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Uk Pension Transfer To Offshore Qrops

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One thing nobody has so far mentioned, what happens if you have a problem with the company running your Qroups.

In any UK based funds you always have the right to take any complaint to the Financial Ombudsman,who if they find the clients has been badly advised, can orders cost to be payed to that client, but with an off-shore Qroups you do not. Off course the IFA's are always quick to point out that in, places such as Guernsey they do have a Financial Ombudsman, it's just that they conveniently forget to mention that some of these F.O,as in Guernsey, Have absolutely no powers to rectify a wrong.

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Having been in the UK pension industry since 1985 and offshore since 2009, with advanced level qualifications in Pensions, I have a good idea about how these things work.

QROPS is the offshore version of a UK SIPP both of which allow you to draw income between UK Government levels. Depending on income levels and where you choose to retire, they can prove attractive in reducing income and death tax when compared to the UK. Depending on individual circumstances there can be other benefits like increased pension lump sum, no early retirement penalties, no younger spouse penalties, no need to but an annuity, but there are many different schemes in the UK as so it depends what you have as to what the benefits may be, if any. The decision to transfer should not be taken lightly and a full comparison should be prepared between the UK pension and proposed QROPS highlighting any guarantees you may lose (final salary benefits or guaranteed annuity rates for example), possible benefits and how it relates to your personal decision, allowing you to make an informed decision. Of equal importance is the investment advice. Again a full report showing the existing and proposed plans and any charges, commissions and exit penalties on the proposed investment product. You should be in a position to make an informed decision based upon you personal circumstances, UK pensions and attitude to risk, etc. The UK recently changed its rules as a result of the retail distribution review meaning no investment related products can pay commissions. This is not the case here and so packaged products will pay high levels of up front commission so ask the adviser to confirm what you are paying so you know if you are getting value for money.

For any dealings with a financial adviser I would ask for their qualifications and experience and also what will they get paid, what are the charges, what are the penalties if I stop and what is investment worth in say 1, 2 or 5 years. Shop around and ask for recommendations as you would do with anything you buy. And of course, google them!

Assume you have a pension pot of £100,000 and take from it a pension of £4,000 a year.

If you hold this onshore and are a basic rate tax payer (i.e. other UK taxable income of more than £9,440), you will pay 20% tax and receive a pension of £3,200/year. (If you're a higher rate tax payer with other income in excess of £32,011 you'll receive £2,400.)

If you hold this pension offshore in a QROPS you won't pay any UK income tax, but you will have to pay around £1,000/year to the plan administrator, leaving you with a pension of £3,000/year.

This ignores the initial cost for an IFA to arrange the QROP for you.

But in summary, if you're a basic rate tax payer, you need a pot somewhat larger than £100,000 for a QROPS to be income tax-efficient (but the death tax situation may still make a QROP attractive).

You are correct except you are not factoring in the cost of drawdown products in the UK. They will also have a cost to administer albeit likely to be less than QROPS, although due to PPF cost increases SIPP prices have been on the rise.

If you educate yourself enough to not blindly trust an IFA, then you don't need the IFA and can manage your own fund online.

In the spirit of education, could you point me in the direction of somewhere I could open and begin an offshore pension fund with the ability to select how to invest the fund myself? I need to start, I don't need to transfer - just to open and begin adding in to one.

could you point me in the direction of somewhere I could open and begin an offshore pension fund with the ability to select how to invest the fund myself? I need to start, I don't need to transfer - just to open and begin adding in to one.

Offshore pensions allow someone else unregulated access to your funds and high charges.

Why not go the SIPP route with a firm like Hargreaves Lansdown, you can invest and control online.

You need a UK address for initial correspondence, as you are supposed to be a UK resident.

You should not start a proper "pension" if you are not receiving tax benefits in my opinion (or being matched by your employer), as you are forever after told by some government how much of YOUR money you can access, what kind of investments you can make with YOUR money, etc. To start with, open a new bank account separate from your others, and start contributing monthly to this. Label this account "pension" mentally and don't touch it. When it gets sizeable enough that you would like to invest some of it, then you can consider the appropriate vehicle for investment management at that point in time. This way you maintain total control, but it requires more discipline to protect you from yourself. Given the decisions otherwise sane people make when at 60 they suddenly fall in love with a beautiful young lady, the restrictions on drawing your pension down have no doubt saved a few guys out here from themselves..

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