Uk Pensions

[leicester]

QROPS v SIPP's

Transferring to a QROPS may result in the loss of certain protected rights, including contracted-out rights. It is advisable that the member commissions a pension transfer analysis from a suitably qualified professional advisor before transferring any pension provisions from the UK.

If an expatriate returns to the UK, the UK pension legislation will apply to the scheme. This means that the member will have incurred the expense of the transfer with no associated benefits. Transfer to a QROPS should therefore only be recommended to those whom have left the UK permanently.

HMRC takes a dim view of any abuse of the QROPS regime, particularly schemes where the sole intention is to give access to 100% of the pension fund. Action has already been taken in this area with the withdrawal of QROPS status from schemes based in Singapore. This potentially creates a very tricky situation for those who have already transferred their pension funds to a scheme that subsequently has its QROPS status withdrawn. Hong Kong and Guernsey are currently under investigation. Historic transfers would be considered unauthorised payments, which results in a tax liability on the member equal to 40% of their transferred value!

SIPP's on the other hand retain their UK status and are fully approved by HMRC. They provide an unrivalled option for retirement provisions and allow a single arrangement to consolidate all exisiting UK pensions, whether frozen, preserved or not performing well, and therefore administered under one trust.

There is no need to purchase a conventional annuity with the added advantage of access to phased retirement and income drawdown. 25% tax free cash can be taken at retirement age leaving the "income pot" to grow. Moreover, with the wide investment choices available and improved dependent benefits, there really is only one choice.

Retain control and remain worry free, choose SIPP's.

[GuestHouse]

While I think QROPS and certainly the selling of QROPS in Thailand should be treated with extreme caution and while SIPPs do offer a number useful features the advice given above is dangerously generalized.

For example:

SIPP's on the other hand retain their UK status and are fully approved by HMRC. They provide an unrivalled option for retirement provisions and allow a single arrangement to consolidate all exisiting UK pensions, whether frozen, preserved or not performing well, and therefore administered under one trust.

SIPPs do not provide and unriveled option for retirement provisions: A fully funded Defined Benefit Pension almost certainly offers better provisions than a SIPP, likewise a well managed QROPS may offer tax advantages to someone who is certain to remain outside the UK.

And I don't like this idea of consolidating all pension savings into one SIPP - All your eggs in one basket comes to mind. If a person has multiple pension funds and one or more is not performing then they should consider moving individual funds around rather than lumping them together.

Like I say, the advice given in the OP's post is dangerously generalized, I would always advise getting indivual professional advice on pensions rather than grasping at 'good offers'.

[GuestHouse]

Not so long back the OP posted this

An established UK based IFA here in Thailand require the services of well spoken foreigners in Bangkok.

The position is business co-ordinator; Job role is to identify prospective clients and make appointments for consultants.

Full training is given.

This is a career opportunity so no time wasters please.

In the first instance, please e-mail your resume/CV to: ****@*********.com

We need to be careful we are not being 'SOLD' advice that we did not ask for.

[leicester]

QUOTE" SIPPs do not provide and unriveled option for retirement provisions: A fully funded Defined Benefit Pension almost certainly offers better provisions than a SIPP, likewise a well managed QROPS may offer tax advantages to someone who is certain to remain outside the UK.

And I don't like this idea of consolidating all pension savings into one SIPP - All your eggs in one basket comes to mind. If a person has multiple pension funds and one or more is not performing then they should consider moving individual funds around rather than lumping them together." END QUOTE

To begin with you would have to be lucky enough to have an occupational pension scheme that had defined benefits i.e. final salary schemes. Ex Rentokil employees would argue this point with you, however, you are right that if you do have a fully funded Defined Benefit Pension then you should keep it and not look elsewhere as you know exactly how much you will get as a lump sum and on a monthly basis. Most people have stakeholder or personal pensions and these are extremely rigid. Occupational schemes are money purchase or super-annuation these days in most cases as defined benefit schemes have struggled to pay the benefits.

