This has become of vital importance with the UK lifetime allowance cut of £250,000 down to £1.25 million looming for many pension savers.
What to ask
To help, here’s a quick guide to choosing the right QROPS pension –
- Get ready for the transfer by asking your UK pension provider to provide an illustration and pension transfer value. Financial advisers need the see these documents to compare the benefits of transferring to a QROPS
- Find a financial adviser who can show a track-record in successful QROPS transfers to a range of providers and financial jurisdictions. The advisor should have a back-up team who can offer cross-border tax help and investment advice.
- Make sure your advisor is regulated so you have recourse to an ombudsman or financial compensation scheme. Don’t take his word, ask for the regulation number and check the details online or by calling the regulatory authority.
- Let the adviser confirm a ‘whole of the market’ service is available and not just a narrow selection of QROPS from a specific financial centre or provider
- Determine your tax residence. QROPS are only available to expats and international workers with UK pension rights either intending to move permanently overseas or who have already left the UK. Expats living or working overseas who are still UK tax resident do not qualify for QROPS.
Once all this prep work has been carried out, it’s time to sit down with the financial advisor to discuss financial goals for retirement, where you are likely to live overseas and whether you need to move from country to country.
The QROPS market
A QROPS provider is unlikely to accept a transfer unless the retirement saver has an investment report from an IFA recommending a switch to their plan.
With 42 financial centres offering more than 3,300 QROPS, this choice and recommendation is crucial to pinpointing the right offshore pension.
Although the market seems huge, many financial centres, like Jersey and Guernsey, offer QROPS to residents only, while around 50% have less than 10 listed QROPS, many of which are single-member plans and not generally available to the public.
The current favourite jurisdictions include the Isle of Man, Malta and Gibraltar.
Although the Isle of Man ranks high in the top 10 QROPS financial centres by number of QROPS, Australia and Ireland top the table with more than two-thirds of the market.