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Are QROPS still the way forward in the new UK pension climate
| Published: | 27 Jun at 6 PM |
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Overdue adjustments to the rules concerning UK pensions have resulted in confusion over the long-term implications of proposed changes and their effects on expats.
Whilst the added flexibility and options promised in the March budget speech offer positive results for holders of UK pensions, many expats are confused about its possible effects on QROPS. Since March the take-up of QROPS has soared by a third, depleting the total UK pension pot by millions and stoking fears of tighter regulation.
At present, government think-tanks are involved in a long-overdue reorganisation of Britain’s entire pension system, and many of the announced changes have already taken place. The most notable was the removal of the forced purchase of annuities, which sent insurance companies scrambling to find new sources of easy revenue.
QROPS consultations are still ongoing, with speculation rife as regards conclusions due to the fact that the UK government wants to keep as much pension cash in the country as is possible. Experts fear that new laws may force the more popular schemes out of the market, as HMRC is infamous for its trial and error-based sweeping amendments.
Moving the goal posts after the game has begun is a typical reaction by UK regulators – seen at its worst when Singapore’s ROSIP fund was deregulated. Dismayed investors, high transfer charges and even demands from HMRC for 55 per cent unauthorised transfer taxes were the results, although the UK High Court later ruled in favour of the investors.
Basically, although QROPS are still the best way forward for expat pension transfers, HMRC’s list cannot be taken as fixed, and those searching for the best jurisdiction should perhaps just ignore it. The responsibility for due diligence must rest on qualified financial advisors with their clients’ financial wellbeing at heart – unfortunately a rare find in most expat destinations.
Whilst the added flexibility and options promised in the March budget speech offer positive results for holders of UK pensions, many expats are confused about its possible effects on QROPS. Since March the take-up of QROPS has soared by a third, depleting the total UK pension pot by millions and stoking fears of tighter regulation.
At present, government think-tanks are involved in a long-overdue reorganisation of Britain’s entire pension system, and many of the announced changes have already taken place. The most notable was the removal of the forced purchase of annuities, which sent insurance companies scrambling to find new sources of easy revenue.
QROPS consultations are still ongoing, with speculation rife as regards conclusions due to the fact that the UK government wants to keep as much pension cash in the country as is possible. Experts fear that new laws may force the more popular schemes out of the market, as HMRC is infamous for its trial and error-based sweeping amendments.
Moving the goal posts after the game has begun is a typical reaction by UK regulators – seen at its worst when Singapore’s ROSIP fund was deregulated. Dismayed investors, high transfer charges and even demands from HMRC for 55 per cent unauthorised transfer taxes were the results, although the UK High Court later ruled in favour of the investors.
Basically, although QROPS are still the best way forward for expat pension transfers, HMRC’s list cannot be taken as fixed, and those searching for the best jurisdiction should perhaps just ignore it. The responsibility for due diligence must rest on qualified financial advisors with their clients’ financial wellbeing at heart – unfortunately a rare find in most expat destinations.
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