QROPS - who to use?

[Captbonio]

Hello ThaiVisa Forum

I am currently UK based but moving to Thailand in 2015 with a view to start retirement .

I have a SIPP and a small company pension, and have decided to transfer some perhaps all into a QROPS scheme, the main reason being I like the inheritance benefit of it.

I have been approached by a couple of UK based IFA's looking for my business, but they are more focused on offering a UK based solution, which is fine, but when I start to talk about anything offshore they sort of lose interest.

Once I started to make enquiries elsewhere regarding QROPS and QNUPS , it seems to bring a completely different standard of IFA, and frankly I suspect they are not all that.

So far I have been approached by Abbey Financial and Devere Group and a couple of others who i wont even mention because they are clearly not acceptable

My question to you good, wise and indiscriminant folks of this forum is do those names ring any alarm bells with any of you? I have done some searches here on this site and the internet in general, and accept that with any company you do a search on, it will always have its detractors and those who just like to complain about everything, but i feel sure that there must be many who can offer unbiased and constructive advice.

I would love to hear from any who can assist.

Many thanks in advance.

Captain.

[rgs2001uk]

Yes those names ring alarm bells, personally I wouldnt go anywhere near them, waiting for others to post of their positive experiences.

With any luck the QROP king Guesthouse will read this and advise accordingly, personally I would not touch a Qrops, unless you can afford a massive tax bill should you ever go back to the UK.

[dabhand]

I use The Fry Group and they appear to be as good as any.

They are UK based and have an office in Singapore and, to my knowledge, a rep makes regular trips to Thailand on pension related matters.

I make no recommendations, as each person has to make the appropriate enquiries / research to suit their own circumstances.

[AyG]

You don't mention where in the UK you are. Anyway, you're unlikely to find a suitably experienced IFA outside the big cities.

If in London you could try Chase De Vere (nothing to do with the Devere group). They're who I used a few years ago. They also have branches across the country - not sure if they have a similar level of expertise in the provinces. They're not particularly cheap, though.

http://www.chasedevere.co.uk

[wordchild]

Abbey and Devere are, i believe, both part of the same network. Both have a pretty poor reputation amongst expats just do a search on this or,frankly any, expat forum. Aggressive sales and high charges would seem to be the main issues. In general stay clear of any Thai based IFA,s.

[AyG]

Interesting article which might explain the reluctance of UK IFAs to deal with you: http://www.international-adviser.com/news/retirement/debate-emerges-about-whether-whole-of-market

[Captbonio]

You don't mention where in the UK you are. Anyway, you're unlikely to find a suitably experienced IFA outside the big cities.

If in London you could try Chase De Vere (nothing to do with the Devere group). They're who I used a few years ago. They also have branches across the country - not sure if they have a similar level of expertise in the provinces. They're not particularly cheap, though.

http://www.chasedevere.co.uk

Many thanks

I am in London , so will give them a try

Much appreciated

[Captbonio]

I use The Fry Group and they appear to be as good as any.

They are UK based and have an office in Singapore and, to my knowledge, a rep makes regular trips to Thailand on pension related matters.

I make no recommendations, as each person has to make the appropriate enquiries / research to suit their own circumstances.

Many thanks

Much appreciated

[Captbonio]

Yes those names ring alarm bells, personally I wouldnt go anywhere near them, waiting for others to post of their positive experiences.

With any luck the QROP king Guesthouse will read this and advise accordingly, personally I would not touch a Qrops, unless you can afford a massive tax bill should you ever go back to the UK.

Thanks.. yes I know that is a detriment, and nobody knows whats is to come

I am sort of thinking of splitting them, leaving some in UK which can pay into UK and part in an offshore plan..

I know it means I am not committed to my future plans but it also means im not goign to be penalised too badly if ityall goes pear shaped.

[Captbonio]

Abbey and Devere are, i believe, both part of the same network. Both have a pretty poor reputation amongst expats just do a search on this or,frankly any, expat forum. Aggressive sales and high charges would seem to be the main issues. In general stay clear of any Thai based IFA,s.

Thanks.. yes that would not surprise me in the slightest.

I am aware of the sales techniques but as I am in the market for a QROPS i have to deal with that aspect. The high charges is another thing altogether. UK IFA's now have to charge fee as they do not get anything back from the plan provider anymore. Thus the fee structure is transparent. It appears that the Offshore agents get not only an excessive fee fro mthe customer but also the kick back from the plan provider which means it takes a very strong perfomance to actually get a return...

