If you currently hold a UK pension, and are either living abroad or planning to, you may be considering transferring your pension into a Qualifying Recognised Overseas Pension Scheme (QROPS).
As well as making the most out of your fund due to lower taxes, greater income flexibility and near-total investment freedom, QROPS allow for much greater succession planning options – the most important being the ability to pass on 100% of your fund to your loved ones, tax free.
If you are in this position, then you have probably researched the legislation to learn how a QROPS could help you. And whilst this is certainly advisable, it should not be taken at face value – as legislation is subject to change.
There is therefore no substitute for receiving advice from a regulated, independent financial advisor (IFA) tailored to your needs.
A system in flux
It is no secret that the laws surrounding both QROPS and pension regulations often change; whether due to more stringent control exerted by HM Revenue and Customs (HMRC), or tax reforms in the UK or foreign jurisdictions.
Only earlier this month two QROPS jurisdictions were delisted, and whilst HMRC does not officially comment on the issues at stake when a QROPS is no longer recognised, it is generally speculated it is part of a drive to tighten up the system and protect investors.
This can make staying up to date on all variables at stake practically impossible – and makes seeking professional advice from a regulated source of paramount importance.
The benefits of professional help
In addition, a financial adviser with extensive experience in QROPS will be able to comprehensively review your situation to find the best solution for you.
One of the most important parts of this process is “marrying up” where you currently reside (or plan to) to the best QROPS jurisdiction. Factors to consider include whether there is a direct tax treaty between your country and a suitable QROPS jurisdiction, and whether you plan to move somewhere else afterwards.
In a similar vein, an IFA can also comprehensively assess your needs – including the lump sum you require, how much control you would like over your investments, and the size of your pension pot – to find the best solution.
A regulated advisor can outline how you can personally benefit from the QROPS legislation, and answer any questions you may have about the transfer.
Can I not complete the transfer myself?
Whilst some QROPS lite solutions can be set up by the individual, usually the more advanced QROPS require a regulated IFA to complete the transfer.
However even if you decide not to use an international IFA for your QROPS lite (so called because they do not offer the investment choice of other QROPS), you will miss out on professional, whole of the market advice – because it is only these advisors who can scour the global QROPS market and find the best scheme for your needs.
You will also miss the opportunity for a review of the investment options available.
These issues mean it is imperative you contact a whole of the market advisor who can guide you through the QROPS transfer process, and ensure you have found the best solution for your needs.