March 3rd, 2010
Further to previous bulletins regarding the uncertainty surrounding Gibraltar as a suitable jurisdiction for Qualifying Recognised Overseas Pensions (QROPS), the Association of Pension Fund Administrators in Gibraltar are fairly positive that the dispute with the UK’s Her Majesty’s Revenue and Customs (HMRC), surrounding QROPS, is close to being resolved.
According to the article in the FT Adviser, which quotes Global QROPS Ltd’s opinion on the subject, Gibraltar may not be far away from being re-instated as a jurisdiction.
Please see link which includes our comments:
http://www.ftadviser.com/FinancialAdviser/Pensions/News/article/20100218/1b77c72e-1a4f-11df-b0bd-0015171400aa/Qrops-dispute-coming-to-an-end-London–Colonial.jsp
The dispute that had led to the initial suspension of UK pension transfers to Gibraltar QROPS, surrounded the ‘zero rate’ of tax from pension payments in Gibraltar. This was not regarded as a ‘progressive’ rate of tax by HMRC thus putting into question the status of the Gibraltar as a suitable jurisdiction for QROPS.
Gibraltar has been working hard to satisfy the conditions that HMRC would like them meet in order to continue as a QROPS jurisdiction. This would be an immense relief to many transferring UK pension members who’s pension transfer may have been left in limbo as a result of the suspension.
Global QROPS Ltd will up date our news items with any further details, as and when it is officially announced, that Gibraltar is back on track and that UK pension transfers to their schemes can commence.
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February 9th, 2010
According to research conducted by a leading UK Self Invested Personal Pension (SIPP) provider, around £500 million of UK pension funds were transferred to QROPS (Qualifying Recognized Overseas Pension Schemes) in the two years immediately after 6th April 2006 (A-day) when QROPS were first introduced.
The research has stated that 7,300 UK to overseas pension transfers were completed in that 2 year period.
One of the reasons for the popularity of QROPS is the potential flexibility of the overseas scheme once the member has been a non-UK tax resident (and continues to be non-UK tax resident) for 5 complete UK tax years.
The main concern for UK SIPP providers, when trying to compete with QROPS, is the death benefits once a client is in Unsecured Pension (USP), which is pension income drawdown pre age 75, or in Alternatively Secured Pension (ASP), which is pension income drawdown post age 75.
For a client in a UK SIPP in USP, on death 35% tax is applied to any remaining fund paid to a beneficiary as a lump sum. On death in ASP, if a lump sum is paid to a beneficiary, a combined tax and unauthorised payment charge of 81% on the lump sum could occur.
For UK expat pension members living abroad and looking to draw on their UK benefits, a transfer to a QROPS, depending on the jurisdiction, could lead to a greater lump sum death benefit being paid to beneficiaries (after the 5 year reporting period) then if the client remained in a SIPP – as a QROPS potentially would not have the UK tax charges.
This is one aspect that has lead to increased popularity, for retirees abroad, of QROPS over SIPPs.
Tags: QROPS, QROPS report, QROPS transfer. QROPS advice
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February 6th, 2010
A member of a UK final salary scheme, who is looking at a pension transfer to Australia, would need to understand the benefits that their existing scheme provides before transferring to Australia. In many cases, if an individual UK pension member is confident of remaining in Australia throughout their retirement, a UK pension transfer to Australia would make sense because of the tax free and flexible benefits that an Australia superannuation scheme can provide – even if the existing benefits are in a UK final salary (defined benefit) scheme.
However, as with many other issues with migration to Australia, just because a friend or work colleague in Australia has transferred their final salary scheme to Australia does not mean that you should follow suit. Not all benefits from final salary schemes are calculated the same way for each employer – indeed, even within the scheme the factors determining your retirement benefits can change depending on when membership of the scheme commenced.