So long as this is all laid out, I can deal with that, but the issue appears to be that it is definitely not transparent...

Points noted.. Many thanks

[AnotherOneAmerican]

Now is not the time to transfer to a QROP, at best it returns poorly.

At worse it is a scam.

Use SIPP drawdown, no need for an IFA you can invest yourself using ontine fund management.

Hargreaves-Lansdown is always winning investment awards.

Do not tie your money up in a QROP.

Pensions in the UK are changing rapidly, a SIPP allows you to pass your pension on.

Maybe next year, you can take it all out as cash yourself.

Outside the UK, you have no financial protection at all.

IoM has many scam based pension companies, do not make the mistake of thinking any money in the IoM has UK style financial protection.

Do not allow any pension fund to be put into an insurance style wrapper (your IFA gets 10% off the top, which is why they are so keen to push them).

Do not allow any part of your pansion to be transferred offshore (IoM and Jersey should be considered offshore)

Do not allow your pension fund management to be split, for example,

Pension fund manager + offshore trading company + IFA

This is the worst of all, as they each will blame the other for the huge losses your pension makes in this type of arrangement.

[AnotherOneAmerican]

Abbey and Devere are, i believe, both part of the same network. Both have a pretty poor reputation amongst expats just do a search on this or,frankly any, expat forum. Aggressive sales and high charges would seem to be the main issues. In general stay clear of any Thai based IFA,s.

Thanks.. yes that would not surprise me in the slightest.

I am aware of the sales techniques but as I am in the market for a QROPS i have to deal with that aspect. The high charges is another thing altogether. UK IFA's now have to charge fee as they do not get anything back from the plan provider anymore. Thus the fee structure is transparent. It appears that the Offshore agents get not only an excessive fee fro mthe customer but also the kick back from the plan provider which means it takes a very strong perfomance to actually get a return...

So long as this is all laid out, I can deal with that, but the issue appears to be that it is definitely not transparent...

Points noted.. Many thanks

Not transparent,

The IFA can enter into private agreements with mutual funds to put money into them from their customers.

These commissions do not appear anywhere. Kickbacks are easily arraigned in the UK or anywhere in the world.

Hargreaves Lansdown, no need for an IFA in the process, unless you want one.

[GuestHouse]

Captbonio,

Before you make a decision I strongly advise you to wait and see what the new pension rules allow AND wait to see what the proposed changes to Tax Allowances for expats are.

There are some important issues:

High Fees - Do not pay them if you do not need to.

You have not stated how old you are, while QROPS may offer some advantages a QROPS scheme will come with high management costs. AYG who is posting in this thread has elsewhere stated that his QROPS set up was 3000 pounds and that that he is paying 995 pounds per year in annual management fees.

Conversely my SIPP with Hargreaves Landsdown has ZERO management fees (actually comes with an annual loyalty bonus).

The point to note is that unless you are very near retirement taking out a QROPS now would burden you with around a thousand pounds a year management fees - every year - fees you need not pay in the far more competitive UK based SIPP market.

Unless you are very close to retirement, those high fees will seriously eat into the capital in your pension and very seriously eat into the growth potential.

As an observation, the 995 pounds per year management fees paid by AYG are a lot lower than many of the charges I've seen other expats pay for their QROPS.

So keep in mind, QROPS might be right for you, but there is no reason to take a QROPS out early and pay high fees - leave it to the last minute (OK you might die before retirement but you will absolutely pay higher fees for a QROPS than a SIPP).

Options Under the New Pension Rules

The new pension rules offer a flexibility that pensioners never previously had. How these changes impact you and the options they give you will depend upon a lot of factors; your age, the amount of pension savings you have, the rate of tax you are paying (perhaps other issues too).

I strongly advise you to take independent financial advice in the UK before you make a decision to move to QROPS (and away from both the New Pension Rules AND the protections you have under UK Financial Regulations).

I understand you are still in the UK so now is a good time to talk to UK based IFA's.

You can prime yourself with information on the new Pension Rules with a fact sheet from Hargreaves Landsdown https://www.hl.co.uk/free-guides/budget-2014-pension-changes-factsheet

Changes to Tax Free Allowances for Expats

The Government are currently consulting on changes to Tax Free Allowances for non residents. The Government consultation paper indicates that the most likely change is to remove tax free allowances from people who do not derive most of their income from the UK - The indication is that the cut-off shall be around 70~90%.

