QROPS pensions are a great option for people with UK pensions that intend or are already living overseas.
The myth that a QROPS is just a tax saving scheme for rich people is simply not true.
QROPS are open to anyone – but the costs of transferring and ongoing fees may mean that if the transfer value of a pension pot is lower than £30,000 may mean the likely gains do not outweigh the expense of a transfer.
Most UK pension funds can be transferred in to a QROPS, except the state pension.
Many ordinary people have a QROPS and are significantly better off because of the tax advantages and more flexible investment options.
Retirement planning allows consolidating several small UK pension funds in to a single QROPS. This allows economies of scale by often reducing administration costs that can eat in to contributions on small schemes.
Much of the ambivalent publicity about QROPS comes from UK pension providers who lose business to the overseas schemes. Many of these are SIPP providers who attract more wealthy clients because of the SIPP’s self-managed fund options
In many ways, a SIPP is an excellent pension choice for a UK resident who does not expect to retire abroad. A QROPS has all the advantages of a SIPP, including self-management of investments, but adds on the benefits of being based in a low tax jurisdiction and the fact that a QROPS has no requirement to buy an annuity or alternative secured pension (ASP).
Several respected SIPP providers, like London and Colonial and AJ Bell, have complained that their business is hit by QROPS because of the tax disparity in favour of the offshore pension.
Often when the words ‘offshore’ or ‘overseas’ are attached to investments discussions, people worry about the risk of moving to a tax haven.
This is not a risk for pension investors transferring money in to a QROPS. Several fail-safes to protect funds can be built in to the scheme:
- UK pension fund managers cannot transfer any money in to a QROPS unless the scheme has registered with HM Revenue and Customs to certify the pension meets QROPS rules
- QROPS providers insist prospective investors take independent financial advice
- Anyone considering a QROPS transfer should make sure his or her financial advice comes from a regulated, independent, whole-of-the-market adviser.
Finding the right QROPS advice is not always easy. Contact us today to speak to one of our experts.