Uk Pension Transfer To Offshore Qrops

[Smileygc]

I am seriously considering transferring my UK Private Pensions to an Offshore QROPS as I live in Thailand.

I am always nervous of Financial Advisers - which may only be Financial "Salesmen" and only interested in their commissions and not my future financial well-being.

Does anyone have recent dealings with Financial Advisers they would recommend?

I am presently talking with Abbey Financial Services of Spain, has anyone had experience with this company?

Many Thanks

Edited September 27, 2012 by Smileygc

[AyG]

I can't suggest a financial adviser, but I would like to share a few thoughts:

(1) Act quickly. The UK government seems to have a vendetta against QROPS, wanting to take away all their tax advantages, and making the administration more onerous (and hence more expensive for the client). This year all QROPS in Guernsey were derecognised, and things with Malta looked very dodgy for a couple of months - personally, I'm still not sure if Malta's out of the woods or not. People wanting to take out QROPS are increasingly being pushed towards less secure, less well-regulated parts of the world.

(2) If possible, get your financial adviser to work on a fixed cost basis - all adviser commission will then be rebated to you. If your finances are fairly simple, say transferring a couple of existing pension funds and using a single custodian, then the charges will probably be in the region of GBP 500 to GBP 1,000. That's not including the QROPS provider's setup charge which will vary according exactly what facilities are being provided, but GBP 1,000 to set up and GBP 1,000 per year to run (paid in advance) is fairly typical. The level of charges usually make transferring to a QROPS not a good idea for people with a pension pot of less than about GBP 1,000.

(3) Make sure that you understand all charges. There are the initial charges, which include: financial adviser fee and/or commission, pension provider setup charges, custodian setup charges, charges for transferring investments in specie (from current pension fund and from new custodian) and/or costs of selling investments and reinvesting (initial commission on purchase, bid/offer spread, custodian charge on purchase). Some pensions will also charge you for closing your account with them. Then for the ongoing charges, there are QROPS provider charges, custodian platform charges, transaction costs and trail commission (which may be rebated in part). There may also be charges from the QROPS provider, for example, for transferring your pension to your bank account (typically GBP 25 per transfer - though some will charge much, much higher than this if you take your pension more than once a year).

(4) You may well find that your financial adviser says that you'll be better off sticking with your existing arrangements. If that happens, you can still proceed by becoming an "insistent client" to use the jargon. You'll then need to sign a letter which absolves the adviser if you end up financially worse off than you otherwise would have been.

(5) Be aware that in the current economic climate, extremely low government bond yields mean that the amount of pension you can withdraw each year has plunged. Make yourself familiar with the GAD tables and the rules surrounding the level of income you can take. Make sure that you're happy with the pathetic level of income you're now allowed from your pension fund. In most cases if you won't have a secured pension from alternative source(s) of GBP 20,000 per annum, it makes sense to withdraw the maximum lump sum available (25% or 30%, according to jurisdiction) and invest it elsewhere offshore. If doing so would take your pension pot below GBP 100,000 think carefully about the effect of the level of charges on the remaining pension pot.

[Smileygc]

Many thanks AyG

For sharing your thoughts and very prevalent ones at that.

I too have picked up, that the UK Gov is no longer keen on QROPS and so I have to act fairly quickly.

I just get twitchy when the FA also told me to act fast as I wonder of their agenda.

Your recommendations in points 2 & 3 are very good and I didn't appreciate there is flexibility in the costs etc. I will make myself aware of all costs, the present FA (Abbey) has advised I should be receiving about 8% return after all costs and taxes, I am awaiting his written report as we only spoke yesterday.

With regard to taking a lumpsum, your advice is along the lines I was thinking, I am investigating taking the full amount and reinvesting, giving me more control than I would have if I left my hard earned money in the pension fund.

Thanks you once again for the advice, it has provoked thoughts in area's I hadn't before considered.

Kind regards

[AyG]

the present FA (Abbey) has advised I should be receiving about 8% return after all costs and taxes

A statement like this immediately sets off alarm bells for me. This would suggest a return before costs of perhaps 10% which is pretty difficult to obtain consistently without taking on a significant degree of risk - not appropriate if this is a pension you're going to be relying upon in future years to put food on the table and a roof over your head. I'm guessing that you're not planning on managing your own investments, so this will introduce yet another layer of fees. Also, most prepackaged investment allocations don't take into account the investor's home economy and currency; it's not a good idea to have your investments geared towards the European economy when you live in SE Asia, for example. Also, does the investment properly take into account how long it is before you retire? If you have a longer period before retirement, then it's appropriate to take on more risk, and to reduce the risk level of you approach retirement and beyond. (Usually that translates into having a higher proportion of equities in your portfolio when you're younger, and reducing this proportion as you get older, increasing the proportion of the portfolio in bonds.)