If this is adopted (and it seems very likely that it will be) then British Expat Pensioners living in Thailand will need to demonstrate that the derive at least 70~90% of their income from the UK. If they cannot do so they will loose their tax free allowance and thereafter all of their UK income (including UK State Pension shall be taxed)

How does this affect you with QROPS?

If you take out a QROPS (which is always declared to HMRC at the time of transfer) then the HMRC will have a record of your UK State Pension and a record of your QROPS.

If your state pension is less than the income cut-off (70~90%) - for example if your QROPS is sufficient to provide a pension equal in size to your state pension, then you will lose your tax free allowance and all of your state pension will be taxed.

Clearly I don't know the ratio of your income UL/QROPS but you need to look at this.

Of course if you have a substantial QROPS you might consider the tax on your state pension to be insignificant, but do get the numbers checked.

Paying tax on your state pension at today's pension rates could cost around 1100 pound a year, if you are retiring after the new pension rates in April 2016 the tax cost could be over 1500 pounds per year.\

These are additional costs on top of your 995 a year QROPS fees.

The changes to the Tax Allowances for Non Residents are due to be decided later this year - As I indicate above, they will have a significant impact.

If your SIPP and company pension pots are not large (Say less than GBP100,000) then you should seriously consider waiting to see what the new Tax Allowance Changes are before you take out a QROPS.

My logic here is that a pension pot of 100K will return around 5000 pounds per year: QROPS management fees and loss of UK tax allowances could cost you half your income from your QROPS scheme (even with a low management fee basis).

My advice

Wait and see

Get advice from an IFA in the UK

Don't confuse the importance of a guaranteed income during retirement with the lure of a cash pot being left over after you are dead.

I personally doubt that QROPS are a good idea for people other than those who have very large pension pots and I absolutely warn against taking out a QROPS via any advisers or companies based in Thailand.

[Captbonio]

Interesting article which might explain the reluctance of UK IFAs to deal with you: http://www.international-adviser.com/news/retirement/debate-emerges-about-whether-whole-of-market

interesting... and worrying... thanks

[Captbonio]

Now is not the time to transfer to a QROP, at best it returns poorly.

At worse it is a scam.

Use SIPP drawdown, no need for an IFA you can invest yourself using ontine fund management.

Hargreaves-Lansdown is always winning investment awards.

Do not tie your money up in a QROP.

Pensions in the UK are changing rapidly, a SIPP allows you to pass your pension on.

Maybe next year, you can take it all out as cash yourself.

Outside the UK, you have no financial protection at all.

IoM has many scam based pension companies, do not make the mistake of thinking any money in the IoM has UK style financial protection.

Do not allow any pension fund to be put into an insurance style wrapper (your IFA gets 10% off the top, which is why they are so keen to push them).

Do not allow any part of your pansion to be transferred offshore (IoM and Jersey should be considered offshore)

Do not allow your pension fund management to be split, for example,

Pension fund manager + offshore trading company + IFA

This is the worst of all, as they each will blame the other for the huge losses your pension makes in this type of arrangement.

Wow...

Thats is very clear.

Thank you for it.

You stoppped me dead in my tracks with that.

If you dont mind, and I fully understand if you decline, could you tell me why you are so convinced ? I have to assume that it is either that you have been burnt by one of the above schemes or you are in the business and just..know.

Like I said I fully understand if you pass on this, but to be so resolute in your answer, you have got me very curious.

Many thanks regardless. Youi have made a big impact.

Captain

[AyG]

Now is not the time to transfer to a QROP, at best it returns poorly.

At worse it is a scam.

Use SIPP drawdown, no need for an IFA you can invest yourself using ontine fund management.

Hargreaves-Lansdown is always winning investment awards.

Do not tie your money up in a QROP.

Pensions in the UK are changing rapidly, a SIPP allows you to pass your pension on.

Maybe next year, you can take it all out as cash yourself.

Outside the UK, you have no financial protection at all.

IoM has many scam based pension companies, do not make the mistake of thinking any money in the IoM has UK style financial protection.

Do not allow any pension fund to be put into an insurance style wrapper (your IFA gets 10% off the top, which is why they are so keen to push them).

Do not allow any part of your pansion to be transferred offshore (IoM and Jersey should be considered offshore)

Do not allow your pension fund management to be split, for example,

Pension fund manager + offshore trading company + IFA

This is the worst of all, as they each will blame the other for the huge losses your pension makes in this type of arrangement.

