[quote="James5245 As PET pointed out, there are agents and many, many companies that advertise the service and of course, some of them are known to actually take a commission out of your money. As I said in my earlier post, I do work for a company who carry out QROPS services and we don't take any commission from a clients' funds.
[/quote]
Can you explain how you or your company earns its commission if it is not paid by the client ?
There are no 'free lunches'' around and as you are in the QROPS business perhaps you will inform the readers, because I cannot see who else would be paying the commission, which by any stretch of the imagination can be huge ?
You are new to this forum as I am so honesty is important for credibility
UK Pensions - QROPS schemes
Re: UK Pensions - QROPS schemes
Can you explain how you or your company earns its commission if it is not paid by the client ?musungu wrote:[quote="James5245 As PET pointed out, there are agents and many, many companies that advertise the service and of course, some of them are known to actually take a commission out of your money. As I said in my earlier post, I do work for a company who carry out QROPS services and we don't take any commission from a clients' funds.
There are no 'free lunches'' around and as you are in the QROPS business perhaps you will inform the readers, because I cannot see who else would be paying the commission, which by any stretch of the imagination can be huge ?
You are new to this forum as I am so honesty is important for credibility[/quote]
I have been away and see my request for an explanation from the financial advisor was ignored - perhaps I was right to be cautious?
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PensionsMatter
- Novice
- Posts: 2
- Joined: Mon Apr 22, 2013 11:54 am
- Location: Kuala Lumpur, Malaysia
Re: UK Pensions - QROPS schemes
Private sector Final Salary Schemes have been closing their doors to new entrants for some years, and clearly that pace has accelerated. Final Salary Schemes place the full onus on the company to ensure that at retirement there is sufficient in the pension pot to provide the retired employee with his salary based pension for the full period of retirement, and frequently a widow’s pension as well. With investment returns falling behind old inflated estimates of just how much money a pension fund may return, and retirees living significantly longer, what has been termed “Pension Black Holes” have emerged. That was also before The Bank of England introduced Quantitate Easing, which further exacerbated the problem. Now a new issue arises, with a revision as to the current method of calculating the retail prices index reckoned to add a further £20 billion on top of the current estimated deficit of £50 billion, just for the FTSE 250 Companies alone. However, if you have pensions held in a Final Salary Scheme, this may be the best time to transfer to a QROPS or SIPP, provided you understand and recognize the risks. This is because transfer values are some 80% higher than they were six years ago.
Most certainly the decision whether to transfer needs a great deal of thought and consideration. However, my belief is that you are not able to make a judged decision without having all the information in front of you. I suggest that if you do hold an old final salary pension scheme and have held off considering a switch that perhaps it may be politic to obtain the relevant information, and make that decision based on facts and not blind judgment.
Most certainly the decision whether to transfer needs a great deal of thought and consideration. However, my belief is that you are not able to make a judged decision without having all the information in front of you. I suggest that if you do hold an old final salary pension scheme and have held off considering a switch that perhaps it may be politic to obtain the relevant information, and make that decision based on facts and not blind judgment.
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PensionsMatter
- Novice
- Posts: 2
- Joined: Mon Apr 22, 2013 11:54 am
- Location: Kuala Lumpur, Malaysia
QROPS - Is it right for me?
The advantages provided by transferring to a QROPS pension represent for many Expats the Holy Grail. Ordinarily, as long as you are aged 55 or above and have lived overseas for a minimum of 5 years, the Pension Commencement Lump Sum (Tax-free cash) can be greater than normally taken from a UK scheme, and dependent upon the country in which you reside, the tax treatment of the actual pension can be considerably more beneficial than under UK rules. There are also benefits in terms of Inheritance Tax and even, in some cases the Lifetime Allowance may be enhanced in excess of the present £1.5million (reducing to £1.25 million in April 2014).
All of which make QROPS a very attractive proposition.
However, there are many factors to weigh; it is not a simple case of “I live in Thailand, so it’s the right thing to do.” Many Expats are either currently, or have been, members of large Final Salary schemes, through which, as the name suggests, the pension payable is directly linked to the (Pensionable) Final Salary. In most cases there is guaranteed “index-linking” which provides inflation-proofing of the pension payable, in line with either the Retail Prices Index or Consumer Prices Index.
There are no such legal impositions on QROPS fund investment.
