Qrops - Fees

[GuestHouse]

Out of curiosity, and because these things are not transparent.

For those of you who have set up a QROPS or have received a quotation for a QROPS, what are the annual management fees you are being charged/quoted?

A recent quote I received was for a management fee of 1.8% of the invested fund per year for the first 8 years.

That equates or over 14% of the invested fund, of if you have a reasonable fund of 250K then 36K will disappear in fees.

So what are others being charged/quoted?

[AyG]

Aurora Libertai - fixed GBP 995 per annum, regardless of portfolio size. It was double this plus a percentage of assets until last year. I did have to pay several hundred poiunds to switch to the new charging scheme. Fees are definitely coming down. All we need to wait and see is whether QROPS in Guernsey will survive after April.

[bendix]

Forgive my ignorance, but is this QROPS fee a fee over and above the normal management charges one would expect to pay in a managed fund or pension?

If it's not, 1.8% doesnt seem too onerous, given you would usually expect to pay an annual management charge in any managed fund - be in a pension or whatever - of around 1-2% depending upon the asset class.

[wordchild]

Agree with AYG on this, admin fees seem to be significantly lower than a few years ago. I will be coming to the end of a five year contract early next year and would expect to negotiate a much lower fixed fee (say around 2k pa) for the next period. The value of the fund is (thankfuly) up a fair amount over the period so, as a percentage, a significantly lower proportion.

I would suggest, with a reasonable sized pot, one is better to negotiate a fixed fee for the admin; the work involved is pretty much the same whatever the size of the fund, and fees are already very high compared to say onshore sipps. You should not have to pay out a share in the long-term growth of the fund for admin.

I also think it is better to keep the investment side separate from the QROP admin and either, use a low cost fund supermarket or a good private client investment manager/ stockbroker to manage the portfolio. There is no reason for these to be offshore (though the fund itself must be), they can be UK based and this makes it easier to keep the fees down.

I would not use an ifa (esp not a Thai based one) for the investment side. Very few of these have any real investment expertise and, the worst of them ,will try to put you into completely inappropriate products eg offshore bonds which generate high fees for them and are costly for the fund.

Edited March 6, 2012 by wordchild

[Treborz]

We charge a transparent flat fee for our QROPS (although this rises incrementally with the size of the introduced fund - but not with it thereafter) and the client is welcome to go with their IFA into an offshore bond (which as pointed out above is lucrative for the IFA in commissions) or they can use a discretionary investment manager of their choice, be it through an investment platform or direct with the managers own custodians etc. That is one of the nice selling points as an independent trustee with no links/partnerships to the large insurance companies.

I actually met with a firm this morning who have just launched a new platform in Hong Kong that has over 55,000 mutual funds / equities available. Clearly these will not all be suitable for a pension portfolio but certainly adds to the flexibility.

All signs are pointing towards Guernsey surviving post April, in fact they appear to be ahead of the others jurisdictions who will be non compliant under their current regimes. The providers, tax office and local government on Guernsey are working extremely hard together to put together a solution.

Edited March 6, 2012 by Treborz

[wordchild]

In a nutshell, 1.8% as an admin fee on a 250k fund (as per the OP,s post) sounds completely mad, and you should be able to do much much better than that.

[fletchsmile]

Forgive my ignorance, but is this QROPS fee a fee over and above the normal management charges one would expect to pay in a managed fund or pension?

If it's not, 1.8% doesnt seem too onerous, given you would usually expect to pay an annual management charge in any managed fund - be in a pension or whatever - of around 1-2% depending upon the asset class.

Often it is on top of the normal management charges for this and other offshore products, eg Offshore portfolio bonds,(OPBs). On OPBs advisors will often say they can get better rates or discounted fees on the underlying initial and annual charges. What they also omit is that you can often go thru other routes that also lower initial charges often to zero and annual charges lower too, so no need to lose out paying the additional charge. These 1.8% charges are just for the wrapper of QROPs for various parties to make money from you and dip into your wealth pot.

... A recent quote I received was for a management fee of 1.8% of the invested fund per year for the first 8 years.