In short, do you really understand what investment is being proposed? If not, don't sign.

And if you post details of the type of investment proposed, then I'm sure that I, or someone else, will be able to provide an opinion.

Edit: and I've just realised that you wrote "after all ... taxes". You don't mention where you're resident. If it's Thailand, then there should be no taxes on income to worry about, so why mention "after taxes"? Of course, if you're resident in Spain, that's a different matter. Incidentally, what jurisdiction is your adviser recommending for your QROPS?

Edited September 27, 2012 by AyG

[Smileygc]

I spoke with the FA yesterday for about an hour, I had a number of questions and his information was free flowing without any hesitation, but not like a sales pitch! He answered all my questions in a confident and informed manner. I did push him for an estimate of return which he reluctantly stated at about 8%. I did point out I wanted a low risk investment 2-3 out of 10.

I now live in Phuket, Thailand and have been outside the UK for over 8 years, spending 5 years working in IT in NZ. I came to Thailand to "sit out the recession" in late 2009 and getting very used to being here, now consider myself to have retired. I have reluctantly just turned 60 (that sounds so old) so decided to investigate my pension options.

The FA was discussing both Malta and Gibraltar jurisdictions, pointing out that Guernsey was no longer available. He did say I would have to pay 2.5% tax imposed by the jurisdiction.

I am awaiting his full report and then I will have the facts in front of me, as a lot was discussed yesterday and I may not have retained all the details.

[wordchild]

Too be frank 8% (as a long term projection) from a low risk investment strategy is hogwash, never going to happen! he either does not know what he is talking about or, even worse, he is looking to take more risk than you are prepared for.

In general, i would say avoid offshore (ie non UK based) ifa,s. There are some real sharks out there and you will find some horror stories about them on this and other expat forums. IMO much better to seek out a UK based ifa and ,as AYG suggests, get them to work on a fee only basis. Also, as AYG says watch the commissions esp on any investment product you may be being sold. remember these commissions come out of your money.

Edited September 27, 2012 by wordchild

[JohnC]

Another point worth considering s that whilst your funds are invested in the UK you have some protection from the FSA, if you move your funds offshore you lose that protection in the event the company goes under. In addition after pension A day a few years ago I understood the maximum cash you could take from your pension fund is 25% the balance had to be used to buy an annuity. Now I am not familiar with the legal side of QROPS so it may be if you move it offshore you can exceed the 25% rule, in addition I seem to recall one of these funds got into trouble when they paid out a pension before the investor had reached the qualifying age. Also remember this is your life savings allbeit pension pot, if lost you cannot replace it!

[TommoPhysicist]

Don't do Qprops.

Use pension drawdown, you can take an income and pass the capital fund onto your wife (children), without the huge risk.

I am not a financial advisor. My advice may be bad.

[churchill]

Don't do Qprops.

Use pension drawdown, you can take an income and pass the capital fund onto your wife (children), without the huge risk.

I am not a financial advisor. My advice may be bad.

Trouble is that with artificially low interest rates .. how much do you need invested to draw a decent income .. hence the benefit of QROPS being able to take 25% cash ....

For instance if one had 200,000 GBP pension ...what annual income would one expect ..... 5% ?

Charges may be higher but at least you have the cash to invest elsewhere ... and If you drawdown you are still facing annual pension charges ..

again I am not a financial advisor .. so my advice may be bad ..

[TommoPhysicist]

Don't do Qprops.

Use pension drawdown, you can take an income and pass the capital fund onto your wife (children), without the huge risk.

I am not a financial advisor. My advice may be bad.

Trouble is that with artificially low interest rates .. how much do you need invested to draw a decent income .. hence the benefit of QROPS being able to take 25% cash ....

For instance if one had 200,000 GBP pension ...what annual income would one expect ..... 5% ?

Charges may be higher but at least you have the cash to invest elsewhere ... and If you drawdown you are still facing annual pension charges ..

again I am not a financial advisor .. so my advice may be bad ..