Some sensible information there (particularly about waiting to see what happens), but also a lot of nonsense.

"a QROP, at best it returns poorly"

One can choose one's own investments with a QROP. Absolutely no reason to assume it will perform any better or any worse than a UK-based scheme. Yes, the fees are a little higher, but then all interest is tax free. Can even perform better than within the UK, depending up the exact fee structure and asset allocation.

"Outside the UK, you have no financial protection at all."

Different regimes have different levels of protection. Saying you have no protection outside the UK is plain wrong. Furthermore, you can hold your QROP investments in the UK and get UK-standard protection for them.

"Hargreaves-Lansdown is always winning investment awards."

Yes, it wins awards. It's also one of the most expensive platforms. It also doesn't allow non-residents to open an account. If you open an account whilst UK-resident you can not add further investments after you become an expat living in Thailand.

[Captbonio]

Captbonio,

Before you make a decision I strongly advise you to wait and see what the new pension rules allow AND wait to see what the proposed changes to Tax Allowances for expats are.

There are some important issues:

High Fees - Do not pay them if you do not need to.

You have not stated how old you are, while QROPS may offer some advantages a QROPS scheme will come with high management costs. AYG who is posting in this thread has elsewhere stated that his QROPS set up was 3000 pounds and that that he is paying 995 pounds per year in annual management fees.

Conversely my SIPP with Hargreaves Landsdown has ZERO management fees (actually comes with an annual loyalty bonus).

The point to note is that unless you are very near retirement taking out a QROPS now would burden you with around a thousand pounds a year management fees - every year - fees you need not pay in the far more competitive UK based SIPP market.

Unless you are very close to retirement, those high fees will seriously eat into the capital in your pension and very seriously eat into the growth potential.

As an observation, the 995 pounds per year management fees paid by AYG are a lot lower than many of the charges I've seen other expats pay for their QROPS.

So keep in mind, QROPS might be right for you, but there is no reason to take a QROPS out early and pay high fees - leave it to the last minute (OK you might die before retirement but you will absolutely pay higher fees for a QROPS than a SIPP).

Options Under the New Pension Rules

The new pension rules offer a flexibility that pensioners never previously had. How these changes impact you and the options they give you will depend upon a lot of factors; your age, the amount of pension savings you have, the rate of tax you are paying (perhaps other issues too).

I strongly advise you to take independent financial advice in the UK before you make a decision to move to QROPS (and away from both the New Pension Rules AND the protections you have under UK Financial Regulations).

I understand you are still in the UK so now is a good time to talk to UK based IFA's.

You can prime yourself with information on the new Pension Rules with a fact sheet from Hargreaves Landsdown https://www.hl.co.uk/free-guides/budget-2014-pension-changes-factsheet

Changes to Tax Free Allowances for Expats

The Government are currently consulting on changes to Tax Free Allowances for non residents. The Government consultation paper indicates that the most likely change is to remove tax free allowances from people who do not derive most of their income from the UK - The indication is that the cut-off shall be around 70~90%.

If this is adopted (and it seems very likely that it will be) then British Expat Pensioners living in Thailand will need to demonstrate that the derive at least 70~90% of their income from the UK. If they cannot do so they will loose their tax free allowance and thereafter all of their UK income (including UK State Pension shall be taxed)

How does this affect you with QROPS?

If you take out a QROPS (which is always declared to HMRC at the time of transfer) then the HMRC will have a record of your UK State Pension and a record of your QROPS.

If your state pension is less than the income cut-off (70~90%) - for example if your QROPS is sufficient to provide a pension equal in size to your state pension, then you will lose your tax free allowance and all of your state pension will be taxed.

Clearly I don't know the ratio of your income UL/QROPS but you need to look at this.

Of course if you have a substantial QROPS you might consider the tax on your state pension to be insignificant, but do get the numbers checked.

Paying tax on your state pension at today's pension rates could cost around 1100 pound a year, if you are retiring after the new pension rates in April 2016 the tax cost could be over 1500 pounds per year.\

These are additional costs on top of your 995 a year QROPS fees.

The changes to the Tax Allowances for Non Residents are due to be decided later this year - As I indicate above, they will have a significant impact.

If your SIPP and company pension pots are not large (Say less than GBP100,000) then you should seriously consider waiting to see what the new Tax Allowance Changes are before you take out a QROPS.

