QROPS
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QROPS
QROPS (for non residents) allow you to move your Pension Fund/SIPP overseas and avoid 55% inheritance tax. Any experience in this area, specially if you can manage the investment yourself instead of an expensive Fund manager? Is there a way to have access to 100% of the fund instead of the yearly GAD (about 6% pa for a 65 year old)?
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I have a little experience dealing with these about 5 years ago. It very much depends where you are moving to, eg in OZ (from memory) the benefits are pretty much tax free. I have a contact who deals with QROPS on a full time basis if you want to get in touch with her.
The Minimum Income Requirement (MIR) will involve an individual demonstrating a sufficient level of secure income.
This secure income must:
An individual’s State Pension and State Second Pension (S2P) will count towards the Minimum Income Requirement (MIR), as will income from final salary pension schemes and lifetime annuities already in payment.
In terms of IHT, the money (not spent) will form part of your estate on death and be subject to 40% tax, after application of the NIL rate band. Therefore you have to do something with the cash/income, otherwise it is potentially liable to both income tax then IHT.
Please bear in mind that if in DD when death occurs the pension can continue paying out to a spouse/dependent (s) as before. The 55% tax only applies if your beneficiaries want the cash.
hope that helps.
As for the UK, after the 25% PCLS (tax free cash in old money), in capped drawdown you are limited to 120% of GAD. In Flexible DD income is not restricted and you can deplete the fund and as you wish, but to enable you to use Flexible DD your guaranteed income needs to be in excess £20,000 pa. Any income taken from either arrangement will be taxable at your highest marginal rate. eg 20/40%
The Minimum Income Requirement (MIR) will involve an individual demonstrating a sufficient level of secure income.
This secure income must:
- Be in payment – i.e. it is not an entitlement to future benefits,
- Be guaranteed for life,
- Be at least £20000 per annum gross
An individual’s State Pension and State Second Pension (S2P) will count towards the Minimum Income Requirement (MIR), as will income from final salary pension schemes and lifetime annuities already in payment.
In terms of IHT, the money (not spent) will form part of your estate on death and be subject to 40% tax, after application of the NIL rate band. Therefore you have to do something with the cash/income, otherwise it is potentially liable to both income tax then IHT.
Please bear in mind that if in DD when death occurs the pension can continue paying out to a spouse/dependent (s) as before. The 55% tax only applies if your beneficiaries want the cash.
hope that helps.
I have lived in Oz for many years. In 2008 I transferred an old UK company pension for an agreed lump sum value to Oz. It had to go into a QROPS scheme. I believe the UK law is that it has to remain there for 5 years. On the 5th anniversary, I transferred the QROPS funds legally into my self managed Australian Superannuation fund.
I found some good advice on the web which saved me employing a lawyer, it's quite an arcane area of expertise it seems.
Good luck
I found some good advice on the web which saved me employing a lawyer, it's quite an arcane area of expertise it seems.
Good luck
Last edited by industry insider; 17th Oct 2013 at 12:36.
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is there a way (after 5 years of being non resident) of taking all the money in a lump sum? like the 25% initial lump sum when you start the income draw down?
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The lady transferring mine did explain it all, but I didn't listen that closely because I had no intention of taking any out in less than ten years anyway
;
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dssmtt7 ; tread carefully. Indeed, all, tread carefully. If we are discussing taking pension fund out of the UK then UK tax laws & pension rules apply. Be VERY careful with QROPS firms. They promise all sorts of goodies but you might fly in the face of UK Tax & Pension legislation.
I took my 25%. I then wanted to raid my fund further & a QROPS firm suggested signing up with them, transferring the remainder of the fund off shore to Isle of Man & thereby giving the Qrops firm total control & giving me what I liked. I nearly signed up but investigating carefully, it appeared that releasing more funds into my hands would be in the form of a LOAN but because the QROPS guys would be investing my money in places of their choice (first amber caution light came on) and interest would be so fantastic, my loan would be paid off at the end of term & I would make more money in the long term (Master Red came on) ! OK , final killer was my trusted Financial Adviser who alerted me to the possibility of the UK Tax & Pension Regulators coming after me for breaking UK rules which, broadly speaking, limit you to 25% of your fund in cash & then an annuity or draw-down scheme to be followed. They, of course, see this QROPS scheming as tax avoidance measures. So, be careful.
I took my 25%. I then wanted to raid my fund further & a QROPS firm suggested signing up with them, transferring the remainder of the fund off shore to Isle of Man & thereby giving the Qrops firm total control & giving me what I liked. I nearly signed up but investigating carefully, it appeared that releasing more funds into my hands would be in the form of a LOAN but because the QROPS guys would be investing my money in places of their choice (first amber caution light came on) and interest would be so fantastic, my loan would be paid off at the end of term & I would make more money in the long term (Master Red came on) ! OK , final killer was my trusted Financial Adviser who alerted me to the possibility of the UK Tax & Pension Regulators coming after me for breaking UK rules which, broadly speaking, limit you to 25% of your fund in cash & then an annuity or draw-down scheme to be followed. They, of course, see this QROPS scheming as tax avoidance measures. So, be careful.
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QROPS
Hi, yes there are some issues, but if you live offshore from the UK (I am in Qatar) and you DYOR, you can save a lot of fee's. I arranged the whole Trxf from my UK SIPP to a QROP, I completed all the paperwork, it took 3 hours, the whole thing cost £1500, and about 6 weeks. A lot of Co will tell you you require Specialist advice, and charge a fortune, often based on a % of the trxfrd funds. One Co quoted £65k !!!
