Despite George Osborne’s decision to do away with the 55% death tax on pensions in the UK to bring them in line with those available overseas, the appeal of QROPS (Qualifying Recognised Overseas Pension Schemes) to expatriates is showing no signs of slowing.
The popularity of QROPS stems from something far more considerable than the after-life benefits they offer, it is the tax benefits offered in the present life that remain the main factor for those wishing to transfer their pension to a more appropriate model overseas.
The UK represents a pension model which is sadly outdated, and yet simultaneously subject to legislative amendments at an ever-increasing rate. This is of great concern to the vast majority of expatriates who are able to look at a variety of alternative measures to ensure their retirement is not spent as a destitute.
As an ever-increasing number of British passport holders choose to move away from the UK. QROPS have witnessed a huge surge in popularity since their introduction in 2006. The government is under constant pressure with the state of the pension pot in the UK, and a whole raft of changes – some designed to try to convince expats not to take their savings out of the country – have been introduced this year.
The abolition of death tax on pensions is of course long overdue, however with a General Election in May, there is no guarantee that it will remain abolished. The major parties have all refused to offer their public backing to the move, and in the increasingly likely event that Labour win come May, the current Chancellor may have to sit and watch as his legislative and austerity measures are effectively thrown in the bin.
In some quarters there is speculation within the industry that with the introduction of the 100% lump sum withdrawal, the removal of the need to by an annuity, and now the death tax move, QROPS may well face a difficult future, however with over 3,500 schemes now in operation across the globe, providers are reporting something very different to that.