Best advice should be about what is best for a client and in their best interests.
This is especially important when it comes to pension planning and advice about pension transfers as the entire income for the client for their next 10, 20 or even 30 years of life after retirement will be funded from their pension plans.
There are plenty QROPS of companies and schemes out there that will try and tell you that you can move your UK pension to a jurisdiction where you can take a 100% lump sum and take all of the money into your bank account - but is that best advice?
No, I don't think it it, and you shouldn't either. If your financial advisor is using this angle to sell you a retirement product, then perhaps you should question his motives?
Okay, so you can buy a great new house or a car with your 100% lump sum when you retire, but how are you going to feed or look after yourself for the next 20 years or more? You can't eat bricks and a new car might get you to the shops, but if you've got no income to buy anything when you get there, then you have a major problem.
Advising on QROPS transfers to pension busting schemes is not good financial advice and it's certainly not retirement planning.
If you need a pot to buy your home at retirement or a new car fund, then this should be arranged by your financial advisor and a specific savings fund can be established, but pension busting should be discouraged.
UK HMRC is actively looking at QROPS juristictions that allow pension busting and may soon be de-registering them from the list of recognised and qualifying schemes.
Don't however confuse this with Pension Commencement Lump Sum or PCLS. This used to be known as the 'tax-free lump sum' and is a % of the pension pot available to you at commencement of your retirement earnings so that you can pay off your outstanding liabilities and enjoy your income with minimal outgoings.
This should have been priced into your pension planning so that your income to live on for the rest of your life is not affected.
Welcome to the UK Qualifying Recognised Offshore Pensions Schemes (QROPS) pensions blog.
QROPS are UK HMRC registered pension schemes that give UK clients the freedom to move your pension to a qualifying jurisdiction of your choice and then choose how you want your money to be invested.
The concept behind this QROPS blog is to give expatriated consumers information and advice on what is available in the offshore market for pension transfers to jurisdictions that may:
Be More Tax-Efficient
Give Freedom of Choice in your Investments
Generate Higher Returns and Give a Greater Retirement Income
Be Free of Inheritance Tax and Be Able to be Passed On to Loved Ones
The offshore market is of high importance and many UK consumers simply don't know where to look for the information they need. This is becoming especially important now that the UK Government has new legislation on the table to change UK pensions, whether frozen or active that may mean they are taxed at 28% on the profits generated, and for defined benefits or the old "Final Salary" scheme, there will no longer be any need for the scheme's administrators to keep up with inflation of any kind at all, meaning that the value of your benefits may reduce in value each and every year.
Why are they doing this? Because 92% of the top 100 final salary pension schemes in the UK are technically insolvent and cannot afford to pay out against their liabilities.
UK defined contributions schemes, at present are growing by an average of between 2 and 3% per annum, this means that, with inflation having just come down to 3.6%, your UK pension is still losing value in real terms every year.
Add this to the fact that you will have to pay UK income tax on your UK pension, deducted at source before you are paid a retirement income, regardless of where you live in the world, and you may be facing quite a bad deal.
There are many QROPS options out there and the advice can be confusing, but hopefully this blog will start to explain what is available to you in plain English and give you the information you need to decide if QROPS is right for you.
The concept behind this QROPS blog is to give expatriated consumers information and advice on what is available in the offshore market for pension transfers to jurisdictions that may:
Be More Tax-Efficient
Give Freedom of Choice in your Investments
Generate Higher Returns and Give a Greater Retirement Income
Be Free of Inheritance Tax and Be Able to be Passed On to Loved Ones
The offshore market is of high importance and many UK consumers simply don't know where to look for the information they need. This is becoming especially important now that the UK Government has new legislation on the table to change UK pensions, whether frozen or active that may mean they are taxed at 28% on the profits generated, and for defined benefits or the old "Final Salary" scheme, there will no longer be any need for the scheme's administrators to keep up with inflation of any kind at all, meaning that the value of your benefits may reduce in value each and every year.
Why are they doing this? Because 92% of the top 100 final salary pension schemes in the UK are technically insolvent and cannot afford to pay out against their liabilities.
UK defined contributions schemes, at present are growing by an average of between 2 and 3% per annum, this means that, with inflation having just come down to 3.6%, your UK pension is still losing value in real terms every year.
Add this to the fact that you will have to pay UK income tax on your UK pension, deducted at source before you are paid a retirement income, regardless of where you live in the world, and you may be facing quite a bad deal.
There are many QROPS options out there and the advice can be confusing, but hopefully this blog will start to explain what is available to you in plain English and give you the information you need to decide if QROPS is right for you.
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I found your blog when I was looking for a different sort of information wonderful collection, but I was very happy and glad to read through your blog. The information available here is great
ReplyDeleteQROPS Pension Transfer
Dear Sajib.
ReplyDeleteThanks very much for your excellent feedback and indeed the link to the DeVere QROPS website.
I myself work with DeVere, and it's good to see others recommending our advice.