’s and now Moody’s is meaningless, bears no relation to the real economy and is politically motivated.

In the past, lowering a credit rating signalled impending economic doom for many countries, but the suggestion now is no one wants to lose their high rating, but if they do, so what?

Awarding a negative outlook is a warning that a country could lose their AAA listing in the following 18 months.

More important for the eurozone economies is the forthcoming GDP data, including figures for the big four of Germany, France, Italy and Spain, expected to show a contraction at end of 2011.

The outlook is slightly better for the UK, with a green shoots announcement from the CBI hinting that business considered things are improving, albeit very slowly.

Azad Zangana, European Economist at Schroders, said: “While Moody’s primarily warns of a lack of growth in the medium term for the UK and proximity to the eurozone debt crisis being the key factors behind its change in the outlook, it also warns that one of the factors that would lead to an actual downgrade would be a ‘reduced political commitment to fiscal consolidation, including discretionary fiscal loosening or a failure to respond to a deteriorating fiscal outlook.”

Analysts are worried that Chinese businesses may pull out of commodities wholesale later in the year as the trade gap no longer gives them the profits to buy up oil, copper and other metals.

Experts believe the Chinese are trying to mask a lack of growth at home by hoarding commodities.

Looking at copper imports gives an idea of what’s going on. In January, China imported 413,964 tons of copper, 13.6% up on January last year.

The story was the same for December, when China imported a record 508,942 tons, up 47.7% on the previous December, increasing the country’s reserves by around 300,000 tons.

This is astonishing, since copper is not in short supply nor particularly expensive, while researcher Shen Xiaoqiang forecasts demand for the metal in China will plunge by around half this year to the lowest since 2006.

The answer may be politics. Beijing’s new leader elect Xi Jinping is due to visit President Obama and trade is at the top of the agenda.

China’s trade gap with the US – and the rest of the world – is a cause for concern for foreign economies.

The January trade surplus hit $27.3 billion, up from $16.5 billion in December and $6.5 billion from 12 months ago. If China had not invested considerable amounts in commodities, that gap would stand even wider.

For investors this means that the price of some commodities may stand artificially inflated by China trying to narrow the trade gap for political reasons.

Clearly, that action cannot continue. Sooner or later, China will reach saturation point for commodity imports or run out of money as demand fails to support growth.

At that point, the rug will be pulled out from under the markets and the prices are likely to fall – or even worse, be controlled by puppet masters in Beijing sitting atop their commodity stockpiles.

Oil buyers are snapping up extra supplies from African oil nations in a bid to keep fuel flowing for their industries.

Refineries from the US, Europe and Far East are now locked in a bidding war for oil supplies from West Africa.

The switch away from buying Iran’s oil follows the unilateral embargo on trading for oil until Teheran stops developing nuclear weapons. The Iran government claims they are researching nuclear reactors to provide electricity.

Asian oil imports from Africa peaked at a record high as scheduled supplies until the end of March have already found buyers.

Oil exports to Asia from Africa are now averaging 1.82 million barrels a day.

Some crude oil cargoes for March from Nigeria, Angola and other West African exporters are awaiting placement, and the total average daily production is likely to increase over the next few weeks, according to traders.

China says crude imports from Angola are already up a fifth this quarter in comparison to the last three months of 2011.

The rise in buying oil from African nations is reflected in a corresponding decrease in exports from Iran since the announcement of the embargo.

Investors should take a view on the switch to African oil as a possible short term move – and an opportunity to push down the price of oil supplies from Iran by the Chinese.

Some traders have pointed out that China is still negotiating long term contracts with Teheran, and taking African oil may be a ploy to bring down the cost of oil from Iran.

Asian countries, including China, are reckoning to take around half the amount of oil from Iran as they bought a year ago.

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.