QROPS - who to use?

[rgs2001uk]

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.

No offence intended, however this leaps out of the page and sets alarm bells ringing.

I have been in contact with my long stand Financial Advisor in the UK who also happens to a very close friend.

Money has no friends, suggest you seek alternative independant FA elsewhere, dot your I s and cross your T s, belts and braces approach for me.

I regualary converse with stock brokers, accountants and bank managers, check and double check.

Sorry to be so blunt, if you cant take a two thousand quid a year hit, or 100k baht, maybe Thailand aint for you.

I despise paying taxes as much as the next man, however sometimes you just have to bend over and take the hit, however painful it may be.

If the negativity seems out of proportion please read again the advice given by GH.

[AnotherOneAmerican]

I despise paying taxes as much as the next man, however sometimes you just have to bend over and take the hit, however painful it may be.

If the negativity seems out of proportion please read again the advice given by GH.

Better to pay tax on a government protected pension, than not have a pension at all.

[Jip99]

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!

Beware penalties upon death.

I have seen two widows disappointed by only receiving circa 50% of what they were told to expect. That may be as much of a communication issue but the fact remains remains that early repayment penalties (including as a result of death) seem ridiculously high.

[rgs2001uk]

I despise paying taxes as much as the next man, however sometimes you just have to bend over and take the hit, however painful it may be.

If the negativity seems out of proportion please read again the advice given by GH.

Better to pay tax on a government protected pension, than not have a pension at all.

To cut a long story short, I was once sat in an office where the suckers were tranferring their gov't linked index pensions to a private pension company, I couldnt believe what I was seeing.

The UK gov't will never go bust, Robert Maxwell or Bernie Maddof anyone?

[GuestHouse]

As members will see from my posts, I am extremely sceptical about QROPS and even more sceptical about Financial Advisors in Thailand. This is deserving of explanation.

I have over the past 10 years or so met or known a number of people who have been robbed blind by Financial Advisers in Thailand, I've known a number of people who have taken out QROPS. I only know one person that benefitted from QROPS the others lost huge sums of money.

The guy who benefitted was an company director who employed an accountant and IFA in the UK to sort his pension planning out for him.

The worst cases of a QROPS going wrong I know of are two people I have worked with for over 20 years.

The first took out a QROPS and retired in Thailand, a couple of years into retirement he was taken ill with cancer, he returned to the UK and took a huge tax hit on his pension. He survived cancer but can't even afford a holiday in Thailand, let alone retirement in Thailand. Everyone taking out a QROPS must consider the penalties of returning home, if you do not you are forgetting the very basic rule that we are guests in Thailand.

The second is a guy who joined the company I work for in the same year - He transferred his gold plated final salary company pension into a QROPS, it is being depleted at a rate of tens of thousands of pounds per year.

I doubt very much that he will receive any money from a pension that otherwise would have given him a rock solid pension in excess of £30,000 year, with a guaranteed pension for his wife of 60% of that after his death.

Before he signed the transfer I spent hours telling him not to sign. He got greedy, thinking he could have all his cake and eat it.

Listen up - Conman trick No 1. Play to the greed of the mark. Convince them they need not pay their taxes, they can get a better return on their investment, they can keep all their money.

It does not work like that.

Your pension pot is irreplaceable - by the time you retire you cannot possible replace it. If you lose it you are facing poverty in old age.

Your pension pot is not a bottomless pit. Money you take out of it today, is money you will not have for later in life.

We have a guy in the thread above telling us his SIPP in the UK has not produced sparkling returns, and yet he tells himself he can make better returns in a QROPS.

Once again proving my oft repeated adage - 'The most dangerous lies you will hear in Thailand are the lies you tell yourself'.

QROPS can be the right choice for some people (usually people with very significant pension pots), so I am not entirely against the idea of QROPS.

My advice is always - proceed with extreme caution, and always get independent financial advice from back home NEVER use the services of a Thailand based IFA.

Feel free to ignore my advice if you wish.

The risk is all yours.

[Captbonio]

Ok I got it....

