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UK FCA new ruling makes QROPs easier for expats
| Published: | 3 Aug at 6 PM |
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For those approaching retirement and thinking to transfer their pension to a QROPS, there’s a lot to consider.
A recent ruling by the UK’s Financial Conduct Agency might well be of help to would-be expat retirees confused about their financial options as regards QROPs transfers. Until now, any pension with over £30,000 was subject to a transfer value overview provided by an IFA, but many advisers have refused to provide the recommendation due to the possibility of being sued by a client should their money be lost. As a result, the FCA has relaxed the rule, allowing expats themselves to push the transfer through even should their financial advisor object.
For retirees unused to the financial jargon often used by IFAs, the entire process can be extremely confusing, but it’s possible to grasp the issue well enough to get it done. Final salary pensions come with a guaranteed income throughout retirement as well as offering other benefits, with the whole rarely matched by private pensions paying according to fund performance. Private pensions also don’t offer guarantees, but they do allow withdrawal of funds from the age of 55, a benefit not provided by final salary pensions. According to the FCA, clients who’ve received a personal pension recommendation are now free to either accept or refuse it and continue the transfer on their own.
However, if you’ve decided do-it-yourself is the way forward, you’ll still need a transfer value analysis from a registered IFA, which should also include a risk profile as regards investments, a breakdown of preferred financial goals plus levels of investment needed to reach them and a list of the most suitable QROPs for your needs as well as set-up and ongoing charges. The best way is to pick a QROPs tailored to your choice of retirement destination overseas, with available products coming in two categories – QROPs Lite and Standard QROPS.
The first is aimed at lower-value funds of less than £100,000 and has lower charges overall as well as a fixed annual fee, with the standard product offering either percentage charges linked to the fund’s value or fixed fees. All products act as a ’wrapper’ for an investment platform, thus enabling expats to select their preferred investment from the platform. There’s also a second layer made up of fund manager charges which vary between providers and are shown as a part of the transfer value analysis.
A recent ruling by the UK’s Financial Conduct Agency might well be of help to would-be expat retirees confused about their financial options as regards QROPs transfers. Until now, any pension with over £30,000 was subject to a transfer value overview provided by an IFA, but many advisers have refused to provide the recommendation due to the possibility of being sued by a client should their money be lost. As a result, the FCA has relaxed the rule, allowing expats themselves to push the transfer through even should their financial advisor object.
For retirees unused to the financial jargon often used by IFAs, the entire process can be extremely confusing, but it’s possible to grasp the issue well enough to get it done. Final salary pensions come with a guaranteed income throughout retirement as well as offering other benefits, with the whole rarely matched by private pensions paying according to fund performance. Private pensions also don’t offer guarantees, but they do allow withdrawal of funds from the age of 55, a benefit not provided by final salary pensions. According to the FCA, clients who’ve received a personal pension recommendation are now free to either accept or refuse it and continue the transfer on their own.
However, if you’ve decided do-it-yourself is the way forward, you’ll still need a transfer value analysis from a registered IFA, which should also include a risk profile as regards investments, a breakdown of preferred financial goals plus levels of investment needed to reach them and a list of the most suitable QROPs for your needs as well as set-up and ongoing charges. The best way is to pick a QROPs tailored to your choice of retirement destination overseas, with available products coming in two categories – QROPs Lite and Standard QROPS.
The first is aimed at lower-value funds of less than £100,000 and has lower charges overall as well as a fixed annual fee, with the standard product offering either percentage charges linked to the fund’s value or fixed fees. All products act as a ’wrapper’ for an investment platform, thus enabling expats to select their preferred investment from the platform. There’s also a second layer made up of fund manager charges which vary between providers and are shown as a part of the transfer value analysis.
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