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Your UK Pension - To QROPS or not to QROPS
Posted: 15 July 2008 12:15 PM  
Tourist
Total Posts:  5
Joined  2008-07-15

Hello everyone.
I live and work between the UK and Spain and you can see what my line of business is at http://www.wealthprotect.co.uk but I want to draw your attention to something that has the making of a catastrophe for a lot of people if they walk into it blind.
HMRC (aka the UK taxman) has imposed all sorts of tax penalties and operational limits on all UK registered pension schemes as a result of the new pension regulations coming into force some 5 years ago.
In that legislation they hid away a means whereby people like us who are essentially full or part time expats could take their pension funds out of the UK and therefore place them outside this awful penalty ridden legislation into one of a list of Qualifying Recognised Overseas Pension Schemes or QROPS.
The advantage other than not being taxed up to the hilt on income or the fund if you wanted to leave any of it to your beneficiaries when you died are that the pension becomes an essentially tax free pot of money after 5 years that you can do more or less what you like with.
Trouble is now that every half baked financial adviser this side of the Orion nebula is dashing about the Costas getting everyone to go into a QROPS when in many cases it is simply quite the wrong thing to do.
The real benefits occur after 5 years has passed.  Within that time all the rules are the same as if you had done nothing.  So there are people being conned into QROPS when they certainly won’t live 5 years thinking that having done QROPS that when they die next month as the doc predicted their pension fund will pass to their wife, children whatever tax free. Equally there are people who have QROPSed who will never qualify as a non UK tax resident and merrily think they have all this lovely tax free status and of course haven’t at all…. and there are other scenarios too but I won’t go on boring you with such technical trivia!
The purpose of this posting is to point you at http://www.qrops-in-spain.co.uk where you can go and get the right information and download a Questions and Answers document so that you can understand exactly what QRPS is and can then have access to crusaders like me who will make absolutley sure that if you are going to be an expat that you do the right thing with your pension - which is for most people the basis for their future financial security and therefore enoyment of their new status as an expat.
That’s it - now I’m off to enjoy the sun outside here in Jalon.
Rex Ashcroft

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Rex Ashcroft
Director
Wealth Protection International Limited

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Posted: 21 July 2008 03:02 PM  
Expat
Total Posts:  38
Joined  2007-03-07

Ahhh, Wise words.  You certainly need good quality and independent advice.  There are trifling little details which if they catch you out are very expensive.  This is true of all types of financial planning but particularly so with QROPS. For example, the 183 day rule or the average of 90 days a year in the UK in the last 4 years are not the ONLY determining factor regarding residency.

Living in Spain permanently as I do gives you a different perspective. This is particulalry important when dealing with QROPS.  My company, the Spectrum IFA Group has qualified and experienced advisers from Gibraltar to the Costa Brava ( up the coast from Barcelona).  The Spectrum IFA Group is also regulated in Spain.

For a cautious and conservative yet clear approach please visit http://www.expatfinancialadvicespain.com

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 01 March 2009 04:01 PM  
Expat
Total Posts:  38
Joined  2007-03-07

The QROPS situation is moving on and so there is an updated page about QROPS at http://www.expatfinancialadvicespain.com/qrops-rules.htm

One thing which is becoming clear is that ther is more than one element to make a QROPS successful.

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 01 March 2009 05:18 PM  
Tourist
Total Posts:  5
Joined  2008-07-15

I couldn’t agree more Barry, people using QROPS (if they really must) and any other Pension arrangement that is fully or partially subject to UK Registered Pension Scheme regulations need as much professional advice as they can muster and then some in order to ensure they do the right thing in the first place let alone have access to decent investment advice.

We are still coming across a steady stream of people who have “done QROPS” because “the financial adviser told us we had to now we are living in Spain/Portugal/France/Italy/Greece/etc” but there will always be black sheep in a family and the financial adviser family are no exception regulation or no regulation.

Fortunately we work closely with four of the largest and most prestigeous Financial Services organisations in the world and as a consequence can offer our clients the very best of advice and guidance in all aspects of “QROPS or not to QROPS”.  I’m sure Spectrum are the same, at least I hope so smile

As a result, probably only 30% of people who come through us actually “do” QROPS, the rest divest themselves completely of the UK Registered Scheme environment and all its rules, regulations, penalties, ceilings and hidden taxation; instead they transfer out of the UK Scheme environment altogether and enjoy complete freedom as regards how to use what are then ex-pension assets - the greatest joy they have is that there is no compulsion to purchase any annuity ever for any reason at any time and that there is no inheritance tax trap for those who want to pass those assets on to their beneficiaries.