The personal stories were the final straw. Nothing like a real life example to nail the point home

I particularly like your point about us just being visitors . I must admit I hadn't thought about it that way. It's completely changes ones perspective . I think that it is easy to think short term even though I imagined I have been thinking long term. Anything can happen , and the example of your friend having to return home because of cancer is of course an example of any plan going to hell.

I got it now.. And thanks to all for driving the points home. I will keep my pension here, pay the tax and spend my retirement grumbling about it...any room at the bar chaps ?

Thanks to all concerned and if you happen to be in hua hin next year gimme a call

Captain

Sent from my iPad using Thaivisa Connect Thailand

[Pormax]

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.

I will just clarify this. My FA in the UK I have known personally for over 30 years. We first met on a holiday in Cyprus. It was not until a few years later when I started my own business that I started using his services. Before then and after we have regularly gone on holiday together with our familes, attended each others childrens marraiges and visited each other at least twice a year even though we live more than 250 miles away. So yes I trust him and he is a friend.

He went out of the way to look at my position regarding QROPS and came back with a positive answer.

But as I said it is not for everyone, every individual's situation is different, and once again I will say that forums don't always give a true picture. We always have and will hear about the negativity or where things have gone wrong but rarely do people comment on the positive. That is the way of forum posters.

[chiang mai]

And I also have a an IFA in the UK who has been a long standing friend of over twenty years, I trust him 100% and he tells me not to do things more than he tells me to do them, there are people like that out there who coincidentally happen to work as a Financial Adviser.

[rak sa_ngop]

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

Captain

In reply to your questions:

My UK private pension was a one-off payment with profits that has grown to a transfer value of 75,000 so if I wait until next year (new regs) and cash the whole amount I will have to pay tax on 75 pc of it. I can draw down part of it this year (less than 10,000) but will have tax deducted, which I will have to claim back. This last part I am not too familiar with but this is what my IFA says. If not this year I will wait for next year to start drawing down.

My IFAs are WT Fry. I have used them for about 15 years in the UK. But now I am making fewer return trips to the UK so it suits me to meet with their advisors from the Singapore office on one of their regular visits to Bangkok. (every one or two months). Pm me if you want more details.

My original intention was to ask about QROPs, but it was explained to me the disadvantages for someone in my situation.

Note I have no dependents so inheritance planning is not an issue.

I have not actually discussed choice of funds with the IFA yet. The words 'offshore' fund was inadvertently used by me in my original posting. I meant pension fund. But maybe the point made about IFAs raking in commission is valid so I will look into that.

I have decided to go this route to try and get as much tax-free pension money back now before changes are made to the non-residents allowance. I would rather invest the money myself rather than pay fund management fees etc to rent luxury offices in prime locations.

Although saving tax is always the driver to this, I also like the quiet life and certainly don't want to be filling in tax forms every year.

Hope this is of help.

[GuestHouse]

But as I said it is not for everyone, every individual's situation is different, and once again I will say that forums don't always give a true picture. We always have and will hear about the negativity or where things have gone wrong but rarely do people comment on the positive. That is the way of forum posters.

I have been very clear about my view on QROPS, I'm not negative, I am skeptical - There is a huge difference.

Nor am I trying to sell financial products, I do not now nor never have worked in the Financial Services Industry.

I press the very real fact that when it comes to pension savings (pensions that cannot be replaced) then it is absolutely essential that people look at the negative sides and understand the pitfalls.

Moreover, as I have explained, the pension regulations have changed considerably, the tax regulations are about to change - Nobody can give advice on what to do that has any veracity other than the advice

"Wait and See What Happens in the New Tax Laws - Investigate the Impact of the Recent Changes to Pension Regulations"

----

This is the internet, we have no idea who the people posting are.

The best advice has to be - be extremely careful with advice received on internet forums, proceed with extreme caution, get face to face independent financial advice (not from IFAs in Thailand - a group of people within which there are significant numbers of fraudsters and sharks)

If in doubt do nothing.

Our pension savings are meant to take care of us in old age - If we loose these savings that it took a life time to build up, then we almost certainly cannot replace them and will face poverty in old age.