I now have my QROP, I manage the money, it is in a safe tax haven and I control my financial destiny, annual fee is £1250
I txfrd under the old rules, so after 5 years and a day, no further reports are required by HMRC. But you are still bound by HMRC rules regarding 25% or possibly 30% lump sum and GAD rates, which are reviewed every 3 years once in D.D.
I also control day to day investment, averaging 23% pa over the last 5 years, I have arranged massively reduced fees with a UK based Stockbroker (yet still thru my QROP a/c)
All in all, the best financial decision I have ever made. Good luck.
I now have my QROP, I manage the money, it is in a safe tax haven and I control my financial destiny, annual fee is £1250
I txfrd under the old rules, so after 5 years and a day, no further reports are required by HMRC. But you are still bound by HMRC rules regarding 25% or possibly 30% lump sum and GAD rates, which are reviewed every 3 years once in D.D.
I also control day to day investment, averaging 23% pa over the last 5 years, I have arranged massively reduced fees with a UK based Stockbroker (yet still thru my QROP a/c)
All in all, the best financial decision I have ever made. Good luck.
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QROPS UK Stockbroker
As I'm intending on moving my Pension Scheme to a QROPS, I am curious to learn who you are using as your UK stockbroker. My broker says he can't retain my portfolio if I move to a QROPS.
Ta v much in advance.
Ta v much in advance.
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Merlot ; do you really mean 'when' ? I suspect you mean where. Then you add 'reliable' ! Cripes, it's a minefield out there with lots of bods after your pension fund. Anyway, unable to answr any of your questions but glad that I stayed well clear of QROPS.
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I'm going through the process at the moment. I've had the usual Skandia/Generali Offshore Bond proposals which pay healthy commissions back to the advisor and I have a meeting this week with a chap who is happy to do an Execution Only deal with a trustee of my choice. I won't be giving him a % of my pension for completing some forms.
I'll let you know the outcome.
I'll let you know the outcome.
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Well the meeting last week was a complete waste of time. Whilst he made the right noises on the telephone his Company's policy is to always use on offshore bond wrapper provided by that largest commission payer in the market, Generali. The other big bond providers, Friends Provident, Royal Skandia, Royal London etc are all in the same league and shouldn't be touched with the proverbial barge pole.
I've gleaned another nugget in that any IFA operating outside the UK is not bound by the rules of the Financial Services Authority and is not required to recommend the best product for the client. Buyer Beware!
Next meeting tomorrow with an IFA based in the UK.
I've gleaned another nugget in that any IFA operating outside the UK is not bound by the rules of the Financial Services Authority and is not required to recommend the best product for the client. Buyer Beware!
Next meeting tomorrow with an IFA based in the UK.
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Another chap in the St James Place "Sales Department" taking HUGE amounts of cash from BA pilots providing a less than active pension management service with mediocre returns.
Might be worth picking his brain on the QROPS front though.
The meeting I have tomorrow is with a now independent IFA who, in his former life, worked for HMRC in the QROPS department. He remains part of their advisory team so I'm hoping to get it from the "Horses Mouth" as it were.
Might be worth picking his brain on the QROPS front though.
The meeting I have tomorrow is with a now independent IFA who, in his former life, worked for HMRC in the QROPS department. He remains part of their advisory team so I'm hoping to get it from the "Horses Mouth" as it were.
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I set up a QROPS 3 years ago in Hong Kong with Friends Provident International.I started with 98k pounds and now it is worth 61k!I still have 2 more years of fees to pay.Worst financial decision I ever made..be careful there are sharks out there.
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NOT ORANGE
Friends Provident are known culprits and the third-party advisor you used will be enjoying the profits paid by your scheme until either you move it, retire or the fund becomes worthless.
It sounds like your fund has been managed in the usual un-managed way. On initial entry your fund would be over-diversified so that you will neither lose too much nor gain too much. Managers do this so that they don't need to look at it too often. A real manager may cost you a little more but should have your fund invested where it can benefit from growth, set stop losses and move it when other sectors become more profitable.
The charges made by the Bond Wrapper have overtaken any gains.
DSMITT7
I have a chap in mind who might be able to help. He specialises in QROPS schemes in Oz and NZ. PM me for further information
Friends Provident are known culprits and the third-party advisor you used will be enjoying the profits paid by your scheme until either you move it, retire or the fund becomes worthless.
It sounds like your fund has been managed in the usual un-managed way. On initial entry your fund would be over-diversified so that you will neither lose too much nor gain too much. Managers do this so that they don't need to look at it too often. A real manager may cost you a little more but should have your fund invested where it can benefit from growth, set stop losses and move it when other sectors become more profitable.
The charges made by the Bond Wrapper have overtaken any gains.
DSMITT7
I have a chap in mind who might be able to help. He specialises in QROPS schemes in Oz and NZ. PM me for further information
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Shanwick, you said:
Genuine question, what sort of cost do you think should be involved if someone looks after the pension of one who is not too financially savvy and who does not have the time to be hands on and able to look after it themselves?
Another chap in the St James Place "Sales Department" taking HUGE amounts of cash from BA pilots providing a less than active pension management service with mediocre returns.