As always, there is more than one way to skin a cat and to my mind, after all the initial hype, poor old QROPS is a most often a dead duck… well at least for most of the people who come to talk to us about their pensions anyway.

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Rex Ashcroft
Director
Wealth Protection International Limited

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Posted: 13 May 2009 08:03 PM  
Expat
Total Posts:  38
Joined  2007-03-07

QROPS are coming of age, in part because HMRC is now starting to understand what it wants to acheive by allowing a peson to move a UK scheme to an Qualifying Recognised Overseas Pension Scheme (QROPS).  Consequently, the UK Government have now “graded” schemes from different jurisdictions.  We feel that it is important that only the countries that are considered “top Quality” by the UK Government are considered. 

Please feel welcome to call if you have a UK pension and need further information.

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 06 July 2009 05:27 PM  
Expat
Total Posts:  38
Joined  2007-03-07

Two quick Updates on QROPS. 

Firstly, there can be some advantages to moving your pension to a QROPS even if you are going back to the UK. You will need individual advice and this is not correct for everyone.

Secondly, remember that you can keep your investments in Sterling when you do your Qrops.  You do NOT have to convert your pension into Euros.  If you believe that the exchange rate will get better again this is a very helpful option.

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 23 September 2009 09:58 PM  
Tourist
Total Posts:  1
Joined  2009-09-23

Hi All,

Barry and Rex are offering good advice. I was going through the whole QROPS debate with an older relative. I was recommended an Independent Financial Advisor who specialises in QROPS and he sorted everything out for us. It was a breeze and my aunt literally paid zero tax. She was delighted as it would have been tens of thousands in tax for her otherwise. I certainly don’t know enough about the Tax laws and regulations myself so have to rely on good informative sites like this to at least get to grips with the basics. Thanks for the info Barry and Rex, my IFA Mark has the same ‘keep it easy to understand’ approach. Your time and effort is much apprecaited as it does seem a bit of a minefield. I don’t know Mark’s email address off by heart but his website is http://www.MF-qrops.co.uk  Perhaps it would be worth you guys getting together somehow as industry experts and write a book or something etc. , anyway just a thought.

Best Wishes

John

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Posted: 29 July 2010 09:04 PM  
Expat
Total Posts:  38
Joined  2007-03-07

Dear John,

Thank you for your kind words and I am pleased that your aunt has had her pension requirements resloved.  May I just highlight a couple of points for other people, points which are very pertinent to expats considering QROPS.  Like the person who helped you we are a QROPS specialists.  The following points you should be aware of if you have a UK final salary scheme.

The austerity measures in the Emergency budget have added to the deficits for final salary schemes.  Eg Royal Mail deficit now over 10 Billion The measures increased the deficits by 12 Billion in one month and a further 43 Billion by Christmas 2010.

The change to the rate of indexation announces by the Government will wipe approx 25% of your transfer value shortly.

The EU is proposing to introduce a new levy of 500 Billion on UK final salary schemes.  This will kill some schemes, put the whole issue of the Pension Protection Fund and peoples benefits in jeopardy.

Individual advice is still vitally important.  If you have a UK pension and wish to discuss how these changes may affect you please feel welcome to email me.

Barry

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 15 August 2010 07:57 PM  
Tourist
Total Posts:  7
Joined  2010-07-26

Pensions In the European Union

The EU’s equivalent of a totalization agreement is known as EULISSES as regards State pensions. But for most expats, occupational pension schemes are a much greater preoccupation. The European Commission announced grandly in October 2005 that workers switching jobs or countries would no longer have to worry about substantial loss of work pension benefits under the ‘portability of pensions’ Directive that it had proposed. Previously, changing job or country could mean losing occupational pension benefits in some Member States. But the proposal announced by the EC would mean avoiding major losses, and in many cases allowing benefits to transfer with the worker across sectors and countries in the EU.

The Directive aimed to help the growing numbers of EU workers who are switching jobs, and was designed to support the Commission’s ‘Jobs and Growth’ strategy by making it easier for workers to move jobs and countries. Vladimír Špidla, European Commissioner for Employment, Social Affairs and Equal Opportunities, explained that the adoption of the proposal would come shortly before the beginning of the 2006 European Year of Workers’ Mobility.

“If we expect workers to be mobile and flexible we cannot punish them if they change jobs. Pension rights must be fully transferable. This directive has been long overdue.”