That equates or over 14% of the invested fund, of if you have a reasonable fund of 250K then 36K will disappear in fees.

...

You need to be careful doing the simple 8 x 1.8% = 14.4%. This is somewhat of a Mickey mouse calc. Much better to calculate the overall reduction in return given in various scenarios, by calculating what happens with zero charges and what happens with the 1.8% each year. Better still to discount the flows back to net present value.

You also need to be careful in volatile years and falling markets. That 1.8% can soon effectively increase. In 2008 FTSE 100 fell over 30% so the charge would no longer be 1.8/100 but would be 1.8 / 70 = 2.6%. FTSE 250 dropped over 40% so would be effectively 1.8/60 = 3%. Add these to the underlying management charges of 1-2% and it can sometimes make portfolios difficult to recover. Basing charges on initial amounts is good for the advisor/ providor in they get their money guaranteed, for the investor it can prove costly if there are a couple of bad years at the start.

Generally I'd say better to grow your money tax free in a SIPP in the UK as charges are often much lower, then consider the switch to the QROPS as you get closer to retirement and drawing the fund. I believe in the past GH you've considered other posters advice and mentioned you now have a Hargreaves Landsdown SIPP. Very unlikely you'll meet anything offshore that can compete on charges and still offer over 2,400 funds with minimal initial charge and no additional charge over and above what the usual fund charge is.

Edited March 6, 2012 by fletchsmile

[GuestHouse]

Thanks for the feedback guys, I'll be bumping this up from time to time to gather ongoing news.

Generally I'd say better to grow your money tax free in a SIPP in the UK as charges are often much lower, then consider the switch to the QROPS as you get closer to retirement and drawing the fund.

I absolutely 100% agree with this.

Fletch, you are correct I do have a H&L SIPP in which I have placed a freestanding AVC I hold, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out' I'd put my funds into H&L for exactly the reasons you mention. Low fees, good market access + fully protected under UK financial laws. A QROPS transfer nearer retirement remains an option and as my question reveals fees are coming down.

Getting fees publicised here on TV will I hope add a bit more market pressure. (Notes that our salesmen in this thread talks about transparent fees but gives no details - So again thanks guys for revealing the numbers).

Again, thanks Fletch for well argued examples of why fees matter so much.

I'm estimating another 15 years before I draw my pensions, I'm sure that is not an unusual time frame amongst TV members, investing at low fee rates over that time frame is a hugely important part of protecting final capital/income.

[fletchsmile]

Thanks for the feedback guys, I'll be bumping this up from time to time to gather ongoing news.

Generally I'd say better to grow your money tax free in a SIPP in the UK as charges are often much lower, then consider the switch to the QROPS as you get closer to retirement and drawing the fund.

I absolutely 100% agree with this.

Fletch, you are correct I do have a H&L SIPP in which I have placed a freestanding AVC I hold, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out' I'd put my funds into H&L for exactly the reasons you mention. Low fees, good market access + fully protected under UK financial laws. A QROPS transfer nearer retirement remains an option and as my question reveals fees are coming down.

Getting fees publicised here on TV will I hope add a bit more market pressure. (Notes that our salesmen in this thread talks about transparent fees but gives no details - So again thanks guys for revealing the numbers).

Again, thanks Fletch for well argued examples of why fees matter so much.

I'm estimating another 15 years before I draw my pensions, I'm sure that is not an unusual time frame amongst TV members, investing at low fee rates over that time frame is a hugely important part of protecting final capital/income.

GH, I know this is a subject of interest for you and comes up from time to time. Always worth getting opinions and advice, and I agree with your conclusions of generally:

Final Salary - often the best pensions and often best left where they because of the safety guarantees and spouse and dependents benefits. These are much less common nowadays tho'.