My logic here is that a pension pot of 100K will return around 5000 pounds per year: QROPS management fees and loss of UK tax allowances could cost you half your income from your QROPS scheme (even with a low management fee basis).

My advice

Wait and see

Get advice from an IFA in the UK

Don't confuse the importance of a guaranteed income during retirement with the lure of a cash pot being left over after you are dead.

I personally doubt that QROPS are a good idea for people other than those who have very large pension pots and I absolutely warn against taking out a QROPS via any advisers or companies based in Thailand.

Dear Guesthouse

Many thanks for your incredibly detailed and well written reply

It is very much appreciated.

As advised earlier , you clearly are an authority on the subject, and in fact have given a better reply that my IFA's here in the UK

Yes I have consulted a few, and they are reluctant to discuss QROPS and I can see why now.

I am 56 and am in a position to start drawing my pension. My thoughts were to take the 25% lump sum to move to Thailand next year with it as some working capital. The rest I would manage as I have as a SIPP as I have been doing over the last few years, and hopefully not have to draw any if I can find some form of income there. If I have to draw on it then so be it.

My whole reasoning for buying QROPS was for the avoidance of tax, and the way is was suggested to me, was that , for e.g. a Gigralter based one would charge 2.50% tax as opposed to the possible 25% I would pay on my UK one.. If the price for that was higher charges, then within reason , I could accpet some, especially if the funds performed ok. The big unknowns of course are how the funds perform (nobody knows) and how high the fees are , and what effect they will have on my returns.

What you good chaps have suggested are that the fees are the killer, and make anything unworkable, unless the are completey transparent , which given the nature of the beast , is porbably never going to happen.

I will take the advice that you and anotheroneamerican have offered and sit tight for the time being. I will porbably take the tax free cash when I am ready to move , but for the time being leave the rest here.

Many thanks to all for your advice. I am really very impressed with how this works.

Gives you faith in humanity.

All the best

All invited to Hua HIn next year for a moving in party....

Captain

[chiang mai]

Use non of them and steer clear of QROPS period, look at the new pension laws. Also be aware of any IFA's based in (or claiming to be based) in Thailand/Asia.

[AnotherOneAmerican]

"Hargreaves-Lansdown is always winning investment awards."

Yes, it wins awards. It's also one of the most expensive platforms. It also doesn't allow non-residents to open an account. If you open an account whilst UK-resident you can not add further investments after you become an expat living in Thailand.

I don't believe any legit UK based pension management company will allow you to open an account if living outside the UK.

I may be wrong, but I think not.

Most UK based financial institutions (including banks) now avoid expats like the plague.

[GuestHouse]

I am 56 and am in a position to start drawing my pension. My thoughts were to take the 25% lump sum to move to Thailand next year with it as some working capital. The rest I would manage as I have as a SIPP as I have been doing over the last few years, and hopefully not have to draw any if I can find some form of income there. If I have to draw on it then so be it.

Retiring at 56 is of course achievable, but to retire and stay retired at 56 you need to have substantial capital (or assets ie houses to let) in order to support a longer retirement.

People in the 50s who have pension savings will generally have company pensions and or private pension schemes - these, for this age group, were designed to provide pension income after the age of 65 - taking an early retirement will dramatically change the sustainability on three grounds.

1. You will be drawing your pension earlier (it sounds like 8 years earlier)
2. You will no longer be contributing to your pension
3. Inflation will have longer to work its evil deeds

These three issues interact to drastically reduce pension income and the buying power of pension income - Taking a cash free lump sum will also have an effect.

It all depends of course on the size of the pension pot you have and what your expected income needs are - I'm not asking you to reveal that information and suggest you do not.

But these are issues you need to discuss with an IFA

There is also an issue of from which pension pot you will draw your tax free lump sum.

The 25% tax free lump sum is available to you on the basis of your whole pension savings (the sum of your SIP and your company pension pots). The rules on how you can take that have recently changed with the relaxing of Pension Regulations, so take advice on that.

But as a general rule, the benefits within your company pension scheme will be far better than those in your SIP. The advice is almost always that if you take a cash lump sum you should take it from the scheme with the least ancillary benefits.

You may find that your company pension allows early retirement, but again check the impact of taking it - reductions in pension income of 4% for every year you retire early are the norm - Retiring in company pension schemes 8 years early will typically incur a reduction in pension payments of 32% for the whole life of the pensioner.

I'm not saying your should not retire early, I plan to retire early myself.

Rather do spend time to get good advice.