I believe that with pension drawdown you may also remove 25% once, then up to 8% of the remaining fund each year.

Hopefully you wouldn't need to take out more than you made each year.

Drawdown doesn't cost more than your normal pension provider charges ....... QPROPS costs a bunch more.

(I do use drawdown, take about 5% out each year and not reduced my capital ...... so far ... withdrawels count as taxable UK income)

Edited September 27, 2012 by TommoPhysicist

[churchill]

Don't do Qprops.

Use pension drawdown, you can take an income and pass the capital fund onto your wife (children), without the huge risk.

I am not a financial advisor. My advice may be bad.

Trouble is that with artificially low interest rates .. how much do you need invested to draw a decent income .. hence the benefit of QROPS being able to take 25% cash ....

For instance if one had 200,000 GBP pension ...what annual income would one expect ..... 5% ?

Charges may be higher but at least you have the cash to invest elsewhere ... and If you drawdown you are still facing annual pension charges ..

again I am not a financial advisor .. so my advice may be bad ..

I believe that with pension drawdown you may also remove 25% once, then up to 8% of the remaining fund each year.

Hopefully you wouldn't need to take out more than you made each year.

Drawdown doesn't cost more than your normal pension provider charges ....... QPROPS costs a bunch more.

It seems that drawdown has much the same benefits of a QROPS but at lower cost then ....

[TommoPhysicist]

It seems that drawdown has much the same benefits of a QROPS but at lower cost then ....

When I was doing my research that did seem to be the case.

Only downside was tax, with QPROPS I believe you can avoid UK income tax, with drawdown you can't.

[nontabury]

I can't suggest a financial adviser, but I would like to share a few thoughts:

(1) Act quickly. The UK government seems to have a vendetta against QROPS, wanting to take away all their tax advantages, and making the administration more onerous (and hence more expensive for the client). This year all QROPS in Guernsey were derecognised, and things with Malta looked very dodgy for a couple of months - personally, I'm still not sure if Malta's out of the woods or not. People wanting to take out QROPS are increasingly being pushed towards less secure, less well-regulated parts of the world.ot.

You say all QROPS in Guernsey were derecognised earlier this year, did that include existing

Policies or just new business?.

[nontabury]

I am seriously considering transferring my UK Private Pensions to an Offshore QROPS as I live in Thailand.

I am always nervous of Financial Advisers - which may only be Financial "Salesmen" and only interested in their commissions and not my future financial well-being.

Does anyone have recent dealings with Financial Advisers they would recommend?

I am presently talking with Abbey Financial Services of Spain, has anyone had experience with this company?

Many Thanks

Yes, I've had dealings with Abbey financial services of Spain,though not with QROPS

I have had no problems.

[wordchild]

I can't suggest a financial adviser, but I would like to share a few thoughts:

(1) Act quickly. The UK government seems to have a vendetta against QROPS, wanting to take away all their tax advantages, and making the administration more onerous (and hence more expensive for the client). This year all QROPS in Guernsey were derecognised, and things with Malta looked very dodgy for a couple of months - personally, I'm still not sure if Malta's out of the woods or not. People wanting to take out QROPS are increasingly being pushed towards less secure, less well-regulated parts of the world.ot.

You say all QROPS in Guernsey were derecognised earlier this year, did that include existing

Policies or just new business?.

Guernsey based schemes can no longer accept new QROPS. There is no immediate impact for pre-existing Guernsey QROPS but the situation is slightly fluid and those who have such schemes (and i am one) should contact their advisers.

In the medium term there is likely to be changes to the status and to the reporting of these schemes to HMRC. It could be (ironically) that there are some, potentially significant, benefits to having a Guernsey QROP and certainly no cause for panic at this stage.

Edited September 28, 2012 by wordchild

[churchill]

I can't suggest a financial adviser, but I would like to share a few thoughts:

(1) Act quickly. The UK government seems to have a vendetta against QROPS, wanting to take away all their tax advantages, and making the administration more onerous (and hence more expensive for the client). This year all QROPS in Guernsey were derecognised, and things with Malta looked very dodgy for a couple of months - personally, I'm still not sure if Malta's out of the woods or not. People wanting to take out QROPS are increasingly being pushed towards less secure, less well-regulated parts of the world.ot.

You say all QROPS in Guernsey were derecognised earlier this year, did that include existing

Policies or just new business?.

