The obvious answer to this question is to look at the fees that the managers and administrators charge. Fortunately for QROPS investors, prices have come down considerably since the schemes were introduced in 2006. It is even possible to get a QROPS for as little as £500 per year, although such a scheme is likely to be an off the peg one rather than a bespoke scheme created for you.
If your QROPS adviser comes from a large firm, they might have the bargaining power to negotiate a reduced fee for you. Or they might even have the advantage of being offered preferential rates on an exclusive basis by certain QROPS providers.
But there are more issues to consider than fees when you are looking at how much a QROPS will cost you. Your QROPS adviser should be able to give you an idea of the tax implications of a variety of schemes. For instance, if scheme A has very low fees but will be taxed highly, then it won’t be any “cheaper” in real terms than scheme B which has higher charges but is virtually tax free.
There are also currency fees and bank transfer costs to bear in mind. If you live overseas but keep your pension in the United Kingdom, you will have to pay currency conversion and bank transfer rates, and of course take the risk of currency fluctuations. The same also applies if your QROPS is overseas, but in a different country to where you live. Some QROPS providers offer some flexibility about how you hold your pension, so you might be able to arrange to hold it in currency that you usually spend.
Without wishing to be morbid, the “final” cost of a QROPS is its inheritance tax consequences for your beneficiaries. This is certainly worth taking into account when you are making your decision. Depending on what other provisions you have made for your family, you may wish to prioritise this as a factor when choosing where to buy a QROPS.