Defined Contribution PPP/ AVCs/ FSAVCs etc - often better in a SIPP, especially if retirement is some time off, and using excellent platform like Hargreaves Lansdown with no additional "wrapper fees" on most funds, with discounted initial fees and a wide range. Then transfer closer to retirement

Would also add:

- inheritance tax may play a part for some people and so anyone over GBP 350k-ish of total assets is more complicated, and QROPs may have some advantages, although money in your spouse and kids names can increase the 350k limits

- Consider whether you may want a pension in the first place. Defined benefit/ final salary and where the employer contributes is usually a no brainer of yes. For defined contribution where only you contribute there are sometimes better alternatives in certain circumstances, eg:

1) Thai LTFs (great tax relief and only 5 year limits to full access)

2) Thai RMFS if close to retirement are a bit more flexible than UK pensions as you can take it all as a lump sum tax free at 55

3) UK ISAs (previously PEPs) - no tax relief in, but no tax on out either

4) Other offshore products tax free, but beware charges.

My biggest criticism of UK pensions is the long wait to 55 to get your money and the inflexibility combined with shifting goalposts. This was previously 50 and the UK Govt changed the rules to 55.

As an Equitable Life Pension holder I found the UK protection wasn't all it was supposed to be. 10 years+ later I'm still waiting for any compensation. My father passed away before getting anything in compensation. In 2012, my mother recently got a letter saying he was a "priority case" as a deceased person and they gave her something like 25% of what they calculated his losses to be dating back to the 1990's. An appalling failure of the UK pension system, ombudsman, government etc! He also passed away not long after retiring, so much of the defined contribution PPP and AVC funds on pensions were effectively lost when purchasing an annuity which guaranteed only 5 years income, or 50% for a spouse.

On the other hand by using PEPs (now ISAs), LTFs, other products, I put myself in a position where stopping work much earlier was feasible, and I'm now financially independent with easy access and control over all my money and assets, with the exception of pensions I still have to wait for. I also have to hope both the pension and I am around when I hit 55! With the exception of pensions, the money s ours now.

You and I come from an era where pensions used to make sense. For many people these days there are often better options, especially as an expat. Pensions aren't what they used to be, and the trend is getting worse.... So consider whether to avoid the whole QROPs / pension debate in the first place

Edited March 6, 2012 by fletchsmile

[Treborz]

Thanks for the feedback guys, I'll be bumping this up from time to time to gather ongoing news.

Generally I'd say better to grow your money tax free in a SIPP in the UK as charges are often much lower, then consider the switch to the QROPS as you get closer to retirement and drawing the fund.

I absolutely 100% agree with this.

Fletch, you are correct I do have a H&L SIPP in which I have placed a freestanding AVC I hold, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out' I'd put my funds into H&L for exactly the reasons you mention. Low fees, good market access + fully protected under UK financial laws. A QROPS transfer nearer retirement remains an option and as my question reveals fees are coming down.

Getting fees publicised here on TV will I hope add a bit more market pressure. (Notes that our salesmen in this thread talks about transparent fees but gives no details - So again thanks guys for revealing the numbers).

Again, thanks Fletch for well argued examples of why fees matter so much.

I'm estimating another 15 years before I draw my pensions, I'm sure that is not an unusual time frame amongst TV members, investing at low fee rates over that time frame is a hugely important part of protecting final capital/income.

I can tell you our formation and annual management fees, the reason i didn't is because i didn't come into this thread to sell anything (in fact i have no marketing experience at all i just work on the administration side of things), just to make it clear that some Trustees are transparent with their fees. However it was not clear if your initial post was referring to the Trustee fee, the investment management charges or both?

Anyway here you go as you have asked for them;

Formation Charges

£0 - £300,000 - £1,200

£300,001 - £500,000 - £1,700

£500,001 - £1,000,000 - £2,500

£1,000,001 - £2,000,000 - £3,000

(If more than one pension is being transferred then each additional pension will be charged at £300 with the largest forming the base figure)

Annual Management Charges

£0 - £300,000 - £1,000

£300,001 - £500,000 - £1,500

£500,001 - £1,000,000 - £2,000

£1,000,001 and above - £2,500

Termination or Exit Charges

Transfer to another administrator

The sum equal to 12 months management charges (However as annual fees are paid upfront this is usually minimal as that years fee is pro-rated and netted off the transfer fee. For example it would be cheaper to transfer at the start of the year than at the end)

Any work to be carried on outside of the scope of a traditional pension such as the purchase of a commercial property is likely to incur additional time charges, currently £175 per hour. Third party fees vary depending on who the client invests with, although clearly these will be made available by their chosen investment manager to the client before any decisions are made.