I will continue to repeat these messages every time I see QROPS mentioned or IFAs in Thailand peddling their services.

[HullyGully]

As a previous post said

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.

I use a HL SIPP, and next year you could cash and pay 20% tax up to the 20% band

I looked at it and the set up and yearly cost make it NOT WORTH IT...EXPENSIVE

There are lots of cowboys out there waiting to take your money

[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

Captain

In reply to your questions:

My UK private pension was a one-off payment with profits that has grown to a transfer value of 75,000 so if I wait until next year (new regs) and cash the whole amount I will have to pay tax on 75 pc of it. I can draw down part of it this year (less than 10,000) but will have tax deducted, which I will have to claim back. This last part I am not too familiar with but this is what my IFA says. If not this year I will wait for next year to start drawing down.

My IFAs are WT Fry. I have used them for about 15 years in the UK. But now I am making fewer return trips to the UK so it suits me to meet with their advisors from the Singapore office on one of their regular visits to Bangkok. (every one or two months). Pm me if you want more details.

My original intention was to ask about QROPs, but it was explained to me the disadvantages for someone in my situation.

Note I have no dependents so inheritance planning is not an issue.

I have not actually discussed choice of funds with the IFA yet. The words 'offshore' fund was inadvertently used by me in my original posting. I meant pension fund. But maybe the point made about IFAs raking in commission is valid so I will look into that.

I have decided to go this route to try and get as much tax-free pension money back now before changes are made to the non-residents allowance. I would rather invest the money myself rather than pay fund management fees etc to rent luxury offices in prime locations.

Although saving tax is always the driver to this, I also like the quiet life and certainly don't want to be filling in tax forms every year.

Hope this is of help.

hi

Thanks

I sort of figured out what you were doing and leaving it in the UK and drawing down the 10k is at the tax free threashold so makes perfect sense

In fact I dont think you could do it better.

I was a bit thrown by using what seemed to be an offshore IFA.... all clear now

Good luck with it

Captain

[Captbonio]

As a previous post said

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.

I use a HL SIPP, and next year you could cash and pay 20% tax up to the 20% band

I looked at it and the set up and yearly cost make it NOT WORTH IT...EXPENSIVE

There are lots of cowboys out there waiting to take your money

thanks Hully Gully

I have recieved some fantastic assistance on this on this forum. I know that I could have been sent a load of rubbish, but the repsonse I got was top draw. I have read all, and am taking the advice recieved from some very knowledgable people on this forum

I will do something similar to you, though not with HL as they are not the company they were in terms of management and fee structure.

I agree that the 20% tax band is probably the most efficient use of funds , and there is every chance that the threshold will rise over the lifetime of my pension too

Appreciate your input .. Many thanks

[Captbonio]

To all members of the Thai VIsa Forum

I came to this site to find answers to a series of difficult questions pertinant to my move to Thailand next year

I had been advised that on a site such as this I would only get misleading and incorrect information, and it will only serve to add to more confusion as to what to do

I can happily report that nothing could be further from the truth, as I have received some really fantasitc guidance, unbiased information, and really useful insight into the Pension market.

I would like to make special mention to Pormax, rgs2001uk, anotheroneamerican, dabhand, Ayg , ras sa_ngop, chiang mai, and the font of all knowledge, Guesthouse for all their assistance, persistance, and very time consuming efforts to convince me of where I could be going wrong. These were not small decisions to make and with what I know now, I feel sufficiently forwarned and forearmed to proceed with confidence.

Apologies to anyone I didnt mention, there were so many who offered help, I am really quite overwhelmed.

Many thanks to you.

Regards

Captain

[fletchsmile]

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.

Very good post - then again QROPS has always been one of your favourite subjects

BTW: One point to be aware of on HL. It's no longer accurate to say that they are zero fees. This changed this year as a result of UK legislation.

http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

I've been a HL client one way or another for 20 - 30 years, and was disappointed with the UK legislation changes, which for me as an experienced investor the changes to "protect retail investors" caused more hassles than they are worth.

For HL, what they essentially did was increase the loyalty bonuses and introduce a platform fee. Many fund management houses have now introduced new "unbundled fund versions". Net net you're probably better off, but it's no longer accurate to say no fee.