The proposal was designed to reduce the obstacles to mobility within and between Member States caused by supplementary pension schemes provisions. These obstacles relate to: the conditions of acquisition of pension rights (such as different qualifying periods before which workers acquire rights), the conditions of preservation of dormant pension rights (such as pension rights losing value over time) and the transferability of acquired rights. The proposal also seeks to improve the information given to workers on how mobility may affect supplementary pension rights. The proposed legislation has not however had an easy ride. After the European Parliament did considerable damage to the main planks of the Directive in 2007, the European Commission announced in October, 2007, that it had adopted an amended proposal taking on the majority of the European Parliament’s amendments. It focuses on the setting of minimum requirements for better access to pension rights, clearer rights of preservation so mobile workers’ pensions are treated fairly, and improved access to useful and timely information. Its aim is now to ensure that workers are not penalised because of mobility rather than to enforce transferability, the original goal of the legislation.

Commenting on the proposal Vladimír Špidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities explained that: “The amended text highlights the determination of the Parliament, the Council and the Commission to break down the barriers to workers’ mobility in Europe.” Saying that he was disappointed by the EP’s attitude, Mr Špidla nevertheless acknowledged the progress made, underlining that “achieving the right balance between reducing obstacles to mobility, while maintaining a stable and sustainable environment for the development of supplementary pension provision is one of Europe’s greatest challenges.”

He went on to add that: “Enabling workers to move freely around the EU and national labour markets without losing important occupational pension benefits is a clear example of “flexicurity” in action. The urgency of improving workers’ rights is why I was ready to accept a compromise on the issue of the transfer of supplementary rights, as well as the exclusion from the Directive of pension schemes that are already closed to new members. It is important that we take this significant step now, and not risk further delay by trying to achieve all our objectives at once.”

Provisions relating to transfers are therefore not present in the proposal. The Commission recognises the view of many that, at this time, measures for the transfer of supplementary rights are a step too far. But that was the whole point of the original Directive, surely?

The title of the proposal was amended to ‘Proposal for a directive on the minimum requirements for enhancing worker mobility by improving the acquisition and preservation of supplementary pension rights ‘. As of mid-2010, the Pensions Portability Directive seems to be bogged down in the Council, with Germany causing particular difficulties. Another EU Directive, 2003/41/EC, on the activities and supervision of Institutions for Occupational Retirement Provision, known colloquially as IORP, which attempts to create a Europe-wide market for pensions provision, is a framework directive, and fairly toothless at that - it has been left to individual countries to implement regulations under the Directive, and they have not done much. For the time being, therefore, hopes for a Europe-wide pensions market probably therefore rest with the European Court of Justice, which ruled in early 2007 that Denmark was in breach of European law on freedom of movement of workers and capital by not granting tax-deductions on contributions to pension contracts with foreign insurers. Swedish Finance Minister Anders Borg, whose country has a similar case pending with the ECJ, had commented at a summit in Brussels that the government would analyse the verdict and its possible implications for Sweden.

These are just two of a series of cases brought against national governments by the European Commission in recent years, which issued a communication seven years ago stating that it would sue member states that did not allow ‘reasonable’ tax treatment of mobile employees’ income. While the Commission’s work on taxation has certainly had beneficial results, it doesn’t help with fragmentation, and does not have the force of law as yet. There is also room for interpretation regarding the definition of ‘reasonable treatment’ at the moment.

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Posted: 17 September 2010 07:16 PM  
Expat
Total Posts:  38
Joined  2007-03-07

May I let the forum know that Expat Financial Advice Spain has a new blog at http://www.expatfinancialadvicespain.com/blog

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 20 September 2010 06:43 PM  
Tourist
Total Posts:  7
Joined  2010-07-26

In the UK I know pension transfers are highly regulated, and you need to have specific Pension Transfer qualifications (G60, AF3 etc. etc.), on top of the standard Financial Advisor Qualifications.

What concerns me (present company excluded), is there seem to be offshore companies with little or no training/qualifications in Pension Transfer, that are recommending QROPS left, right, and centre.

Does anyone have any views on this ?

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Posted: 19 October 2010 02:59 PM  
Expat
Total Posts:  38
Joined  2007-03-07

An intention has been announced by George Osborne, Chancellor of the Coalition Government to change the rules and tax regulations regarding pensions in Britain.  It is advisable for people with a UK pension, and particularly those approaching retirement, to seek advice sooner rather than later as this may result in tax savings.

Johnexpat makes some good points.  Regulated, qualified and experienced advisers are the best ones to deal with.  A professional and polite approach should also not be too much to ask.  If you have these characteristics in place it is often helpful to be able to look your adviser in the eye (so clients tell me!).  You also know where the person is based which you may not know in other circumstances.  The company may be a perfectly reputable company and do a good job but if they are based in Panamá for example, it is a bit more difficult to pop in to see them.