With regard to dependants, i.e. spouse and children up to the age of 18 or 23 if in full-time education, it is incumbent on Final Salary schemes to make provision. Some provide ongoing pension to a maximum of 4/9ths to a dependent wife; the not so well-funded schemes may merely provide for the balance of 5 years pension if the annuitant’s demise occurs within this period.
A QROPS scheme provides for the entire fund to be paid free of all taxes to dependants.
Many people think that they will continue to live overseas forever, and, given the factors of better climate, standard of living and lifestyle, it’s easy to see why. However, what happens if you should choose, or indeed be forced, for whatever reason, to return to the UK? Quite simply, if you have already transferred your pension to a QROPS and return to the UK with the QROPS still active, there will be tax charges levied to a maximum of 55% on the tax-free cash and the pension will be taxed at the highest marginal rate.
It is clear then that the case is not as cut and dried as many are led to believe.
However, all is not lost. Many expatriates still want to make the most of the financial opportunities afforded by living overseas and to maximise the benefits. The good news is, this is still possible without making potentially disastrous life-changing decisions at an early age.
There is no doubt that QROPS plans are hugely tax efficient and of great benefit in securing the futures of many Expats. However, they are not right for everybody.
There are alternatives to QROPS that will allow you to secure your defined benefits whilst providing flexibility and which are fully compliant with UK tax regime and remove the potential problems highlighted above. The selection of the most suitable product is highly individual. Given personal circumstances, it may be that a combination of financial vehicles is required to provide the most bespoke solution, which indeed, is what every client is entitled to.
Before making the decision to transfer to QROPS, ask yourself these questions:-
1. Am I willing to exchange a guaranteed pension for QROPS flexibility?
2. What taxes, if any, will I pay on my pension in the country I retire in?
3. Am I likely to return to the UK and become resident there?
4. Am I allowed to transfer my pension?
5. Is there a QROPS alternative more suited to me?
For expert assessment and a full written TVAS report detailing your options, you can always contact me.
All of which make QROPS a very attractive proposition.
However, there are many factors to weigh; it is not a simple case of “I live in Thailand, so it’s the right thing to do.” Many Expats are either currently, or have been, members of large Final Salary schemes, through which, as the name suggests, the pension payable is directly linked to the (Pensionable) Final Salary. In most cases there is guaranteed “index-linking” which provides inflation-proofing of the pension payable, in line with either the Retail Prices Index or Consumer Prices Index.
There are no such legal impositions on QROPS fund investment.
With regard to dependants, i.e. spouse and children up to the age of 18 or 23 if in full-time education, it is incumbent on Final Salary schemes to make provision. Some provide ongoing pension to a maximum of 4/9ths to a dependent wife; the not so well-funded schemes may merely provide for the balance of 5 years pension if the annuitant’s demise occurs within this period.
A QROPS scheme provides for the entire fund to be paid free of all taxes to dependants.
Many people think that they will continue to live overseas forever, and, given the factors of better climate, standard of living and lifestyle, it’s easy to see why. However, what happens if you should choose, or indeed be forced, for whatever reason, to return to the UK? Quite simply, if you have already transferred your pension to a QROPS and return to the UK with the QROPS still active, there will be tax charges levied to a maximum of 55% on the tax-free cash and the pension will be taxed at the highest marginal rate.
It is clear then that the case is not as cut and dried as many are led to believe.
However, all is not lost. Many expatriates still want to make the most of the financial opportunities afforded by living overseas and to maximise the benefits. The good news is, this is still possible without making potentially disastrous life-changing decisions at an early age.
There is no doubt that QROPS plans are hugely tax efficient and of great benefit in securing the futures of many Expats. However, they are not right for everybody.
There are alternatives to QROPS that will allow you to secure your defined benefits whilst providing flexibility and which are fully compliant with UK tax regime and remove the potential problems highlighted above. The selection of the most suitable product is highly individual. Given personal circumstances, it may be that a combination of financial vehicles is required to provide the most bespoke solution, which indeed, is what every client is entitled to.
Before making the decision to transfer to QROPS, ask yourself these questions:-
1. Am I willing to exchange a guaranteed pension for QROPS flexibility?
2. What taxes, if any, will I pay on my pension in the country I retire in?
3. Am I likely to return to the UK and become resident there?
4. Am I allowed to transfer my pension?
5. Is there a QROPS alternative more suited to me?
For expert assessment and a full written TVAS report detailing your options, you can always contact me.
Re: UK Pensions - QROPS schemes
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