The first main factor determining your benefits is the question of what defines a final salary? Final salary or final remuneration can be defined in several different ways. This can be an individual’s last year’s earnings in the year of their retirement or date of leaving employment or the best salary in the last 5 years of employment but more commonly it is an average of the final 3 years salary when leaving employment.
The next factor is years of service. Again, each scheme can vary in this definition. This can be based on years of service in the scheme. It could also be based on the years of service with the employer (if the member joined the pension scheme at a later date of joining employment). A member would also need to be aware how their scheme defines a ‘year’ of service – are part years counted? Are whole years only counted?
The final main factor is the accrual rate. This is the ‘fraction’ applied to each year of service, for example 1/60ths or 1/80ths, to determine the final pension. Each final salary scheme can apply a different fraction.
Putting this altogether, if an individual retires with a final salary of £90,000 and has worked for 40 years, a scheme with an accrual rate of 1/60th would provide a pension of £60,000 pa (£90,000 x 40/60ths).
The above example is a basic calculation to illustrate – and would not be the calculation used for all final salary schemes – and assessing whether a pension transfer to Australia should occur in these circumstances would largely depend on what the scheme offers as a transfer value.
Global QROPS Ltd advisers have both the experience, and importantly, the permissions from the UK financial services authority (FSA) to provide advice on pension transfers from UK final salary schemes.
Tags: Australia 6 month rule, Australia Pension Transfer, Australia QROPS, Expat Pension, Pension Transfer to Australia
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February 4th, 2010
A large percentage of migrants that enter Australia each year come from the UK. Indeed, around about 30,000 of the migrants that enter Australia each year come from the UK, according to a study in 2008. Putting this into perspective, this is more than New Zealand migrants to Australia (around 27,000) and those from India and China (around 22,000 from each country).
For those UK migrants living in Australia many of them would have UK pension benefits held in the UK. Should a UK expat pension member in Australia transfer their UK pensions to Australia?
Whether a UK pension transfer to Australia is a good idea or not is a big issue, not just for a UK expat pension member but also for a returning Australian that has returned to Australia after a period of work in the UK.
The benefits from a UK pension scheme can vary. This is because historically the UK has a variety of pensions that provide different benefits. For example, a final salary (defined benefit) scheme is not a common type of scheme throughout the world. The benefits from this type of scheme depend on the years of service an individual has from their employer, their final remuneration and the scheme accrual rate. This is unlike an Australian scheme where benefits depend on the fund size at retirement – where there are no guarantees.
If you are a UK expat pension member of a final salary scheme how can you compare two totally different types of benefits, in two different countries, in order to decide whether a pension transfer to Australia would be advantageous or not?
The advisers at UK based IFAs Global QROPS Ltd have many years of experience advising on pension transfers to Australia from the UK and can make firm recommendations to UK expat pension members in Australia deliberating on what to do with their UK pensions.
Tags: Expat Pension, Expat pension transfer, New Zealand QROPS, Pension Transfer New Zealand
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February 1st, 2010
The main benefits that a UK expat pension member – who is now a permanent resident of Australia – may have when considering a UK pension transfer to Australia, is the tax free income and lump sum that that the may receive at retirement age 60 from an Australian QROPS (Qualifying Recognized Overseas Pensions Scheme).
UK expat pension member in Australia, who is several years from retirement, may consider a UK pension transfer to Australia for investment reasons rather than for the benefits that they could obtain in the future.
As far as UK pension plans are concerned certain assets held in schemes are considered ‘taxable property’. These assets include residential property, fine art, classic cars, antiques, jewellery etc. Would a pension transfer to Australia (or any other QROPS scheme) therefore, allow you to invest in something that would otherwise be deemed as taxable property in the UK?
The answer to this is no. The rules on these types of investments have been clear from day one of the QROPS legislation (6th April 2006). Investments such as residential property, within QROPS, are taxable throughout the period that the individual’s membership of the QROPS. This is an important distinction to payments to members, which are more flexible outside of the QROPS reporting period.