Find out

• What your financial situation is.
• What is the impact on your pension income of retiring early.
• What is the impact on your pension income if you retire early and take a tax free lump sum.

I checked these numbers for myself and concluded that drawing any of my pension before age 60 would place my long term retirement security at risk.

I'm busy now working and stashing cash savings to fund an early 'part retirement' a period when I plan to work part time moving into full retirement at 60 when there are no penalties under my pension scheme.

These are very difficult decisions, often clouded by emotion, so do get good independent financial advice.

[GuestHouse]

"Hargreaves-Lansdown is always winning investment awards."

Yes, it wins awards. It's also one of the most expensive platforms. It also doesn't allow non-residents to open an account. If you open an account whilst UK-resident you can not add further investments after you become an expat living in Thailand.

Odd that.

I've had an account with HL for almost ten years, the whole time of which I have been an expat.

I top my account up every month - never once had a problem.

The fees I pay for transactions are almost identical to those you have stated elsewhere that you pay.

I don't pay management fees, I don't get hassled for services I don't want.

I'm more than happy with their service.

[chiang mai]

A helpful article here:

http://www.telegraph.co.uk/finance/personalfinance/investing/10567911/How-Hargreaves-Lansdowns-new-prices-stack-up-against-other-fund-supermarkets.html

ANd here:

http://www.thisismoney.co.uk/money/diyinvesting/article-2539725/Hargreaves-Lansdown-levy-annual-fee-0-45-investors.html

Edited August 14, 2014 by chiang mai

[AyG]

"Hargreaves-Lansdown is always winning investment awards."

Yes, it wins awards. It's also one of the most expensive platforms. It also doesn't allow non-residents to open an account. If you open an account whilst UK-resident you can not add further investments after you become an expat living in Thailand.

Odd that.

I've had an account with HL for almost ten years, the whole time of which I have been an expat.

I top my account up every month - never once had a problem.

The fees I pay for transactions are almost identical to those you have stated elsewhere that you pay.

I don't pay management fees, I don't get hassled for services I don't want.

I'm more than happy with their service.

I specifically asked them a few weeks ago about whether an expat could open an account (the answer was "no"), and whether an expat with a preexisting account could top it up (again the answer was "no"). It's possible that the rules for preexisting accounts, or where the account owner hasn't notified H-L they've become non-resident are different.

As for expenses, if you invest in funds, then using Hargreaves Lansdown will cost about 0.45%/year for custody, compared with iWeb's 0.01%. (OK, levels of service here are very different, but TrustnetDirect at 0.16% is probably a better comparison. Their custody charges are capped at GBP 200/year.)

[Captbonio]

I am 56 and am in a position to start drawing my pension. My thoughts were to take the 25% lump sum to move to Thailand next year with it as some working capital. The rest I would manage as I have as a SIPP as I have been doing over the last few years, and hopefully not have to draw any if I can find some form of income there. If I have to draw on it then so be it.

Retiring at 56 is of course achievable, but to retire and stay retired at 56 you need to have substantial capital (or assets ie houses to let) in order to support a longer retirement.

People in the 50s who have pension savings will generally have company pensions and or private pension schemes - these, for this age group, were designed to provide pension income after the age of 65 - taking an early retirement will dramatically change the sustainability on three grounds.

1. You will be drawing your pension earlier (it sounds like 8 years earlier)
2. You will no longer be contributing to your pension
3. Inflation will have longer to work its evil deeds

These three issues interact to drastically reduce pension income and the buying power of pension income - Taking a cash free lump sum will also have an effect.

It all depends of course on the size of the pension pot you have and what your expected income needs are - I'm not asking you to reveal that information and suggest you do not.

But these are issues you need to discuss with an IFA

There is also an issue of from which pension pot you will draw your tax free lump sum.

The 25% tax free lump sum is available to you on the basis of your whole pension savings (the sum of your SIP and your company pension pots). The rules on how you can take that have recently changed with the relaxing of Pension Regulations, so take advice on that.

But as a general rule, the benefits within your company pension scheme will be far better than those in your SIP. The advice is almost always that if you take a cash lump sum you should take it from the scheme with the least ancillary benefits.

You may find that your company pension allows early retirement, but again check the impact of taking it - reductions in pension income of 4% for every year you retire early are the norm - Retiring in company pension schemes 8 years early will typically incur a reduction in pension payments of 32% for the whole life of the pensioner.

I'm not saying your should not retire early, I plan to retire early myself.