So there you have it we're not the cheapest in terms of flat annual fee but we do not charge transaction charges for investment switches or any routine work during the course of the year. What you see above is all that you will be charged by the Trustee.

We also run SIPP's from our UK office, in fact QROPS is not our main source of business at all and i doubt it ever will be. Again as i'm not trying to sell anything, i'm not disclosing who it is i work for.

Edited March 7, 2012 by Treborz

[wordchild]

Thanks for the feedback guys, I'll be bumping this up from time to time to gather ongoing news.

Generally I'd say better to grow your money tax free in a SIPP in the UK as charges are often much lower, then consider the switch to the QROPS as you get closer to retirement and drawing the fund.

I absolutely 100% agree with this.

Fletch, you are correct I do have a H&L SIPP in which I have placed a freestanding AVC I hold, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out' I'd put my funds into H&L for exactly the reasons you mention. Low fees, good market access + fully protected under UK financial laws. A QROPS transfer nearer retirement remains an option and as my question reveals fees are coming down.

Getting fees publicised here on TV will I hope add a bit more market pressure. (Notes that our salesmen in this thread talks about transparent fees but gives no details - So again thanks guys for revealing the numbers).

Again, thanks Fletch for well argued examples of why fees matter so much.

I'm estimating another 15 years before I draw my pensions, I'm sure that is not an unusual time frame amongst TV members, investing at low fee rates over that time frame is a hugely important part of protecting final capital/income.

I can tell you our formation and annual management fees, the reason i didn't is because i didn't come into this thread to sell anything (in fact i have no marketing experience at all i just work on the administration side of things), just to make it clear that some Trustees are transparent with their fees. However it was not clear if your initial post was referring to the Trustee fee, the investment management charges or both?

Anyway here you go as you have asked for them;

Formation Charges

£0 - £300,000 - £1,200

£300,001 - £500,000 - £1,700

£500,001 - £1,000,000 - £2,500

£1,000,001 - £2,000,000 - £3,000

(If more than one pension is being transferred then each additional pension will be charged at £300 with the largest forming the base figure)

Annual Management Charges

£0 - £300,000 - £1,000

£300,001 - £500,000 - £1,500

£500,001 - £1,000,000 - £2,000

£1,000,001 and above - £2,500

Termination or Exit Charges

Transfer to another administrator

The sum equal to 12 months management charges (However as annual fees are paid upfront this is usually minimal as that years fee is pro-rated and netted off the transfer fee. For example it would be cheaper to transfer at the start of the year than at the end)

Any work to be carried on outside of the scope of a traditional pension such as the purchase of a commercial property is likely to incur additional time charges, currently £175 per hour. Third party fees vary depending on who the client invests with, although clearly these will be made available by their chosen investment manager to the client before any decisions are made.

So there you have it we're not the cheapest in terms of flat annual fee but we do not charge transaction charges for investment switches or any routine work during the course of the year. What you see above is all that you will be charged by the Trustee.

We also run SIPP's from our UK office, in fact QROPS is not our main source of business at all and i doubt it ever will be. Again as i'm not trying to sell anything, i'm not disclosing who it is i work for.

very helpful post thanks Treborz. These fees you quote are quite a bit lower, i believe, than one would have paid +3 years ago and shows the market is getting more rational.

I would also agree with Treboz earlier post that one is much better to find an independent trustee to set up and administer the QROP, this then leaves you free to shop around for the investment management. It is the investment product structure and fees that you really have to pay close attention to, this is where the real rip off charging can be; eg offshore bonds.

Edited March 7, 2012 by wordchild

[topt]

, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out'

.