This is important as what we're starting to see is that HL's model is now under threat and other places are now charging less than the HL fee. Certainly for those under GBP 250k you can better the 0.45% HL do charge on your SIPP for most funds. For me given a loyal client history I'm happy to wait a while and see, and keep myself up to date. You may want to ask your IFA though if there are now better/cheaper platforms for you than HL next time you meet up with them. The answer should be yes there are cheaper ones if your IFA is up to scratch. Better is subjective.

To OP,

GH Sums up very well. For some people QROPS and QNUPS did used to make sense. They were a minority though. Changes in UK legislation will reduce that number even further. As mentioned if your pot is under GBP 100k forget it.

Cheers

Fletch

Edited August 16, 2014 by fletchsmile

[AyG]

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%.

How could that possibly work? There's no way the government can know how much total offshore income one has. OK, they can know for QROPS for the first ten years, but after that, and for other income sources? No way.

[AnotherOneAmerican]

Captain

In reply to your questions:

My UK private pension was a one-off payment with profits that has grown to a transfer value of 75,000 so if I wait until next year (new regs) and cash the whole amount I will have to pay tax on 75 pc of it. I can draw down part of it this year (less than 10,000) but will have tax deducted, which I will have to claim back. This last part I am not too familiar with but this is what my IFA says. If not this year I will wait for next year to start drawing down.

My IFAs are WT Fry. I have used them for about 15 years in the UK. But now I am making fewer return trips to the UK so it suits me to meet with their advisors from the Singapore office on one of their regular visits to Bangkok. (every one or two months). Pm me if you want more details.

So why not take,

25% tax free today as start of drawdown, then the first year drawdown payment (approx 5% of remaining amount, tax free if no other income in the year).

Then next year, whatever the new rules allow.

Tax is not deducted on the drawdown payment if you declare it is your only income this year.

Still don't see why you need to transfer it anywhere,

Sounds like your IFA is ripping you with a secret commission fee .

(about 10% of the transfer paid to him direct from the new pension company, plus another 5% or more from every asset purchase).

You do understand he gets a 10% commission on the transfer out of your existing company?

You do understand that 10% payment is taken from your pension (in one way or another)?

An easy 7,500GBP for your IFA!

Not to mention, name of the new fund trading company, new trustees, I bet your IFA didn't even name them?

If some dealer like Friends Provident International, high charges, large commissions for your IFA, large early penalty withdrawal fees if as you stated you take the money out. Not to mention FPI are well know as the crooks choice, they turn a blind eye to all sorts of thieving.

Edited August 16, 2014 by AnotherOneAmerican

[AnotherOneAmerican]

"to meet with their advisors from the Singapore office on one of their regular visits to Bangkok."

So you are meeting with IFAs working illegally in Thailand.

Seems to me like you are about to be taken in a scam of some kind.

You do understand these people are not allowed to do this work in Thailand?

If they steal your money, to whom would you complain?

Someone in the UK? Nope they don't care, these guys aren't registered to work there.

Someone in Singapore? Nope, they aren't advising you from within the Singapore area financial responsibility?

Thailand? Nope, they aren't registered with the Thai SEC.

The only thing I do wonder, is your request for PMs on more info, are you shilling for some crooked IFAs?

I'm sure you aren't, but nobody in their right mind would be doing business with these guys.

Edited August 16, 2014 by AnotherOneAmerican

[GuestHouse]

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%.

How could that possibly work? There's no way the government can know how much total offshore income one has. OK, they can know for QROPS for the first ten years, but after that, and for other income sources? No way.

As you pointed out, they can know your QROPS value for the first ten years - The onus will be on the expat to demonstrate their QROPS suddenly disappeared.

Now while I admit, Thailand based IFAs might help out with that (perhaps more than the expat expected) nevertheless, I'm sure the point is not being explained by carpet baggers selling QROPS.

[rgs2001uk]

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%.

How could that possibly work? There's no way the government can know how much total offshore income one has. OK, they can know for QROPS for the first ten years, but after that, and for other income sources? No way.