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 08 November 2010 08:43 PM  
Expat
Total Posts:  38
Joined  2007-03-07

Interesting development.  It has been announced that the BT Pension Scheme deficit has fallen 2.7 Billion GBP overnight!!!  This is being hailed as a great success by some elements of the Press but it is not.

The UK Government has changed the basis for indexation on final salary pension schemes from Retail Price Index to Consumer Price Index.  Yawn, Yawn, very boring most people think.  Yet you SHOULD take interest if you have, or have had, a final salary pension in the UK. 

The BT pension deficit fell by 36% overnight because of the change.  The fall was not because of a great surge in the value of the assets in the fund.  It fell because this change has reduced the future pensions of the scheme members by 36%.  It is the members, most of who will believe such a change without their consent is illegal, that have lost out.

Please check to see if you have a final salary pension and seek advice where appropriate.

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Barry Davys MBA Dip PFS
Spectrum IFA Group

Tel:  00 34 645 257 525
Email:  .(JavaScript must be enabled to view this email address)
QROPS Advice

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Posted: 19 January 2011 04:07 PM  
Tourist
Total Posts:  4
Joined  2010-09-20

Back to the subject of QROPS transfers.

Be warned do not undertake your transfer without a TVA.

OIIA undertake a free TVA (Transfer value analysis) for every QROPS pension transfer enquiry they receive.  Other IFAs charge up to £500 for this service. This is undertaken by a CII G60 qualified adviser.

Most people are looking for a QROPS transfer with a low price tag. A low cost solution may be the difference between undertaking a QROPS transfer or not. But how do you know whatever the cost involved whether a transfer is financially beneficial. The answer is a TVA (Transfer value analysis). It is like having the AA inspect a car you are about to purchase.


FSA regulations on Final Salary pension transfers make it compulsory for an IFA to undertake a TVA (Transfer value analysis) as part of the pension transfer advice process. A TVA clearly shows in financial terms whether or not a transfer is beneficial.


Without this calculation it is impossible to make any comparison. The calculation can be very complicated, and must only be completed by a suitably qualified adviser. Hence the CII G60 or equivalent qualification. To sit the G60 qualification one has to hold a Certificate in Financial planning. So you know that if your advisor is CII G60 qualified he will have a minimum of five years experience as a financial planner. Proceed with care if your adviser does not, or cannot provide you with a TVA. As this may also signal that the firm you are dealing with employs totally unqualified people. Who you are about to entrust with your hard earned life savings.


OIIA are happy to undertake a TVA (Transfer value analysis) prepared by a CII G60 qualified adviser free of charge. This will clearly demonstrate whether a QROPS transfer is financially beneficial to you. This combined with discounted fees and cash rebate, ensure that you get the right solution at the lowest cost possible.

For further details contact:  .(JavaScript must be enabled to view this email address) 

or visit their website:  http://www.pension-transfers-qrops.com/index.html

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Posted: 20 January 2011 12:49 PM  
Tourist
Total Posts:  5
Joined  2011-01-20

I spent a lot of time looking at IFAs to do my pension transfer. Well over a year spent on it. And I must say what a nightmare it was. Some IFAs told me I could take 100% cash out legaly. So I spent time on this half say you can half say you carnt. So I made my own decision on this and decided not to take a chanse of being taxed 55% for taking all the cash out, especialy when the IFA wanted to charge me 8% as his fee.

I then went down the route of paying for advice. A fixed fee of £350. That go me an hours consultation with what I can only call a young lad who seemed to know the QROPS provider and investment structure before he came in the door. He sent me a report a few days later. But when I saw the fees involved I thought this is not for me as my pot is only £55,000.

However I did do my transfer using the IFA on this forum OIIA. After taking information off me and a copy of my Pension statement. They sent me a TVA. I had never heard of it. It clearly showed the benefits of my existing pension at age 65, compared to a QROPS at age 65. They gave me full details of the costs involved including their charges, which in total was a lot less than any of the other options I had been given. I was surprised with the company they used as it was a well known top UK company. And all the admin was taken care of by them. In short it went like clockwork.

My QROPS has been up and running for a few months now so it is early days but already I an in profit. So it proves that it can be done. Many thanks to John and his team.

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Posted: 09 March 2011 05:24 PM  
Tourist
Total Posts:  4
Joined  2010-09-20

Hi Brian,
did you do your QROPS transfer after seeing OIIA mentioned on this post?

I did my QROPS transfer with them nearly two years ago. Saved a small fortune compared to what others had quoted.

I would be interested to compare notes as to what investments you now hold in your QROPS.

  James….......

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