I would be very interested to hear any reason why someone would consider (or an IFA advise) why you should cash in/move a final salary scheme. Surely the whole point is it is pretty much guaranteed (whatever the amount) as opposed to being at the mercy/vagaries of the investing climate....or am I missing something?

[topt]

1) Thai LTFs (great tax relief and only 5 year limits to full access)

2) Thai RMFS if close to retirement are a bit more flexible than UK pensions as you can take it all as a lump sum tax free at 55

You and I come from an era where pensions used to make sense. For many people these days there are often better options, especially as an expat. Pensions aren't what they used to be, and the trend is getting worse.... So consider whether to avoid the whole QROPs / pension debate in the first place

Fletchsmile can you elaborate on what exactly you mean by LTFs and RMFS?

I agree wholehartedly with you last comment but unfortunately only really aware of it in the recent past.

[GuestHouse]

, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out'

.

I would be very interested to hear any reason why someone would consider (or an IFA advise) why you should cash in/move a final salary scheme. Surely the whole point is it is pretty much guaranteed (whatever the amount) as opposed to being at the mercy/vagaries of the investing climate....or am I missing something?

Because your entitlement under a Final Salary scheme is to a Benefit.

Depending upto your scheme rules, your 'Buy Out' option may be based upon the amount of cash to buy the same benefit in the open market at the prevailing market conditions.

With the market conditions as they are, record low interest rates AND record low annuity rates, the scheme (based on the rule above) has to give you a lot more cash to buy the benefit to which you are entitled.

I check my buy out price every year (I'm entitled to a free buy out quote every 12 months) the buy out offer has almost doubled in the past two years. It is now a very large number and may well be even larger after April when the rates are reviewed again. Sufficiently large to provide an good pension when placed in very low risk investments.

That's why.

Edited March 7, 2012 by GuestHouse

[GuestHouse]

On fletch's point, yes the LTFs and RTFs you mention are very attractive where there is no access to a company pension. They are in any case a good additional place to save on top of pension savings.

But my question relates to QROPS for the most part buying out existing pensions.

[topt]

, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out'

.

I would be very interested to hear any reason why someone would consider (or an IFA advise) why you should cash in/move a final salary scheme. Surely the whole point is it is pretty much guaranteed (whatever the amount) as opposed to being at the mercy/vagaries of the investing climate....or am I missing something?

Because your entitlement under a Final Salary scheme is to a Benefit.

Depending upto your scheme rules, your 'Buy Out' option may be based upon the amount of cash to buy the same benefit in the open market at the prevailing market conditions.

With the market conditions as they are, record low interest rates AND record low annuity rates, the scheme (based on the rule above) has to give you a lot more cash to buy the benefit to which you are entitled.

I check my buy out price every year (I'm entitled to a free buy out quote every 12 months) the buy out offer has almost doubled in the past two years. It is now a very large number and may well be even larger after April when the rates are reviewed again. Sufficiently large to provide an good pension when placed in very low risk investments.

That's why.

Thanks GH. I will have to review that option when I can take it but had not even considered it before.

[fletchsmile]

1) Thai LTFs (great tax relief and only 5 year limits to full access)

2) Thai RMFS if close to retirement are a bit more flexible than UK pensions as you can take it all as a lump sum tax free at 55

You and I come from an era where pensions used to make sense. For many people these days there are often better options, especially as an expat. Pensions aren't what they used to be, and the trend is getting worse.... So consider whether to avoid the whole QROPs / pension debate in the first place

Fletchsmile can you elaborate on what exactly you mean by LTFs and RMFS?

I agree wholehartedly with you last comment but unfortunately only really aware of it in the recent past.

Don't really want to hijack this thread and send off track. I think it's worth highlighting there's a message of there are alternatives that are often better than SIPPs or QROPs, and can avoid this whole question for younger people

LTF = Long Term Equity Fund. RMF = Retirement Mutual Fund. Both are products here in Thailand, which can be used to save money. They both give tax relief at your marginal rate of tax, similar to contributions to a UK pension getting tax relief. LTFs need to be held for 5 calendar years, RMFs like pensions need to be held to 55. The big advantage of both is the whole pot is yours tax free after the 5 year (LTF) or 55 years old RMF. No requirement to buy annuities or income drawdown.

