Why Do I Need QROPS Specialists?
As more and more QROPS come onto the market, you might be asking yourself, why do I need QROPS Specialists to sort out my pension transfer? Not all QROPS are the same and both the fees as well as level of customer service varies greatly.
It is important to seek out a QROPS specialist who is up to date with the latest QROPS rules and can advise you on the best course of action depending on your current situation.
Each transfer is different and requires different treatment.
The main points to take into consideration when you are thinking about pension transfers into a Qualifying Recognized Overseas Pension Scheme (QROPS) should be: 1.
Taxation: Ensure the jurisdiction you transfer to employs double taxation agreements and that non-resident status on taxation on pension income is fully understood.
Remember you do not need to transfer your QROPS to the country you reside to.
It is typical for someone to live in Thailand, for instance, and transfer their pension to the Isle of Man for tax purposes.
2.
Trustees: Your financial adviser should conduct a comprehensive due diligence on the QROPS scheme trustees.
The QROPS should be listed on HMRC's web site and the trustees should follow HMRC's guidelines.
3.
Residency: Be sure of taxation obligations in your country of residence.
If the pension member is returning to the UK, take the chance to explore other options as well.
It may be better for a client to transfer into a Self Invested Pension Plan (SIPP), especially if the client has a smaller pension and their assets fall under the inheritance tax threshold.
SIPPs are typically cheaper as well 4.
HMRC rules: Ensure the conditions for transfer are met.
30% of your pension can be received for a lump sum.
70% must be used to provide for a pension for life.
The 5 years offshore rule must be met as well before you can draw your pension.
You can move your pension as long as you intend to live/retire abroad.
Be careful of schemes, particularly in Hong Kong or New Zealand which promise more than 30% access to your pension.
Many are facing a retrospective tax clawback because the scheme did not adhere to the spirit of the rules.
The Isle of Man has just made changes to their rules (50c).
This may enable clients with large pension pots (200k plus) to access more than their 30% lump sum.
For example, if someone has a £200,000 pot, only £140,000 (70% of it) has to be used to provide a pension income.
So, if you have an initial pot of £200,000 that you invest in low risk funds which grow at 5% per year for 20 years, then that will give a £530,000 pension pot.
But, only £140,000 needs to be used as a pension, meaning that the member has access to £390,000 which he can take as a lump sum, which you could use to buy property or help yor kids get on the property ladder.
So, 100% of the investment return + 30% of the original can be taken as a lump sum, giving a massive incentive to enter this type of a QROPS scheme rather than a SIPP or Guernsey QROPS.
5.
Diversification: Don't hold all your eggs in one basket.
Spread your investments across different asset classes and sectors.
Try to get some funds which have little or no correlation to the stock market to protect clients' interests.
6.
Custodian: Ensure your financial adviser completes due diligence on the investment vehicle that will hold your pension transfer and understands the tax rules concerning the jurisdiction where the portfolio is held.
7.
Jurisdiction: Try to aim for jurisdictions where QROPS have been held for long periods of time such as the Isle of Man or Guernsey where the rules are well known by HMRC, pension trustees and pension companies.
8.
Understand the different types of pension schemes: Ensure a QROPS is the right way forward and a transfer value analysis is conducted especially for final salary pension schemes.
Make sure you are up-to-date with the latest HMRC rulings and pension changes.
9.
Reviews: Make sure your financial advisor sends you regular updates.
10.
QROPS Updates: The UK pension landscape is changing: Read the Foot review, Lord Hutton pensions commission report, OECD/EU directives, HMRC website and other related literature to prepare for potential changes to retirement and tax legislation and/or pensions transfer, QROPS or QNUPS retirement opportunities in the future.
Written by Richard Malpass.
In order to get the lowest fees for your QROPS pension transfer and get the best advice, please contact a QROPS specialist now.
For a free QROPS guide and consultation, please contact Richard at QROPS Specialists.
It is important to seek out a QROPS specialist who is up to date with the latest QROPS rules and can advise you on the best course of action depending on your current situation.
Each transfer is different and requires different treatment.
The main points to take into consideration when you are thinking about pension transfers into a Qualifying Recognized Overseas Pension Scheme (QROPS) should be: 1.
Taxation: Ensure the jurisdiction you transfer to employs double taxation agreements and that non-resident status on taxation on pension income is fully understood.
Remember you do not need to transfer your QROPS to the country you reside to.
It is typical for someone to live in Thailand, for instance, and transfer their pension to the Isle of Man for tax purposes.
2.
Trustees: Your financial adviser should conduct a comprehensive due diligence on the QROPS scheme trustees.
The QROPS should be listed on HMRC's web site and the trustees should follow HMRC's guidelines.
3.
Residency: Be sure of taxation obligations in your country of residence.
If the pension member is returning to the UK, take the chance to explore other options as well.
It may be better for a client to transfer into a Self Invested Pension Plan (SIPP), especially if the client has a smaller pension and their assets fall under the inheritance tax threshold.
SIPPs are typically cheaper as well 4.
HMRC rules: Ensure the conditions for transfer are met.
30% of your pension can be received for a lump sum.
70% must be used to provide for a pension for life.
The 5 years offshore rule must be met as well before you can draw your pension.
You can move your pension as long as you intend to live/retire abroad.
Be careful of schemes, particularly in Hong Kong or New Zealand which promise more than 30% access to your pension.
Many are facing a retrospective tax clawback because the scheme did not adhere to the spirit of the rules.
The Isle of Man has just made changes to their rules (50c).
This may enable clients with large pension pots (200k plus) to access more than their 30% lump sum.
For example, if someone has a £200,000 pot, only £140,000 (70% of it) has to be used to provide a pension income.
So, if you have an initial pot of £200,000 that you invest in low risk funds which grow at 5% per year for 20 years, then that will give a £530,000 pension pot.
But, only £140,000 needs to be used as a pension, meaning that the member has access to £390,000 which he can take as a lump sum, which you could use to buy property or help yor kids get on the property ladder.
So, 100% of the investment return + 30% of the original can be taken as a lump sum, giving a massive incentive to enter this type of a QROPS scheme rather than a SIPP or Guernsey QROPS.
5.
Diversification: Don't hold all your eggs in one basket.
Spread your investments across different asset classes and sectors.
Try to get some funds which have little or no correlation to the stock market to protect clients' interests.
6.
Custodian: Ensure your financial adviser completes due diligence on the investment vehicle that will hold your pension transfer and understands the tax rules concerning the jurisdiction where the portfolio is held.
7.
Jurisdiction: Try to aim for jurisdictions where QROPS have been held for long periods of time such as the Isle of Man or Guernsey where the rules are well known by HMRC, pension trustees and pension companies.
8.
Understand the different types of pension schemes: Ensure a QROPS is the right way forward and a transfer value analysis is conducted especially for final salary pension schemes.
Make sure you are up-to-date with the latest HMRC rulings and pension changes.
9.
Reviews: Make sure your financial advisor sends you regular updates.
10.
QROPS Updates: The UK pension landscape is changing: Read the Foot review, Lord Hutton pensions commission report, OECD/EU directives, HMRC website and other related literature to prepare for potential changes to retirement and tax legislation and/or pensions transfer, QROPS or QNUPS retirement opportunities in the future.
Written by Richard Malpass.
In order to get the lowest fees for your QROPS pension transfer and get the best advice, please contact a QROPS specialist now.
For a free QROPS guide and consultation, please contact Richard at QROPS Specialists.
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