Posts Tagged ‘QROPS specialist’

Changes to Tax on Short Service Refunds for UK Occupational Pension Members

Wednesday, January 20th, 2010

In the pre Budget Report, changes were announced (on 9th December 2009) to the tax that is charged when an individual leaves an occupational pension scheme within 2 years of joining and takes a refund of their contributions.

Global QROPS Ltd will explain the impact to UK occupational pension scheme members in this position and if there is any QROPS advice that may be affected by this.

What is a Short Service Refund?

Lump sums paid to members who leave an occupational pension schemes within 2 years of joining (known as short service refund lump sums), are permitted by the UK’s HMRC (Her Majesty’s Revenue and Customs) in order to ease the administrative burden for a scheme and reduce the cost of providing an extremely small pension for life for a member.

 The pre Budget Report declared that changes are being made to take into consideration the new 50% upper rate of income tax – coming into force from April 2011.

Short service refund lump sums, made on or after 6 April 2010, will now be taxed at a rate of 20% on the first £20,000 of the refund and 50% on the remainder. (Previously this was 20% on the first £10,800 and 40% on the amount above this).

For potential migrants, taking QROPS advice, there may be little option but to take the refund. Occupational scheme administrators will not always provide a transfer value for members with less than 2 years membership and therefore a transfer to QROPS may not be an option.

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Global QROPS Ltd working with UK IFA’s regarding QROPS advice options

Thursday, November 5th, 2009

Global QROPS Ltd, UK specialists in overseas pension transfers, are working alongside UK Independent Financial Advisers (IFA’s) throughout the UK, regarding client’s Qualifying Recognized Overseas Pension Scheme (QROPS) advice options.
From the introduction of the QROPS legislation in April 2006, UK IFA’s with migrating clients have been able to add the QROPS advice option to the other retirement options available. Although this would be a valuable choice for a migrating client, it can be both a time consuming and complicated option for a UK IFA to fully research.
The team at Global QROPS Ltd have specialized in transferring UK pensions overseas for many years and as a result understand that migrating clients are in different types of UK pension schemes, have various sizes of funds and migrate to a choice of countries (with their own tax rules) throughout the globe. As UK based IFA’s (authorized and registered with the FSA) Global QROPS Ltd also understands that there are the essential ‘know your client’ facts to establish too, such as their aims, goals and long-term retirement plans.
There are many QROPS providers that are based in different jurisdictions that may (or may not) suit a client for tax, investment or retirement purposes. Finding a QROPS that can suit each migrating client’s unique circumstances is not always straightforward. Global QROPS Ltd have the experience to provide solutions.
As a result, Global QROPS Ltd are setting up agreements with UK IFA’s to assist specifically with the QROPS advice option for the UK IFA’s migrating clients.

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Receiving Regulated QROPS advice

Monday, October 26th, 2009

For people looking for advice with transferring their schemes from an existing UK pension scheme to an overseas pension scheme, approved as a Qualifying Recognized Overseas Pension Scheme (QROPS), there is always the question of who should you approach for advice?

Who can provide Regulated QROPS Advice?

There are many overseas advisers (and QROPS schemes) that are more than willing to speak to an individual interested in transferring their UK pension benefits to a QROPS. In many cases a UK pension member would be receiving advice from someone who is acting in good faith but are they receiving the same protection from the regulators for UK pension to QROPS advice as they would be receiving if they were being advised on a UK pension to another UK pension, transfer?

In most cases an overseas adviser (or scheme administrator) will not be authorised and regulated by the UK Financial Services Authority (FSA) and therefore could not be subject to any complaint to the FSA ombudsman if the advice to transfer out of a UK scheme was incorrect.

Receiving regulated advice from a UK based adviser is a very important advantage for a UK pension member, particularly for a UK pension member looking for QROPS advice pre-migration, as this offers the customer a degree of protection they would not necessarily get from a non-UK based adviser.

Anyone looking for QROPS advice should check, with the adviser that they are speaking to, that they confirm they are FSA authorised and regulated.

Global QROPS Ltd are able to confirm this.

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GMP Transfers to QROPS

Saturday, October 17th, 2009

GMP (guaranteed minimum pension) are ‘contracted out’ rights built up in a final salary (defined benefits) scheme between 6th April 1978 and 5th April 1997. QROPS (Qualifying Recognized Overseas Pension Schemes), on the other hand, are a more recent concept – introduced on 6th April 2006.
For UK final salary pension schemes, an employer would make the choice as to whether their employees national insurance contributions (NICs), that were earmarked to contribute to the second tier of the basic state pension, would be re-directed into the final salary scheme or not. If the NICs were redirected to the scheme, the scheme would then be considered a Contracted Out Final Salary Scheme (COSR). The benefits built up in this fashion (between April 1978 and April 1997) would provide GMP for the member at retirement.
As Final Salary schemes are gradually phased out, and as time passes, the amount of people with GMP benefits will become rare. Their will be, however, some people migrating that will have GMP in their pensions and will look for advice as to whether this benefit can transfer to a QROPS.
Although GMP transfers to QROPS are possible in the majority of circumstances, an individual has to be aware of the benefits that they would be giving up from their final salary scheme by transferring. Most QROPS are likely to be money purchase (defined contribution) arrangements and would be unlikely to match the guarantees.
There are, of course, other considerations – such as tax and flexible benefits – when using a QROPS, therefore an individual with GMP must take suitable advice from a QROPS specialist in the UK when weighing up their options.

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