Following link would be useful, and it would be worth you doing a search on other threads on here on TV, as it comes up from time to time

http://www.ingfunds.co.th/EN/GettingStarted_RMFLTF.asp

[Treborz]

1) Thai LTFs (great tax relief and only 5 year limits to full access)

2) Thai RMFS if close to retirement are a bit more flexible than UK pensions as you can take it all as a lump sum tax free at 55

You and I come from an era where pensions used to make sense. For many people these days there are often better options, especially as an expat. Pensions aren't what they used to be, and the trend is getting worse.... So consider whether to avoid the whole QROPs / pension debate in the first place

Fletchsmile can you elaborate on what exactly you mean by LTFs and RMFS?

I agree wholehartedly with you last comment but unfortunately only really aware of it in the recent past.

Don't really want to hijack this thread and send off track. I think it's worth highlighting there's a message of there are alternatives that are often better than SIPPs or QROPs, and can avoid this whole question for younger people

LTF = Long Term Equity Fund. RMF = Retirement Mutual Fund. Both are products here in Thailand, which can be used to save money. They both give tax relief at your marginal rate of tax, similar to contributions to a UK pension getting tax relief. LTFs need to be held for 5 calendar years, RMFs like pensions need to be held to 55. The big advantage of both is the whole pot is yours tax free after the 5 year (LTF) or 55 years old RMF. No requirement to buy annuities or income drawdown.

Following link would be useful, and it would be worth you doing a search on other threads on here on TV, as it comes up from time to time

http://www.ingfunds....rted_RMFLTF.asp

I haven't looked into either in detail yet but you would not be able to export a UK Pension into either product as HMRC would not allow you to draw your pension as a 100% commutation when their rules clearly state that 70% must be used to provide an income for life.

I know you weren't suggesting this but just bringing it back into the context of the thread.

Edited March 7, 2012 by Treborz

[fletchsmile]

1) Thai LTFs (great tax relief and only 5 year limits to full access)

2) Thai RMFS if close to retirement are a bit more flexible than UK pensions as you can take it all as a lump sum tax free at 55

You and I come from an era where pensions used to make sense. For many people these days there are often better options, especially as an expat. Pensions aren't what they used to be, and the trend is getting worse.... So consider whether to avoid the whole QROPs / pension debate in the first place

Fletchsmile can you elaborate on what exactly you mean by LTFs and RMFS?

I agree wholehartedly with you last comment but unfortunately only really aware of it in the recent past.

Don't really want to hijack this thread and send off track. I think it's worth highlighting there's a message of there are alternatives that are often better than SIPPs or QROPs, and can avoid this whole question for younger people

LTF = Long Term Equity Fund. RMF = Retirement Mutual Fund. Both are products here in Thailand, which can be used to save money. They both give tax relief at your marginal rate of tax, similar to contributions to a UK pension getting tax relief. LTFs need to be held for 5 calendar years, RMFs like pensions need to be held to 55. The big advantage of both is the whole pot is yours tax free after the 5 year (LTF) or 55 years old RMF. No requirement to buy annuities or income drawdown.

Following link would be useful, and it would be worth you doing a search on other threads on here on TV, as it comes up from time to time

http://www.ingfunds....rted_RMFLTF.asp

I haven't looked into either in detail yet but you would not be able to export a UK Pension into either product as HMRC would not allow you to draw your pension as a 100% commutation when their rules clearly state that 70% must be used to provide an income for life.

I know you weren't suggesting this but just bringing it back into the context of the thread.

Yes. That's spot on. You wouldn't be able to move a UK pension product into these. These are alternative tax efficient ways of saving.

Now on the other hand, anyone earning/paying tax in Thailand could pay money into a LTF and gain up to 37% tax relief. After 5 years they could then take the same money out, pay into an LTF again and get another up to another 37% tax relief. As long as they remain within the THB 500k or 15% of salary income per year. It's basically a great choice for your first GBP 10k (approx) of equity based investments each year. they've been going since around 2004, and will be reviewed again around 2016.

