Uk Company Pension Transfer Overseas

[chiang mai]

I missed the fact that in 2006 the UK enacted legislation allowing UK company pension to be transfered to qualifying overseas pension fund providors, apparently this piece of work is known as QROPS, Qualifying Recognised Overseas Pension Schemes. There's a number of web sites offering QROPS services and this is just one for anyone who wants to know more http://freemypension.com/. In a nutshell the legislation allows UK company pension holders to transfer their company pension out of UK control and into any one of a number of pre approved funds contained in a list covering a range of countries around the world. The benefits of this program, potentially, are that once transfered the fund becomes more flexible in that UK governement rules and restrictions can be avoided, taxes reduced and the ability to invest the funds as and when you chose much easier.

M question is: does anyone have experience of QROPS, in which countries and which funds.

[Nignoy]

I missed the fact that in 2006 the UK enacted legislation allowing UK company pension to be transfered to qualifying overseas pension fund providors, apparently this piece of work is known as QROPS, Qualifying Recognised Overseas Pension Schemes. There's a number of web sites offering QROPS services and this is just one for anyone who wants to know more http://freemypension.com/. In a nutshell the legislation allows UK company pension holders to transfer their company pension out of UK control and into any one of a number of pre approved funds contained in a list covering a range of countries around the world. The benefits of this program, potentially, are that once transfered the fund becomes more flexible in that UK governement rules and restrictions can be avoided, taxes reduced and the ability to invest the funds as and when you chose much easier.

M question is: does anyone have experience of QROPS, in which countries and which funds.

It is a straight forward transaction in Australia, any of the main financial institutions can sort it for you, Suncorp Brisbane Handled mine for me it took 4 weeks , transfer fees were minimal Nignoy

[Mosha]

Interesting, I have dropped them an email, with regard to the tax position, I forgot to ask about annual rises, as I get an annual increase of abetween 3 an 4%.

[binnsy]

Itook early retirement and the only problem i have come across is that i am still paying TAX.

[chiang mai]

Interesting, I have dropped them an email, with regard to the tax position, I forgot to ask about annual rises, as I get an annual increase of abetween 3 an 4%.

Will be grateful if you will let me know what you find out? It does seem improbable that the UK Treasury would allow the transfer of an entire "transfer amount" without some form of tax safeguard in place. But once transfered the amount is outside of UK jurisdiction so the only answer would seem that they may apply tax at source before the fund is transfered, don't know. On the other hand it does seem that this might be a means to escape the annuity rule, IHT and any caps that are currently in place on UK pension schemes.

[GuestHouse]

Before you make a decision based on what you think you are going to gain, also look at what you may and will be loosing.

Company Pensions held in the UK are covered by legislation that insures pension funds and pension payments (provides a 90% cover up to a ceiling of £25K per year - I'll check those figures later today).

You are also allowed to take 25% of your pensions as a tax free lump sum, which you can do with as you please.

But importantly - Your pension is money you cannot afford to loose - You should not be placing it at risk by investing it where you can loose just as easily as you can gain.

I am always surprised by the number of people who fail to understand the difference between 'Pension' as something you can't afford to loose and Earned Income during working years as something that is replaced on a weekly/fortnightly/monthly basis.

If you have an Occupational Pension and you want to retire, but you need to grow that pension fund inorder to be retired then take the hint - Your retirement is underfunded. Do not go placing your secure pension at risk with the hope of getting more money.

Don't just look at what you can do. Talk to a financial advisor - who is able to give international tax advice - AND to the trustees of your pension.

UK Company pensions are one of the most secure means of ensuring your financial security in old age - You'd be extremely foolish to take your money out of such a secure scheme without careful consideration and without getting very good professional advice.

[GuestHouse]

The UK Pension Fund Protections are explained here UK Occupational Pension Protection Fund.... Think very carefully before giving up these valuable protections.

[Westerner]

Itook early retirement and the only problem i have come across is that i am still paying TAX.

Claim it back at the end of each tax year.

[chiang mai]

Before you make a decision based on what you think you are going to gain, also look at what you may and will be loosing.

Company Pensions held in the UK are covered by legislation that insures pension funds and pension payments (provides a 90% cover up to a ceiling of £25K per year - I'll check those figures later today).

You are also allowed to take 25% of your pensions as a tax free lump sum, which you can do with as you please.

But importantly - Your pension is money you cannot afford to loose - You should not be placing it at risk by investing it where you can loose just as easily as you can gain.

I am always surprised by the number of people who fail to understand the difference between 'Pension' as something you can't afford to loose and Earned Income during working years as something that is replaced on a weekly/fortnightly/monthly basis.

If you have an Occupational Pension and you want to retire, but you need to grow that pension fund inorder to be retired then take the hint - Your retirement is underfunded. Do not go placing your secure pension at risk with the hope of getting more money.

Don't just look at what you can do. Talk to a financial advisor - who is able to give international tax advice - AND to the trustees of your pension.

UK Company pensions are one of the most secure means of ensuring your financial security in old age - You'd be extremely foolish to take your money out of such a secure scheme without careful consideration and without getting very good professional advice.

Sensible advice Guesthouse and such things should be done without needing to be said. However in my particular case my pension fund is very small, around £50k and does not form a part of my financial planning for my retirement and never has. I earned the fund initially out of necessity to reduce tax at one point and I have totally excluded the amount from my planning and will regard anything that comes from it as a bonus, case in point the 25% lump sum. I might view it differently were I able to invest the funds myself or indeed, exert greater influence over its earned value. For example, the UK pension fund currently only invests in UK equities and gilts and whilst my appetite for risk is fairly low, I might be inclined to be a little more adventurous with what I view as bonus money. However, I do not to understand more about the mechanics of the options and the associated rules before I can go further with this.