Guernsey based schemes can no longer accept new QROPS. There is no immediate impact for pre-existing Guernsey QROPS but the situation is slightly fluid and those who have such schemes (and i am one) should contact their advisers.

In the medium term there is likely to be changes to the reporting of these schemes to HMRC. It could be (ironically) that there are some, potentially significant, benefits to having a Guernsey QROP and certainly no cause for panic at this stage.

I also have an existing Guernsey QROP .....interested to know what potential benefits you see ...

[wordchild]

I can't suggest a financial adviser, but I would like to share a few thoughts:

(1) Act quickly. The UK government seems to have a vendetta against QROPS, wanting to take away all their tax advantages, and making the administration more onerous (and hence more expensive for the client). This year all QROPS in Guernsey were derecognised, and things with Malta looked very dodgy for a couple of months - personally, I'm still not sure if Malta's out of the woods or not. People wanting to take out QROPS are increasingly being pushed towards less secure, less well-regulated parts of the world.ot.

You say all QROPS in Guernsey were derecognised earlier this year, did that include existing

Policies or just new business?.

Guernsey based schemes can no longer accept new QROPS. There is no immediate impact for pre-existing Guernsey QROPS but the situation is slightly fluid and those who have such schemes (and i am one) should contact their advisers.

In the medium term there is likely to be changes to the reporting of these schemes to HMRC. It could be (ironically) that there are some, potentially significant, benefits to having a Guernsey QROP and certainly no cause for panic at this stage.

I also have an existing Guernsey QROP .....interested to know what potential benefits you see ...

It is difficult to be specific at this stage because no one knows fully how the situation will evolve particularly in regards to the long term reporting requirements , also indevidual situations (and schemes) vary. The point i wanted to make was that there was no need to panic it looks likely that existing Guernsey QROPS will retain their benefits as before. And also, it is possible, that things could evolve in a way such that there are some benefits/opportunities for those who have pre-existing QROPS. Also, if it ever became necessary or beneficial, i am sure most/all providors will ensure mechanisms are in place for the easy tranfer of schemes to other jurisdictions. Edited September 28, 2012 by wordchild

[AyG]

You say all QROPS in Guernsey were derecognised earlier this year, did that include existing

Policies or just new business?.

Guernsey can take no new QROPS business. However, the existing QROPS are unaffected - though technically they're not QROPS any more since the "R" in QROPS stands for "recognised".

HMRC has confirmed all existing QROPS transfers to Guernsey remain valid, and that it won't be imposing the (ouch!!!) 55% tax charge that were imposed when Singapore QROPS were derecognised.

Incidentally, HMRC delisted all Cyprus QROPS last month. In this case it's unclear whether the 55% tax charge will be applied or not. This case is particularly interesting, since it's the first time HMRC has gone after QROPS within the European Union. Previously people had thought that EU QROPS would be safe; so now nowhere's 100% secure.

And my crystal ball tells me that once all the QROPS are gone, it'll be QNUPS next.

[yoshiwara]

If I wanted appropriate financial advice I would be using the facilities provided by an HSBC Premier account or equivalent, not a no-name IFA.

[churchill]

'Does anyone have recent dealings with Financial Advisers they would recommend?'

I have used MBMG based in Bangkok over the years and would be happy recommending them ..

[richardbkk]

Abbey seem OK, but from what I've seen they are really heavily overweight in student accom. funds and you really need to diversify your portfolio. If you want a low risk investment there are a number of funds, strucured notes and ETF's out there which can help you, but you won't get an 8% return. You need to diversify across asset classes and also try to look at funds which have little or no correlation to the stock market, so your portfolio performs no matter what. Gibraltar QROPS is the way to go forward or a SIPP to hold down costs if you have a smaller pot. There is a trust company which allows a free switch between Gibraltar and Malta at a later date as Malta and Thailand are looking into signing a Double Taxation Agreement which will mean zero income tax rather than the 2.5% in Gibraltar. Try QROPS Specialists. They are based in Thailand.

[AyG]

Up to 35% tax free cash is commonplace.

No. The 2012 budget changed that. The limit's 30%. (70% of the funds must be invested to provide an "income for life".) Still, that's better than the 25% permitted for UK pensions.

[121Advice]

Strange then how one client has just taken 35% TFC from his Mauritius based QROPs? Perhaps another example of the QROPs minefield? Not my speciality so I'm as unsure as the next person!

