QROPS Questions & Answers
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QROPS Questions & Answers
by Ambernectar 13
Despite the fact that QROPS seems to be literally EVERYWHERE these days! We are continuing to receive lots of enquirys from clients wishing to know more about QROPS and asking very much the same questions. How did they come about? Do they apply to me? How much does it cost? So without wanting to sound repetitive here is a breakdown of the most commonly asked questions.
Firstly, how did QROPS come about? A – Day- Tuesday 6th April 2006, saw some of the most significant reforms for UK pensions that have been seen in the last 60 years, the day itself dubbed ´A – Day´. In essence this has meant increased simplicity and flexibility. These changes have affected when and how you retire, how you contribute, where you investand how much you can accumulate.
The new rules aimed to encourage a more active approach, allowing you to continually tailor and manage your pension.
What are these changes in rules?
Firstly you are no longer obliged to buy an insurance annuity. This means that your pension assets are yours to pass on to your beneficiaries, unlike an insurance annuity, where the remaining assets become the property of the insurance company.
You can denominate your pension in any number of currencies, thus neutralizing currency risk.
Freedom of investment choice, whether you prefer safe fixed and index linked returns or a more exotic approach incorporating stocks, property, commodities, private equity, land or unquoted shares.
You can now choose whether to opt for an early retirement 50/55(50 before 6th April 2010) or continue to work or grow your pension pot to take benefits later.
Now all pension schemes can offer a 25% (30% with some QROPS)tax free lump sum at earliest retirement date.
Your pension income can be paid to you gross (depending on the jurisdiction).
No tax on death. Many Estate Planning opportunities exist under QROP Schemes after completing five full consecutive years as a UK nonresident.
What does it cost? It could cost more or less than you are currently paying to your current pension provider. As these benefits are simply HMRC rule changes these benefits are not subject to a direct fee. The fees are simply related to the type of investments you hold and which QROPS provider you use. A good Independent Financial Adviser will be able to provide you with a number of schemes to compare. The cheapest schemes now start from as little as £300 set up fee and a further annual fee of £300.
Is my pension fund big enough? This will depend on a number of factors including what type of scheme or schemes you hold. There are now QROPS at the small end of the market that can cater for pots of £25,000 or higher, and at the other end of the market there are schemes that are suited to large pots up to and beyond the lifetime allowance of £1.75 million. Again a good Independent Financial Adviser will be able to help you identify the most suitable options.
Is it safe to use QROPS? Yes, the process is simply a case of having your current pension administrator transfer the assets to a QROPS provider of your choice. QROPS are Qualified and Recognised by HMRC and your Financial Adviser will be able to provide you with a certificate from HMRC confirming their approval of the scheme.
As fully regulated financial advisers we have access to a wide variety of QROPS that can cater for all pension sizes whether they be small or large. We can also tailor the investment choice to match your specific risk profile, for instance do you require capital guarantees or are you prepared to accept some risk in exchange for higher returns? Do you require growth or are you ready to take an income from your fund?
For more information specific to your own needs, whether for QROPS or supplementing your income from savings underperforming in the bank, please visit us and request your free report from www.expatwealthbuilder.com
Expat Wealth Builder was created by industry experts to provide professional tailor made solutions to meet our clients individual needs.
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