[Mosha]

This is the email I got back, basically telling me I don't qualify as I already recieve a monthly payment from my former employer.

HI Stephen

Sorry, but pensions in payment, unless drawdown of some description, do not qualify for QROPS transfers.

Just in case I have misunderstood, I am saying this on the basis that you are in receipt of an income (probably monthly) from a former employer or former employers pension scheme.

If you are resident in Thailand you should declare your income to the authorities there. I believe there is a double taxation treaty which should ensure that you are not taxed twice.

If I can be of any more assistance do let me know

Allan Young

[Nignoy]

My company pension was in a pension fund with Allied Dunbar after emigrating ,we discovered that the management fees were taking all the interest and the lump sum was slowly shrinking, that is why we got it transfered to a suncorp metway pension, this transfer was tax free Nignoy

[Mosha]

When I worked for I.C.I. during the late 70's we found out the company was raiding the funsd for low interest loans. The upshot of that was that they had to form an independent pension company. Needless to say at the time we were not too thriled about it.

[GuestHouse]

When I worked for I.C.I. during the late 70's we found out the company was raiding the funsd for low interest loans. The upshot of that was that they had to form an independent pension company. Needless to say at the time we were not too thriled about it.

Indeed, and ICI were not the only companies doing this 'Maxwell anyone?!' - but UK pension law has been subtantialy revised leading to UK occupational pensions being a very secure means of saving for one's old age - Defined Benefit (Final Salary) schemes being the cream of the crop.

[chiang mai]

My company pension was in a pension fund with Allied Dunbar after emigrating ,we discovered that the management fees were taking all the interest and the lump sum was slowly shrinking, that is why we got it transfered to a suncorp metway pension, this transfer was tax free Nignoy

I also got caught in the Allied Dunbar trap, fortunately I realized the situation, thanks to a newspaper article, about five days after making a one time payment and persuaded them to refund the money. Just out of curiosity, what has the fund performance been like since you transfered and were there any upfront fees?

[Nignoy]

My company pension was in a pension fund with Allied Dunbar after emigrating ,we discovered that the management fees were taking all the interest and the lump sum was slowly shrinking, that is why we got it transfered to a suncorp metway pension, this transfer was tax free Nignoy

I also got caught in the Allied Dunbar trap, fortunately I realized the situation, thanks to a newspaper article, about five days after making a one time payment and persuaded them to refund the money. Just out of curiosity, what has the fund performance been like since you transfered and were there any upfront fees?

the fund on average was bringing 9.1% per annum,I cashed the fund in 30 months ago,and invested in property, there was a 1 off up front fee of 380dollars australian, Nignoy

[chiang mai]

Just to make closure on this issue, here is the response I received from one UK agent on this subject. As might be expected this looks like a case of agents cashing in on pension policies by way of transfer and maintenance fees. As pointed out earlier by Nignoy these are not mandatory and can be avoided:

You may transfer your XXXX pension plan (but watch out for early settlement

penalties) to a QROPS.

You need to be aware that some QROPS plans are artificial and are currently

under scrutiny by HMRC.

We use a proper Channel Islands QROPS which has HMRC approval and has no

necessity for a member to be a Channel Islands resident or employee to use.

The benefit to you is that you can transfer away from UK tax regime.

If you have not already drawn your 25% tax free cash you can do so (or we

can provide you with a loan because loans are not taxed as income almost

anywhere in the world)

The policy is written under a discretionary trust with wide powers which

provides for maximum flexibility. The trustees also have a responsibility

to all plan holders and will not countenance any action that may jeopardise

approval. That said, once an individual has been non UK resident for 5

complete tax years all reporting requirements to HMRC are dropped.

You can/could legitimately transfer to a QROPS and benefit potentially from

enhanced performance.

Any income paid to you would be paid gross and it is your responsibility to

declare that income in your country of residence.

In your position we can either leave the fund inside a QROPS and you can

take benefits as and when required or you might possibly and providing you

can clearly prove to the trustees that you have independent and adequate

provision remove the fund in its entirety. However, I would have to add why

move the fund from a tax exempt investment in any event?

There is no requirement to purchase an insurance company annuity (legalised

theft), however, income is often by way of ""annuity"" because there are tax

advantages in some countries for this type of income.

The removal of the annuity requirement means that one may leave residual

funds to whomever one wishes, in the event of death which is a massive

improvement on UK rules.

There are fantastic advantages to QROPS transfers, however, some individuals

and organisations are not content with that and seek to take even more

advantage (polite word). We contend that if individuals can get so many

advantages by transferring in the first place. Why try to bend the rules

further when usually it is simply not necessary.

I am happy to prepare you a report comparing benefits from your Abbey Life

pension and in order to do that I will need certain information and your

signed authority.

If you like what you see, we will arrange the transfer for you.

We charge a fee of 5% of the fund value for arranging the transfer and there

is an establishment fee of .8%, subject to a minimum of £500 per annum and

ongoing annual management fees of .5% per annum again subject to a minimum

of £500 per annum (or for a bespoke portfolio 1% per annum).

Edited April 21, 2008 by chiang mai

[Taijitu]

Itook early retirement and the only problem i have come across is that i am still paying TAX.

Claim it back at the end of each tax year.

If the company pension is UK sourced then it is taxed and it is not possible to claim the tax back at the end of the tax year.

[Paul MBMG]

Itook early retirement and the only problem i have come across is that i am still paying TAX.

Claim it back at the end of each tax year.

If the company pension is UK sourced then it is taxed and it is not possible to claim the tax back at the end of the tax year.

but contrary to common misconceptions, it can be possible to transfer a Uk compnay scheme in drawdown to a QROPS and legitiamtely avoid tax altogether