[AyG]

Strange then how one client has just taken 35% TFC from his Mauritius based QROPs? Perhaps another example of the QROPs minefield? Not my speciality so I'm as unsure as the next person!

The 30% limit was not applied retrospectively. It applies, however, to all QROPS taken out after April this year.

[Smileygc]

Many thanks for all the replies and information. I have been away on the motorbike touring NW Thailand, now back home in the South just catching up with emails, topics etc.

Thanks to QROPSifa who I will contact once I gather all the facts from various advisors out there.

One thing I have discovered is the tax advantages of QROPS now I am an ex-resident of UK.

So I think QROPS is the way to go, I am still unsure of the best Juristriction, but am still reading up and investigating and liasing with various IFA's.

Another discovery is that all pensions originating in the UK are subject to GAD withdrawal rates as mentioned by AyG, so no matter what growth it makes, the withdrawal is capped! I am still unsure if the capping expires after more years as an ex-pat, which would raise my income.

I will update as I learn more.

Thanks again!

[MYKTHEMIN]

I am seriously considering transferring my UK Private Pensions to an Offshore QROPS as I live in Thailand.

I am always nervous of Financial Advisers - which may only be Financial "Salesmen" and only interested in their commissions and not my future financial well-being.

Does anyone have recent dealings with Financial Advisers they would recommend?

I am presently talking with Abbey Financial Services of Spain, has anyone had experience with this company?

Many Thanks

Yes, I've had dealings with Abbey financial services of Spain,though not with QROPS

I have had no problems.

Yes maybe no problems, but has it performed as well as it was supposed to?

[AyG]

Another discovery is that all pensions originating in the UK are subject to GAD withdrawal rates as mentioned by AyG, so no matter what growth it makes, the withdrawal is capped! I am still unsure if the capping expires after more years as an ex-pat, which would raise my income.

The cap never expires (unless you have another secured pension of GBP 20,000 or more). The thinking behind behind the limit is to ensure you never are so poor as to be able to return to the UK and receive certain state benefits. If you have a guaranteed GBP 20,000 you'd have too much income to claim these benefits, so the government doesn't care if you fritter away your pension pot and end up living in abject poverty. Incidentally, the same limits apply whether your UK resident or not.

[fiberman]

It's been awhile now since the topic was started, I am looking at Abbey as one option for QROPS, did you use them in the end?

[AnotherOneAmerican]

QROPS, high charges and high risks.

Why not consider a SIPP with pension draw down.

This lot have very low yearly charges, and you can manage your portfolio yourself over the internet or have them do it for you.

These guys have recommendations from financial magazines every year.

http://www.hl.co.uk/

Have a look at their SIPP pages.

Remember, IFAs working outside the UK are bound by very few rules and often end up putting your pension in junk bonds that give them the biggest commissions. No comeback on them if it all goes wrong. If you must use an IFA, use one based in the UK, at least they have to obey some rules. DO NOT USE ONE BASED IN THAILAND UNDER ANY CIRCUMSTANCES.

[fiberman]

QROPS, high charges and high risks.

Why not consider a SIPP with pension draw down.

This lot have very low yearly charges, and you can manage your portfolio yourself over the internet or have them do it for you.

These guys have recommendations from financial magazines every year.

http://www.hl.co.uk/

Have a look at their SIPP pages.

Remember, IFAs working outside the UK are bound by very few rules and often end up putting your pension in junk bonds that give them the biggest commissions. No comeback on them if it all goes wrong. If you must use an IFA, use one based in the UK, at least they have to obey some rules. DO NOT USE ONE BASED IN THAILAND UNDER ANY CIRCUMSTANCES.

The main problems with a SIPP as far as I can see are that I would have to pay income tax and also once I die the gov would take a half of the remainder as inheritance tax. The IFA's that I have talked to (both UK and non UK) do not handle any of the money, it is transferred to the holding company in Gibraltar, New Zealand or wherever, both of which have very strict laws regarding the financial sectors. These are international companies not some fly by night operation and you are given complete freedom as to how the money is invested.

There obviously is always risk in investing money but I don't think the performance of the UK or the US over the last few years can give anyone much confidence.

I have been googling all afternoon and have yet to find any criticism of any QROPS company so if anyone has found any bad reports please let me know. You are right though about Thai based companies, not that they are necessarily all bad but the laws governing the financial industry here are just too lax.