Rather do spend time to get good advice.

Find out

• What your financial situation is.
• What is the impact on your pension income of retiring early.
• What is the impact on your pension income if you retire early and take a tax free lump sum.

I checked these numbers for myself and concluded that drawing any of my pension before age 60 would place my long term retirement security at risk.

I'm busy now working and stashing cash savings to fund an early 'part retirement' a period when I plan to work part time moving into full retirement at 60 when there are no penalties under my pension scheme.

These are very difficult decisions, often clouded by emotion, so do get good independent financial advice.

Hi Guesthouse

Thanks again for your very attentive reply and your attention to detail

I am really so happy to see such coherant and knowledgable advice on this forum you and a couple of others.

It is truely gratifying.

You are quite correct in most of your assumptions and yes this is not the place to go into any in depth analysis.

I find myself in a rather difficult position having had a good part of my assets decimated by divorce and that I am in a business that is coming to the end of its tenure. So this means, low assets and soon the inability to earn a decent income.

Moving to Thailand has been planned for some time and provision for it and the reasons to do so are all in place.

It may not be an option to defer taking pension early though it is of course the last thing that i want to do, so its needs must as you were.

I totally agree with all you say above about when to take pension , the benefits of a company pension and the timing of taking the cash free.

I have had advice from my long standing (and fairly useless) IFA and it was this that prompted me into looking further afield for alternatives, and this led me to QROPS.

Given what you and one other on here have advised me on, I will not go down that route, well not for the time being, and will leave it under a SIPP wrapper which had been my intention all along , untill I got swayed by the prospect of tax fee income.

My pot is not a big one, but will be enough to live on in Thailand , but no where near enough to live on here. My (new) wife and I hope to open a business when we come to Thailand and use some of the 25% portion to finance it. Im not going to risk my whole wad on it but I am up for an attempt , such is the mad and impetuous fool that I am....lets see

Appreciate all you have said to me. It is great stuff and incredibly useful. I have learnt a lot and feel very happy to have made aquaintance of some very good people on this site.

Many thanks to you

Captain

[Captbonio]

A helpful article here:

http://www.telegraph.co.uk/finance/personalfinance/investing/10567911/How-Hargreaves-Lansdowns-new-prices-stack-up-against-other-fund-supermarkets.html

ANd here:

http://www.thisismoney.co.uk/money/diyinvesting/article-2539725/Hargreaves-Lansdown-levy-annual-fee-0-45-investors.html

thanks... im not with them, got the brochure on numerous occasions , and when i delved into the small print , gave up...

Cheers

[rak sa_ngop]

For my situation I have been advised as follows (by WT Fry, Singapore).

Small private pension (75,000 GBP) Age 60 years.

Take the 25% tax free ASAP.

Transfer the remainder to an offshore pension fund.

Start drawing down every year10,000 GBP and use up my personal allowance (10,000 GBP per annum). This will be allowed from next year with the planned pension reform.

At 65 defer taking the State pension for a few years

At 65 keep drawing down 10,000 pa (within tax allowance) until no private pension remaining.

Take State pension after pension fund depleted (boosted by several years of deferral) and still pay no tax as it falls within the allowance.

Use the money from the private pension and invest in high yield blue chip companies paying 3 - 5 pc p.a.

Watch the dividends grow each year.

Of course if the personal allowance is withdrawn for UK non residents as currently threatened then all the above is not so rosey!

[Pormax]

There does seem to be a lot of negativity regarding QROPS.

However a lot of things must be taken into consideration.

I have recently been down the route of looking at QROPS.

My main reason was so as not to pay more UK income tax than neccessary. Should the Personal Tax allowance be removed for expats which is a good probability then as I am receiving pensions just over the PTA limit now I stand to lose 2,000GBP a year. Also soon I shall also recieve the State Retirement Pension which will mean a further tax bill of 1,100per year. I cannot do anything about my Armed Forces Pension or the State Retirement Pension as although there is a Dual Taxation Agreement with Thailand this does not Government paid pension to be taxed anywhere but the UK. Some other countries do allow this.

So it is my Self Invested Personal Pension Plan that I am looking at.

Recent UK government changes to pensions now allow your heir to continue on a drawdown however I believe if the lump sum is taken that their is a 55% tax on this.

I am also looking at the probability that I will need to increase my yearly drawdown, however should I do this then i will lose to tax 20% of the extra amount.

