Posts Tagged ‘QROPS’

Transfer delays for members’ of public sector pension schemes

Thursday, August 5th, 2010

Members’ of Public sector pension schemes wishing to transfer to QROPS and to other UK registered schemes, are currently unable to request transfer value quotation following a Government decision to link final salary pensions to the Consumer Prices Index.

The Chancellor George Osborne announced in the emergency Budget that the indexation applied to public sector pensions would change from the Retail Prices Index to CPI. The implementation date has not yet been confirmed but it is anticipated that guidance should be published within then next few months.
Over time CPI is generally 0.5% lower than RPI mainly because it does not include housing costs. As such, the change is likely to reduce government pension liabilities but is likely to result in lower transfer values for members’.

Individuals in receipt of a guaranteed transfer value for public sector schemes, wishing to transfer to a QROPS, should act swiftly before the guarantee period expires.

Once Public Sector schemes have received guidance from Treasury on how to apply CPI we are expecting long delays while the schemes deal with the backlog of transfer value requests that have accumulated during the transfer embargo.

If you are a member of a public sector pension please do not hesitate to contact Global QROPS for further advice.

Tags: , , ,
Posted in Advice, News | Comments Off

The Popularity of QROPS

Tuesday, 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: , ,
Posted in Advice, News | Comments Off

Global QROPS Ltd in Money Marketing regarding Residential Property

Thursday, December 3rd, 2009

Further to Global QROPS Ltd’s recent item regarding permitted investments within QROPS (Qualifying Recognized Overseas Pension Schemes), the position and our thoughts on this matter can now be viewed in financial journal Money Marketing:

http://www.moneymarketing.co.uk/pensions/hmrc-spells-out-qrops-property-ban/1002818.article

Essentially the rules regarding ‘taxable property’ in QROPS have always been clear from the UK’s HMRC (Her Majesty’s Revenue and Customs) perspective since the QROPS rules were introduced. However, the legislation that had been set down, had made some advisers and QROPS schemes unclear as to what is allowed, as an investment, after the QROPS ‘5 year reporting period’. Therefore HMRC felt compelled to publish an update clarifying exactly what is possible.

To clarify what the rules are, residential property and tangible moveable assets (such as jewellery, classic cars, antiques etc) would all be treated as taxable property investments regardless of how long an individual QROPS member has been resident outside of the UK for tax purposes.

Global QROPS Ltd have been aware of these rules from outset and the difference between the reporting period for payments to members from QROPS ( 5 complete tax years of the member’s overseas residency) and the reporting period for taxable property investment (essentially, for the life of the member).

For those individuals that have invested in such assets, the HMRC tax charges are clear in the pension scheme manuals: an unauthorized payment charge will be levied on the member of 40% of the property’s value plus the scheme administrator will be liable for a scheme sanction charge of 15%.

In the case of a residential property, there would be additional tax charges of up to 40% on rental income and 40% tax on any capital gains.

For further clarification, please feel free to speak to an adviser at Global QROPS Ltd.

Tags: , ,
Posted in Advice, News | Comments Off

Why would you need QROPS Advice?

Friday, July 31st, 2009

Factors when Considering QROPS Advice
Planning for the ideal lifestyle in retirement is not easy. For the 130,000 people that migrate from the UK each year, to live abroad, there are additional opportunities and problems to consider.
The main question is whether a migrating UK pension member should move their UK pension benefits with them.
Careful advice should be taken as whether the benefits available from the existing UK scheme are better for the individual as to those available from an overseas scheme.  
By obtaining the correct QROPS advice, an individual could obtain that ideal retirement lifestyle.
A QROPS adviser would take into account all the necessary factors and advise accordingly.
The questions that a QROPS adviser would ask could include:
Do you intend to retire abroad?
Will you return to the UK to live at any point?
What type of UK scheme are you currently a member of?
What benefits does your UK scheme currently provide for you?
Does your current scheme levy any additional charges for transferring?
Do you have dependants?
Are there investments in your existing scheme that you would like to retain?
Is there an appropriate QROPS scheme, provided by your new employer, in your new country of residence?
What are the rules for retaining pension investment overseas in your new country of residence?
What level of tax is applied, in your new country of residence, to any pension benefits received?
Only when considering the answer to the above questions can a QROPS adviser deliver the most appropriate QROPS advice.

Tags: , ,
Posted in Advice | Comments Off