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New QROPS rulings unlikely to deter many pension savers
| Published: | 26 Jul at 6 PM |
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Many expats and would-be expats are now worried that QROPS as an efficient, tax-friendly investment option may soon be dead in the water due to recent changes.
QROPs experts are rushing to clarify the recent changes to QROPS rules by Britain’s HM Revenue and Customs in order to reassure investors looking to take advantage of the best way to deal with their pension pots. Several recent reports seem to indicate the popular product is stuttering, but the reality is that around one thousand offshore pensions are still available in 29 world financial jurisdictions.
Since QROPs were introduced in 2006, some £8.8 billion in pension savings has been transferred offshore by 108,000 savers and. even although the rumours concerning tax changes are actually true, getting professional advice will ensure very few are hit with unpleasant tax bills.
Those able to make use of the tax-efficient funds are retirement savers with either workplace or private savings schemes, with only public sector, civil service and UK state pensions barred from transfer as they’re not backed by an underlying fund holding value. One recent change introduced by HMRC that's worrying a number of pension savers looking to retire overseas is the rule that everyone transferring over £30,000 from a direct benefit scheme to a QROPs should get financial advice throughout the process.
Nearly all those in such schemes will be affected, and the authority sees the rule as a safety net protecting inexperienced investors from losing their cash to unprincipled advisors. The rule isn’t in force as yet, but the double-headed advice at both ends of the transaction avoids any breach of UK regulations, thus letting investors off the hook. Pension freedoms came in on April1, 2015, allowing retirement savers over 55 years of age the freedom to refuse an annuity and take money out as they wish, although some workplace pensions either don’t allow freedom or stipulate drawing cash is limited to savers over 60 years old.
As a result, not all QROPs come attached to pension freedoms, although some Malta schemes do and the Isle of Man and Gibraltar are working towards following suit. Another controversial issue is the new Overseas Transfer Charge but, in real time, very few expats will be receiving a bill.
Exemptions are given to those resident in the EEA area, provided their QROPs originates within the area, as well as those living in the same jurisdiction as the QROPs. One interesting exception is relevant to expats living in China, who can transfer to QROPs based in Hong Kong without getting caught out by the transfer tax.
QROPs experts are rushing to clarify the recent changes to QROPS rules by Britain’s HM Revenue and Customs in order to reassure investors looking to take advantage of the best way to deal with their pension pots. Several recent reports seem to indicate the popular product is stuttering, but the reality is that around one thousand offshore pensions are still available in 29 world financial jurisdictions.
Since QROPs were introduced in 2006, some £8.8 billion in pension savings has been transferred offshore by 108,000 savers and. even although the rumours concerning tax changes are actually true, getting professional advice will ensure very few are hit with unpleasant tax bills.
Those able to make use of the tax-efficient funds are retirement savers with either workplace or private savings schemes, with only public sector, civil service and UK state pensions barred from transfer as they’re not backed by an underlying fund holding value. One recent change introduced by HMRC that's worrying a number of pension savers looking to retire overseas is the rule that everyone transferring over £30,000 from a direct benefit scheme to a QROPs should get financial advice throughout the process.
Nearly all those in such schemes will be affected, and the authority sees the rule as a safety net protecting inexperienced investors from losing their cash to unprincipled advisors. The rule isn’t in force as yet, but the double-headed advice at both ends of the transaction avoids any breach of UK regulations, thus letting investors off the hook. Pension freedoms came in on April1, 2015, allowing retirement savers over 55 years of age the freedom to refuse an annuity and take money out as they wish, although some workplace pensions either don’t allow freedom or stipulate drawing cash is limited to savers over 60 years old.
As a result, not all QROPs come attached to pension freedoms, although some Malta schemes do and the Isle of Man and Gibraltar are working towards following suit. Another controversial issue is the new Overseas Transfer Charge but, in real time, very few expats will be receiving a bill.
Exemptions are given to those resident in the EEA area, provided their QROPs originates within the area, as well as those living in the same jurisdiction as the QROPs. One interesting exception is relevant to expats living in China, who can transfer to QROPs based in Hong Kong without getting caught out by the transfer tax.
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