As you pointed out, they can know your QROPS value for the first ten years - The onus will be on the expat to demonstrate their QROPS suddenly disappeared.

Now while I admit, Thailand based IFAs might help out with that (perhaps more than the expat expected) nevertheless, I'm sure the point is not being explained by carpet baggers selling QROPS.

The IFA aint there to explain, he is there to feather his nest and take his commission.

Years ago I lived in a hotel, after exiting the dining room and sitting in the lounge reading the newspaper other expats would appear.

Just off to the side was a table set up and manned by one of the companys mentioned here, one of his favourite products was RS.

I sat with the "old China Hands" and would hear phrases such as, "another lamb to the slaughter" blah blah blah.

Being young and stupid I asked one of the seasoned expats.

He took one look at the T-shirt I was wearing and summed it up in one sentence.

Its amazing how songs you like and love can all of a sudden take on a whole new perspective.

He said to me, if you were in the pub stone cold sober and this guy was drunk, would you hand him the keys to your car and ask him to drive you home.

The T-shirt I was wearing had Jim Morrison on it, the guy said to me "keep YOUR eyes on the road and YOUR hands upon the wheel"

He also told me, if that guy was worth anything he wouldnt be flogging dodgy financial products, he would be doing your job.

Point noted and taken on board.

Thanks to GH for you his excellent precis, summed it up way better than I could.

[chiang mai]

The IFA aint there to explain, he is there to feather his nest and take his commission.

That's simply not true, we've always had the choice to pay commission, an hourly charge or a flat fee to an IFA. If you don't trust your IFA choose the second or third option, actually, if you don't trust them you shouldn't be doing business with the in the first place.

[AyG]

The IFA aint there to explain, he is there to feather his nest and take his commission.

That's simply not true, we've always had the choice to pay commission, an hourly charge or a flat fee to an IFA. If you don't trust your IFA choose the second or third option, actually, if you don't trust them you shouldn't be doing business with the in the first place.

Not true any longer in the UK. Following the RDR the option of paying by commission was taken away.

[AyG]

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%.

How could that possibly work? There's no way the government can know how much total offshore income one has. OK, they can know for QROPS for the first ten years, but after that, and for other income sources? No way.

As you pointed out, they can know your QROPS value for the first ten years - The onus will be on the expat to demonstrate their QROPS suddenly disappeared.

Now while I admit, Thailand based IFAs might help out with that (perhaps more than the expat expected) nevertheless, I'm sure the point is not being explained by carpet baggers selling QROPS.

That HMRC knows of the existence of a QROPS doesn't mean that they will know the level of income being taken from it (after the first 10 years).

And HMRC doesn't know anything about other sources of income worldwide.

Taxation based upon percentage of total income derived from the UK seems to be me to be easily open to abuse and completely unworkable.

[chiang mai]

The IFA aint there to explain, he is there to feather his nest and take his commission.

That's simply not true, we've always had the choice to pay commission, an hourly charge or a flat fee to an IFA. If you don't trust your IFA choose the second or third option, actually, if you don't trust them you shouldn't be doing business with the in the first place.

Not true any longer in the UK. Following the RDR the option of paying by commission was taken away.

Thanks, I wasn't aware. that makes it even easier to answer the previous remark.

[GuestHouse]

As you pointed out, they can know your QROPS value for the first ten years - The onus will be on the expat to demonstrate their QROPS suddenly disappeared.

Now while I admit, Thailand based IFAs might help out with that (perhaps more than the expat expected) nevertheless, I'm sure the point is not being explained by carpet baggers selling QROPS.

That HMRC knows of the existence of a QROPS doesn't mean that they will know the level of income being taken from it (after the first 10 years).

And HMRC doesn't know anything about other sources of income worldwide.

Taxation based upon percentage of total income derived from the UK seems to be me to be easily open to abuse and completely unworkable.

You are correct, the HMRC cannot, in well hidden cases, reliably know this information, but they do reliably know if you transferred your pension into a QROPS - it is a very simple matter for them to assume an income unless you prove otherwise. i.e. present your QROPS accounts.