Should I decide to go down the QROPS route with my SIPP then I will save more than 1,300 per year on tax, pay no fees to my current pension handler or my Financial Advisor. So all in all save a minimum of 1,600GBP. But then of course I have to pay the fees on QROPS. I have seen some high amounts quoted in this forum way above what my research has told me. First there is a QROPS one off setup charge which is 300GBP then an annual management fee of 500GBP. Should I not want to leave my portfolio as it is and want to keep swapping and changing then yes this could incur large charges. Tax on my drawings say in Gibraltar is 2.5% other countries differ. So If I go down this route I believe I will not lose out regarding the charges against the UK tax I will save.

I have been in contact with my long stand Financial Advisor in the UK who also happens to a very close friend. He admitted that like many FA in the UK, Qrops is not something they deal with on a regular basis. He had to contact some of his colleagues who were more knowledgable on this subject and in the end even though he would be losing his commission on my SIPP he did after doing more research, say he thought it would be a good thing for me to do especioally regarding the tax situation.

A couple of points to note. A UK pension provider can only transfer your funds to a HMRC registered and approved QROPS provider and the QROPS provider has to complete a form to be sent to HMRC.

I believe there are certain rules regarding QROPS that apply to expats such as how long you have continuously lived outside of the UK. If one is travelling back and forth to the UK or think they may have to do so at some point in the future then perhaps QROPS is not right for them.

Like in all investments there are of course risks involved but this can be limited by what you decide to do. Go on a high risk strategy or play safe with a low to medium investment.

Saying all that over the last couple of years my SIPP with one of the largest companies in the UK has not done particularly well.

QROPS is not for everyone and a lot of research should be undertaken before one goes down this path but the negativity I read on this forum seems to be out of proportin.

[AnotherOneAmerican]

For my situation I have been advised as follows (by WT Fry, Singapore).

Small private pension (75,000 GBP) Age 60 years.

Take the 25% tax free ASAP.

Transfer the remainder to an offshore pension fund.

Start drawing down every year10,000 GBP and use up my personal allowance (10,000 GBP per annum). This will be allowed from next year with the planned pension reform.

At 65 defer taking the State pension for a few years

At 65 keep drawing down 10,000 pa (within tax allowance) until no private pension remaining.

Take State pension after pension fund depleted (boosted by several years of deferral) and still pay no tax as it falls within the allowance.

Use the money from the private pension and invest in high yield blue chip companies paying 3 - 5 pc p.a.

Watch the dividends grow each year.

Of course if the personal allowance is withdrawn for UK non residents as currently threatened then all the above is not so rosey!

Why would you need to transfer to an offshore fund?

That's so the IFA can rake in a 10% commission from the transfer, while sealing your new pension into an insurance wrapper.

(You don't see the 10% commission loss, as it's paid from new pension company to IFA, they recover the money by high fees on everything over the next 10 years when you can't move the money out without a huge penalty fee)

You gotta love IFAs!

[Captbonio]

Hello rak sa_ngop....

Thank you for your post and your candid response.

I appreciate your comments and have some questions as a result

You mention your funds is/was at 75k. You take 25% which leaves 56k, which at 10k PA will be gone by the time you are just over 65. You then will rely on the state pension which goes higher if you defer it. (I didnt know that part. Very useful)

I presume that as you are in this forum , and you are being advised by Fry of Singapore that you are in Thailand now and your pension is in the UK as you are only taking the tax free threshold of £10k PA, and then sending this to yourself where you are.

That all makes perfect sense.

My question is why are you being advised by a singapore based IFA, when this is all very straight forward and tax efficient use of what you have. It sturck me that maybe your fund is not in the UK but in a different tax free jurasdiction, but then why would you then take £10k a year where there would be no restriction

Sorry to ask, more curious than anything else, but this forum has got me into a very analytical mode...

Regards

Captain

[AnotherOneAmerican]

I have been in contact with my long stand Financial Advisor in the UK who also happens to a very close friend. He admitted that like many FA in the UK, Qrops is not something they deal with on a regular basis. He had to contact some of his colleagues who were more knowledgable on this subject and in the end even though he would be losing his commission on my SIPP he did after doing more research, say he thought it would be a good thing for me to do especioally regarding the tax situation.

Close friend, or Bunko artist playing his mark?

Nearly every IFA I have met attempts to 'befriend' his customers, do they even have real friends?

Con men the world over work the same way, befriend you, gain your trust and confidence, then steal from you.

Edited August 14, 2014 by AnotherOneAmerican