Likewise, QROPS are suitable for some, if you have in excess of GBP200k due to high chagrging structure and never intend to return to the UK - only in that scenario!

As for your point of consolidating pensions into a SIPP as having all your eggs in one basket; surely the underlying performance of the funds/assets within the SIPP overcomes this. The SIPP only acts as a wrapper, you can have property, land, equities, cash, commodities, almost anything you want to generate better growth.

Edited October 30, 2008 by leicester

[gregchambers]

It is incorrect to say that a QROPS is not suitable for someone who wants to return to the UK later - a problem would only arise if you took benefits from the pension that were not in line with UK rules (ie you took 30 percent cash sum rather than 25) when some very penal tax rates would then be applied by the IR.

It is also now untrue to say that you need 200k as there are some relatively low cost schemes that cater to 50k upwards.

The big advantage of a QROPS would be the ability to take income free of local tax (say in Guernsey) and then avoid tax on that income in places like Thailand.

The big disadvantage is that none of the large companies are offering QROPS's offshore in a similar manner to SIPP's in the UK (I am quite happy with my Barclays SIPP) and it is almost impossible to suss what the smaller companies are really like (true, in some places they can not directly get their hands on your money as it is held by government regulated trustees) who could quite easily be struck off the approved IR list with disastrous consequences as a huge tax bill would then arise.

Until the big players start to offer them I feel it is too dangerous to indulge, especially as I have no intention of touching the money for another twenty years.

[Treborz]

I work for a Company (fully regulated by the Guernsey Financial Services Commission) in Guernsey that has recently been granted QROPS status for our pension scheme by HMRC and actually head up the admin team that looks after it. If anybody has any questions feel free to PM me and I will endeavour to answer them.

[GuestHouse]

I've got some questions.

How do you structure your charges for QROPS transfers and what are typical charges likely to be (in % terms of transferred Fund Value or absolute £ terms)?

What is the smallest fund you recommend Transferring to QROPS?

What is the smallest Fund you have Transferred to QROPS?

Have you read and digested the Forum rules?

[Treborz]

Im offering to answer any general questions people have about QROPS in general i.e. the benefits, im not trying to sell our service and as such will not answer questions here that are specific to the Company I work for. As for the benefits of a pension fund of a certian size being exported to a QROPS, this is something you will need to ask your financial advisor. We merely administer the scheme and cant provide advice on individual cases.

Edit - I should add that I do not own nor am I a Director of the Company that employs me nor do i work on a commission basis so there is no benefit to me directly for posting here i'm just trying to be helpful.

Edited November 6, 2008 by Treborz

[GuestHouse]

I don't see as that precludes you answering the quesion.

What is the smallest size fund you recommend transferring to a QROPS?

[Treborz]

I don't see as that precludes you answering the quesion.

What is the smallest size fund you recommend transferring to a QROPS?

As i'm not a financial advisor i'm not qualified to answer the question but one factor that would help determine if it is worthwhile transferring a smaller fund, say £50-80k would be the fees of the QROPS provider and making sure they are not disproportionate to the size of the fund and the benefits thereafter.

[GuestHouse]

As i'm not a financial advisor i'm not qualified to answer the question but one factor that would help determine if it is worthwhile transferring a smaller fund, say £50-80k would be the fees of the QROPS provider and making sure they are not disproportionate to the size of the fund and the benefits thereafter.

So we are back to the questions I asked in .7

[Treborz]

If you PM like i suggest in my original post I will be happy to let you know our charges but im not willing to put them here or send them to you unsolicited (if i send them to you on the back of your first post then i could be seen to be poaching commercially).

[leicester]

If you PM like i suggest in my original post I will be happy to let you know our charges but im not willing to put them here or send them to you unsolicited (if i send them to you on the back of your first post then i could be seen to be poaching commercially).

I guess my posting was correct! Avoid QROPS and stick with SIPP's!

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