The major advantage of an Australia QROPS is that a member can access 100% of the fund, at retirement, after the Reporting Period. Therefore, if an individual wishes to purchase a residential property after they have received their funds from the scheme at retirement, they could have the option to do so.
Tags: Australia QROPS, Overseas QROPS transfer, Pension Transfer to Australia, Regulated QROPS Advice
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January 29th, 2010
The UK Pension Scheme Services (PSS) have updated the QROPS (Qualifying Recognized Overseas Pension Scheme) list on the HMRC (Her Majesty’s Revenue and Customs) website on 15th December 2009. Individuals looking at a UK pension transfer to Australia, would observe that there are over 450 Australian QROPS schemes currently on the list.
For full details of the HMRC update see link: http://www.hmrc.gov.uk/NEWS/INDEX.HTM
If an individual does want to complete a UK pension transfer to Australia, they may be tempted to look at the list and work from there. However, HMRC stress that the QROPS list is not a recommendation or advertisement for any particular scheme, it is merely for information purposes for an individual to check that an Australian QROPS that they have received professional QROPS advice on is indeed approved.
Global QROPS Ltd advise many people migrating to Australia on their pension options. It is not, in all circumstances, best advice to transfer pensions to Australia and people need to be aware of all of the advantages and disadvantage before making a decision.
Many of the Australian QROPS on the HMRC list are either Australian employer’s pension schemes or Self Managed Super Funds (SMSF). These schemes may be available for an employee of a company or to an individual that has set up a SMSF but someone looking down the QROPS list could not simply pick out a scheme and apply to become a member.
For advice on a UK pension transfer to Australia, speak to an adviser at Global QROPS Ltd.
Tags: HMRC QROPS list, QROPS HMRC, QROPS reporting period, QROPS Rules, QROPS transfer
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January 27th, 2010
Qualifying Recognised Overseas Pensions Scheme (QROPS) specialists, Global QROPS Ltd, have been quoted in the UK financial publication, Money Marketing, regarding the use of QROPS for UK expat pension members.
A study by a leading UK Self Invested Personal Pension (SIPP) provider suggests that there is an increase in overseas pension transfers over UK pension transfers to a SIPP (for example) because of the steep UK tax charges on death whilst in Alternatively Secured Pension (ASP).
Once a UK pension member reaches the age of 75, they will be required to take pension benefits (if they haven’t already). Since 6th April 2006 (A-day), as an alternative to purchasing an annuity with accrued pension funds, a UK pension member can go into ASP – which is a form of pension income drawdown, paid from the fund. ASP was introduced as an ‘alternative’, to buying an annuity as certain religious groups objected, on moral grounds, to the concept of annuities.
One of the main problems with ASP is, once it has commenced for a member, the death benefits are severely restrictive for beneficiaries. In short, if a beneficiary was to receive death benefits as a lump sum from a deceased member of a UK pension, who was receiving benefits in the form of ASP, a tax charge as high as 82% could apply to the fund.
UK expat pension members, in retirement, have the option to transfer to a QROPS. The study suggests that many consider this as, once the 5 year reporting period falls away, the local rules of the QROPS scheme, for tax on death benefits, apply and not the UK’s rules. This could lead to the removal of the ‘82%’ tax charge on death, for beneficiaries.
Whether this is the main reason for a UK pension transfer to QROPS is by no means certain, however, it is definitely a consideration.
Please see link to the article: http://www.moneymarketing.co.uk/£500m-transferred-to-qrops/1005325.article
Tags: ASP QROPS, Death benefits QROPS, QROPS reporting period
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January 26th, 2010
On 15th December 2009, the UK’s Her Majesty’s Revenue and Customs (HMRC) updated on their website the latest updated list of QROPS (Qualifying Recognized Overseas Pension Schemes). The update is published by the PSS (Pension Scheme Services).