Don't kid yourself, the US, EU and UK have all been pressing banks and overseas jurisdictions to reveal information on taxation. The UK and Thailand already have dual taxation agreement.

Governments across the world are aware that there is tax to be had and they are cooperating at levels never seen before to get it.

[AyG]

Don't kid yourself, the US, EU and UK have all been pressing banks and overseas jurisdictions to reveal information on taxation. The UK and Thailand already have dual taxation agreement.

Governments across the world are aware that there is tax to be had and they are cooperating at levels never seen before to get it.

True to a certain extent.

However, how is HMRC going to know if I buy a property in my partner's name and get rental income from it?

How is HMRC going to know if I purchase bearer bonds?

Though the level of information sharing is increasing, AFAIK it's only America that requires financial institutions in all countries to provide information about its citizens. Otherwise, it's only within Europe that there's information sharing - and one can opt out of that (at the price of a high level of taxation. I'm pretty sure that the UK taxman knows nothing about my investments in Singapore (at least for now).

(Incidentally, a dual taxation agreement has nothing to do with disclosing information about the amounts of income declared or tax paid by individuals. That's really a red herring.)

[wordchild]

I certainly agree with the greatest part of what has been posted so far and, given the changes in (UK) pension legislation (most of which are now set in stone), i would agree that it is a complete no brainer for people to sit tight. Anyone considering a QROP must understand that while it is now (mostly) clear what the situation will be for UK pensions, we dont yet know what the other jurisdictions that host QROP,s (eg the likes of Malta) ,are going to do in response. For QROP holders this is what counts and there is uncertainty around this. The offshore IFA industry seems to be in a complete panic about this; what looked like a nice little earner stretching out for years ahead has just been stymied by George Osbornes budget. I think this is why you keep seeing junk being quoted from the likes of Nigel Green (head of devere) urging people to act now and set up a QROP before its "too late". They obviously feel they need to get the money in quick; Too late for who? one has to ask!

I would also agree that, even when things do become clearer, QROP,s will only be useful for a fairly small subset of expat pensions; basically quite large ones.

However, I also think some of the negativity about QROPs above has been somewhat overdone. In essence they are potentially very useful vehicles for long term expats (in particular) and they do offer some very considerable benefits over UK based personal pensions. The problem (as mentioned by Guesthouse) is that the greed of the offshore financial services industry has made many QROPs toxic through charging structures that, over time, take large slices out of peoples funds. It is though possible, with a bit of effort, to set up a QROP with a low cost structure both, in terms of the admin and (most importantly), the investments. Its just that the industry doesnt make it easy for people to do this right now, and the offshore IFA,s dont have enough incentive to help people do this. You really have to do a fair bit of the work yourself, but it can be done.

One particular point i wanted to make is on the tax situation of a QROP if the holder returns to the UK . Someone made the point above that HMRC imposes penalties in this situation; this would only happen if the fund was found not to have been operated properly (as a pension fund) eg was found to have made unauthorized payments ie excessive or early payments to a beneficiary. If the fund has been operated properly there would be no such penalties and nothing to fear from HMRC. On a return , if the beneficiary becomes resident and domiciled again in the UK, then they can retain the QROP (which would make sense for most people) but obviously any payments from it must be declared tor UK tax. Or, if they wish, they can transfer back to a UK SIPP. This would even apply in the case of someone who set up a QROP and then never left the UK.

Edited August 17, 2014 by wordchild

[churchill]

I certainly agree with the greatest part of what has been posted so far and, given the changes in (UK) pension legislation (most of which are now set in stone), i would agree that it is a complete no brainer for people to sit tight. Anyone considering a QROP must understand that while it is now (mostly) clear what the situation will be for UK pensions, we dont yet know what the other jurisdictions that host QROP,s (eg the likes of Malta) ,are going to do in response. For QROP holders this is what counts and there is uncertainty around this. The offshore IFA industry seems to be in a complete panic about this; what looked like a nice little earner stretching out for years ahead has just been stymied by George Osbornes budget. I think this is why you keep seeing junk being quoted from the likes of Nigel Green (head of devere) urging people to act now and set up a QROP before its "too late". They obviously feel they need to get the money in quick; Too late for who? one has to ask!