Excellent product as you get tax relief and are locked in only for 5 years. So someone could invest THB 500k in an LTF here and get the tax relief. (So GBP10k equivalent (using FX rate of 50 for ease) costs as little as GBP 6,300). Should they return to UK or still be paying UK tax / have earned income UK for any reason, it's possible to take the gross lump sum, pay it into a UK pension and get UK tax relief. So:

Invest GBP 6,300 here = grossed up to GBP 10k approx. Wait 5 years, invest the 10k in a UK pension and get it grossed up by basic rate tax and tax relief at top marginal rate (so effectively up to 50% tax relief again). You could over double your original money of GBP 6,300 just on the tax reliefs and have some reduction in your UK tax bill. You'd hope for some capital increase too A very nice little earner for say a UK expat of around 50 in Thailand who'll return to UK. Who knows they could always come back to Thailand again and transfer to a QROP having used Thai 37% and UK 50% tax relief to fund it

Edited March 7, 2012 by fletchsmile

[GuestHouse]

, all the rest of my pension provisions are final salary schemes which I recently had a Financial Actuary review to advise me on the pros and cons of buying out. The advice I've had is stay put, but check the numbers again after April.

At this moment in time, even if the FA comes back with the advice 'take a buy out'

.

I would be very interested to hear any reason why someone would consider (or an IFA advise) why you should cash in/move a final salary scheme. Surely the whole point is it is pretty much guaranteed (whatever the amount) as opposed to being at the mercy/vagaries of the investing climate....or am I missing something?

Because your entitlement under a Final Salary scheme is to a Benefit.

Depending upto your scheme rules, your 'Buy Out' option may be based upon the amount of cash to buy the same benefit in the open market at the prevailing market conditions.

With the market conditions as they are, record low interest rates AND record low annuity rates, the scheme (based on the rule above) has to give you a lot more cash to buy the benefit to which you are entitled.

I check my buy out price every year (I'm entitled to a free buy out quote every 12 months) the buy out offer has almost doubled in the past two years. It is now a very large number and may well be even larger after April when the rates are reviewed again. Sufficiently large to provide an good pension when placed in very low risk investments.

That's why.

Thanks GH. I will have to review that option when I can take it but had not even considered it before.

By all means review the option but make sure you appoint a UK BASED FINANCIAL ACTUARY to check the numbers for you - Not a Financial Advisor and certainly not one of the Thai based carpet baggers.

The point is get a professional Actuary who is controlled under UK law to advise on the pros and cons of moving your pension - He's advising pros and cons, not selling you something. You'll need to pay a fee for this service, but it is well worth paying up front so that you are not being sold a deal based on what the advisor gets out of it.

[heebee]

Establishment charge - Nil

Annual QROPS Trustee fee - Minimum GBP500, Maximum GBP950, dependent on size of transfer.

No underlying portfolio bond (PPB) - hybrid used - cheaper than PPB - better funds available than most platforms, uses non-stock market / bond market funds

Posted by a "Carpetbagger", resident in Thailand for 14 years, qualified via UK's Chartered Institute of Securities and Investment, who has a Non-Imm B and work permit, aThai wife and cannot afford to screw up, given the way that some disputes here are settled....

[Bangkokhatter]

I have recently thought about setting up a qrops , but after reading through a few threads on here i think not such a good idea.

However I do have 2 pension funds in the U.K that are just stagnating, neither scheme were final salary so no real reason not to try and do something about it ?

What are SIPP's , have never heard of this before. Would it be a good idea to transfer the small pension funds i do have into this kind of scheme ? I should add i am non-resident and can't see that changing , but you never know.

I want to find something where the little money i do have actually grows a bit and perhaps where i can also add any spare cash, and rental income when my mortgage is paid off.

I have an LTF set up here already but what was written earlier in the thread about them has, as usual confused me further, but i don't want to hi-jack this thread any more