As with previous updates of the QROPS list, this is not a definitive list. In other words, there are QROPS schemes that have been approved by HMRC that have chosen not to appear on the list.
More importantly for those individuals looking for QROPS advice, they should not look at that list and assume that it is a recommendation by HMRC to use any of the QROPS stated. HMRC have emphasized that the publication of the list is for information purposes only and that they are not responsible for any overseas pension transfer from a UK scheme to an overseas scheme based on the clients choice of the scheme coming from the list.
As mentioned in previous news updates by Global QROPS Ltd, there are a number of schemes that feature on the list, as QROPS, but are actually unable to receive transfers in because their local rules do not allow this. An example for this is the USA – IRAs (individual retirement arrangements) and 401K’s are not permitted to take UK pension transfers in under USA legislation – despite appearing on the QROPS list.
It is also worth noting, that there are schemes that have been approved by HMRC but may have obtained their approval with incorrect information.
Please find link to HMRC latest news page. Latest QROPS list under 15th December: http://www.hmrc.gov.uk/NEWS/INDEX.HTM
Tags: HMRC QROPS, HMRC QROPS list, QROPS ADVICE, QROPS Adviser, QROPS transfer
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January 25th, 2010
Global QROPS Ltd, UK independent financial advisers that specialize in providing, financial advice for people migrating to Australia and New Zealand, will be exhibiting at the Down Under Live exhibition on Saturday 30th January and Sunday 31st January in London.
The exhibition is to be held at the Business Design Centre, London. For details of the times and location of the show, please check the attached link:
http://www.downunderlive.co.uk/london_directions.php
Global QROPS Ltd will be available to speak to potential migrants who are looking at all financial concerns relating to their move including major topics such as a pension transfer to Australia (or New Zealand), retaining UK property, UK inheritance tax and investments.
Potential migrants that have not considered the financial aspects of migration should take this opportunity to speak to Global QROPS Ltd to see if their service would be of some benefit to them.
People that may have already enquired or researched aspects such as a pension transfer to Australia or New Zealand and other financial implications in migrating Down Under should also speak to the experts to ensure they are not missing out on any details or tax breaks that their move to Australia or New Zealand could offer.
The Down Under Live exhibition is an excellent opportunity for a potential migrant to speak face to face with firms and companies that assist in a variety of aspects in the migration process.
Global QROPS Ltd looks forward to meeting you there.
Tags: Australia Pension Transfer, australian financial advice, Australian Pension Transfer, Australian QROPS
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January 23rd, 2010
Anyone approaching retirement and migrating to Australia, who is looking at a UK pension transfer to Australia, would need to consider how flexible the Australian QROPS (Qualifying Recognized Overseas Pension Scheme) is permitted to be during the QROPS reporting period.
Members of a UK pension scheme are allowed to transfer their benefits to an overseas pension scheme at anytime – providing the overseas scheme has been approved by the UK’s HMRC (Her Majesty’s Revenue and Customs) as a QROPS. However, a member of a scheme can not take advantage of the possible flexible pension benefits that the QROPS provides until after Reporting Period.
The Reporting Period is the time period in which the QROPS has to report to HMRC any payments (death benefits, lump sums or income) to the member (or member’s beneficiaries).
How Long is the QROPS Reporting Period?
The QROPS reporting period is 5 complete tax years of the pension member’s overseas residency.
For example, if an individual migrated to Australia on 1st July 2006, then the reporting period would last for the rest of that UK tax year (ending 5th April 2007) and for the 5 following completed UK tax years. Therefore, in this example, the reporting period would finish on 5th April 2012.
This may affect an individual’s retirement planning when considering a pension transfer to Australia (or any other overseas scheme). An individual pension member needs to be aware that their QROPS scheme will follow the same rules as a UK scheme for the reporting period and that they would not get the full flexible benefits from the Australian scheme before then.
Tags: Australia 6 month rule, Australia Pension Transfer, Australian QROPS, Pension transfer Australia
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