Uk Pension Advice

[jimflan]

I have 2 UK pensions - the main one is a DB scheme from which I have been taking a pension since I was 50, and a smaller DC one which I have not touched. Can anyone tell me if it's OK for me to transfer my DC fund (about 100k GBP) into a QROP whilst leaving my DB pension in place ? I left the UK in March and do not intend (ever !) to go back for anything other than short breaks.

Edited June 18, 2011 by jimflan

[teddy_bare]

You will need to provide them with evidence of your residency in (I assume Thailand). You can move any number of pension schemes out. My understanding is that you must have been a expat for 5 years and have no intentions of residing in the UK again. If HMRC find out you are not an Expat they will tax you at 40% of the amount and fine you a futher 15%. Happened to my mates who believed the financial advisor based in Lativa. HMRC have subsequently banned them (the advisors) from dealing with QROPS out of the UK. They were telling their clients they were expats when in fact they had only been working overseas. They had retained a place of residency in the UK and HMRC classed them as residents.

PM me and I will put you in touch with a few advisors who seem to know their stuff.

Be aware the last government changed the way state pensions were calculated from RPI to CPI. Most unions for the public sector are backing a legal challenge to the change that is likely to be heard in the High Courts in October. The jist of the challenge was the Secretary of State at the time had no authority to change it and that the it is akin to the mis selling of PPI currently in the news

Anyhoo late now so sleepy time

[AyG]

Yes, you can take your second pension pot and transfer it into a QROPS. However, I would question the wisdom of doing this. The set-up charges are high, as are the annual charges. For example, Aurora Libertai charges GBP 645 for formation and GBP 845 annually. On top of this you may have charges involved in transferring money out of your existing plan, and there will almost certainly be charges involved in reinvesting the money in whatever wrapper you use to hold your investments. Then there are the annual charges for the wrapper and the fund manager annual management charges. Usually the maths works out that unless you have GBP 200,000 or more in your pension pot it's better not to transfer to a QROPS. However, each case is different; you really need to get professional advice from an IFA. The initial meeting will usually be free, and you can agree a fixed fee for the remainder of the work.

(Incidentally, whilst you can handle the transfer process yourself, I'd strongly recommend against it. The process can quickly turn nightmarish. It did in my case, but thankfully I'd already agreed a fixed fee with my IFA for the work.)

[AyG]

My understanding is that you must have been a expat for 5 years and have no intentions of residing in the UK again.

Not actually true. You can transfer to a QROPS the moment you leave the UK. However, your QROPS provider has to report all relevant transactions to HMRC for five years. Also, all transactions are free of CGT, but if you become UK resident again during this period you have to pay the CGT.

You can have the intention of returning to the UK, there's no problem with this. From a tax point of view a QROPS is on a par with an on-shore scheme - though (of course) the charges are much higher, so a QROPS is not usually a good vehicle for someone who does intend to return to the UK.

[SantiSuk]

If you leave your defined benefit scheme in the UK isn't there a risk that it marks you out as still UK resident for tax purposes? I do not have the answer - I'm just raising a risk.

[yobalon]

You don't have to wait 5 years to do the transfer - you just have to intend on being offshore for 5 years or more. Plus for the first five years you have to report to HMRC.

I'd recommend transfers to Guernsey - avoid Latvia, Croatia etc. - just not worth the risk.

Fees are not that bad - in total run at between 1.5 - 2%, which to be honest is probably the same as you are paying now. Pension's in the UK are a black box, most people have no idea of what they are being charged.

First off though, find out if your pension can be transferred offshore, a lot of UK pensions are not eligible so you may well be wasting your time even considering it. If you need help with that send me a private message - it's simple and free to do.

[expatworld]

Leaving your pension in the UK can be a very expensive affair, referring to a BBC documentary in January where the BBC looked into fees and commissions on pension funds, the findings were as follows; on a pension of 100,,000 over 25 years, the overall fees paid were in some cases as high as 96,000! A Qrops can be a much more economical option, but guidance should be sought to find the best solution for your specific needs. A Qrops furthermore gives total investment freedom, increasinng the growth potential.