I would also agree that, even when things do become clearer, QROP,s will only be useful for a fairly small subset of expat pensions; basically quite large ones.

However, I also think some of the negativity about QROPs above has been somewhat overdone. In essence they are potentially very useful vehicles for long term expats (in particular) and they do offer some very considerable benefits over UK based personal pensions. The problem (as mentioned by Guesthouse) is that the greed of the offshore financial services industry has made many QROPs toxic through charging structures that, over time, take large slices out of peoples funds. It is though possible, with a bit of effort, to set up a QROP with a low cost structure both, in terms of the admin and (most importantly), the investments. Its just that the industry doesnt make it easy for people to do this right now, and the offshore IFA,s dont have enough incentive to help people do this. You really have to do a fair bit of the work yourself, but it can be done.

One particular point i wanted to make is on the tax situation of a QROP if the holder returns to the UK . Someone made the point above that HMRC imposes penalties in this situation; this would only happen if the fund was found not to have been operated properly (as a pension fund) eg was found to have made unauthorized payments ie excessive or early payments to a beneficiary. If the fund has been operated properly there would be no such penalties and nothing to fear from HMRC. On a return , if the beneficiary becomes resident and domiciled again in the UK, then they can retain the QROP (which would make sense for most people) but obviously any payments from it must be declared tor UK tax. Or, if they wish, they can transfer back to a UK SIPP. This would even apply in the case of someone who set up a QROP and then never left the UK.

quoting

' One particular point i wanted to make is on the tax situation of a QROP if the holder returns to the UK . Someone made the point above that HMRC imposes penalties in this situation; this would only happen if the fund was found not to have been operated properly (as a pension fund) eg was found to have made unauthorized payments ie excessive or early payments to a beneficiary. If the fund has been operated properly there would be no such penalties and nothing to fear from HMRC. On a return , if the beneficiary becomes resident and domiciled again in the UK, then they can retain the QROP (which would make sense for most people) but obviously any payments from it must be declared tor UK tax. Or, if they wish, they can transfer back to a UK SIPP. This would even apply in the case of someone who set up a QROP and then never left the UK. '

This is what I have been told also ...

[HullyGully]

I also have read with interest the various comments, generally it all depends on your own circumstances

However, a drawdown SIPP and take 25% tax free

Then 10K a year tax free...providing the rules do not change

Also if you need more tax at 20% unto approx. 41K isn't that bad

[GuestHouse]

Don't kid yourself, the US, EU and UK have all been pressing banks and overseas jurisdictions to reveal information on taxation. The UK and Thailand already have dual taxation agreement.

Governments across the world are aware that there is tax to be had and they are cooperating at levels never seen before to get it.

True to a certain extent.

However, how is HMRC going to know if I buy a property in my partner's name and get rental income from it?

How is HMRC going to know if I purchase bearer bonds?

Though the level of information sharing is increasing, AFAIK it's only America that requires financial institutions in all countries to provide information about its citizens. Otherwise, it's only within Europe that there's information sharing - and one can opt out of that (at the price of a high level of taxation. I'm pretty sure that the UK taxman knows nothing about my investments in Singapore (at least for now).

(Incidentally, a dual taxation agreement has nothing to do with disclosing information about the amounts of income declared or tax paid by individuals. That's really a red herring.)

Yes, all very good.

But let us remind ourselves, the removal of UK tax allowances from expats who cannot demonstrate most of their income comes from the UK (or if you wish HMRC cannot prove otherwise), represents a tax burden to the individual of not more than GBP2K per year.

This is unlikely to be a significant amount of money for individuals who have the means to buy properties to rent overseas, but it will be a significant amount for people moving moderately sized private pensions into QROPS.

If you feel you wish to purchase properties in someone else's name in an attempt to avoid this maximum GBP2K a year tax burden, then that would be one means of doing so - it of course might not succeed and it might result in you loosing the property you bought in someone else's name.

A high risk strategy with uncertain outcome, high potential losses and low potential gains.