NHS pension holders are currently the main sector looking to transfer their savings into a more beneficial QROPS, before this option is no longer available.
As of April 2015 the door will be shut firmly on any kind of transfer to a scheme developed initially to allow expatriates living away from the UK – or indeed foreign nationals returning to their homeland – to be closer to their savings and thus avoid UK tax and currency fluctuations. Since the inception of QROPS by HMRC in 2006, the benefits have actually extended further than the purposes for which the schemes were intended. The industry has quadrupled in size, and particularly now, the number of transfers taking place has sky rocketed.
Benefit Reductions
NHS pension holders have seen their benefits reduced over the last 10 years in some cases by up to 13%, and a recent error in pension statements over-estimated tax liabilities for savers, meaning that thousands of pounds were lost. These cases are still in the process of being sorted out. Sadly, it is these type of incidents combined with the announcement that transfers are soon to be banned, which has encouraged NHS staff both former and current to give serious consideration to utilising a QROPS.
The UK pension market is damaged, in deficit, and apparently extremely disorganised. It’s really rather off-putting for those with a lifetime’s worth of savings invested in the country.
Benefits are likely to be reduced further as the years roll by, the retirement age is expected to increase sooner rather than later, and the uncertainty of more changes hangs like a dark cloud over the entire UK pension market. There is a huge deficit to be made up, and the Government will try every procedure available to try to meet the multi-billion pound shortfall.
The Benefits of QROPS
QROSP are available in 42 jurisdictions currently and there are a record number of schemes available to choose from – the number currently exceeds 3,500.
The benefits of a QROPS are numerous, but are predominantly based upon the fact that the schemes are very modern in design, and offer flexibilities and investments choices simply not available in the UK.
Up to 30% is available as a lump sum, and depending on the destination of retirement and the jurisdiction selected for the QROPS, savers could pay as little as 2.5% tax on the remainder.
A choice of currency is available meaning that the volatility of the foreign exchange is avoided, and no inheritance tax is due on any of the remainder of the funds upon death.
There is only five months before QROPS are no longer an option for NHS employees, and it sis now time for the options to be considered very seriously.
Contact us today to find out more about transferring your NHS pension to a QROPS
About John Cassidy
