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QROPs - Choice of adviser and choice of jurisdiction

By Robert Burns BA (Hons), FCCA , Cert PFS - Mon 16th May 2011

THE QROPS market is pretty crowded now as is evidenced by the relentless advertising seen in many expat newspapers up and down the Costas. However the majority of advisers out there are looking to jump on what they see as a lucrative bandwagon and in reality have little knowledge of or experience of UK pension transfers.

What questions should I ask?

When meeting any adviser offering QROPS advice the first thing to ask about is the extent of the adviser’s professional qualifications. Ask if they have passed the CII pensions paper known as G60 or its equivalent. Ask for references from other clients in respect of whom they have arranged pension transfers. Ask about fees and commissions looking for clarity and transparency. If you do not get the right answers then walk away.

What are the main jurisdictions?

The main jurisdictions are Guernsey, Isle of Man, Malta and New Zealand. Advisers should be able to offer a choice of QROPS from these jurisdictions and recommend the most appropriate for you based on your circumstances and objectives.

The following list will serve as an outline guide as to which jurisdictions are suitable for expats who are resident in Spain.

1.) If you left the UK before April 2006 and require an immediate lump sum then New Zealand will generally be the jurisdiction of choice.

2.) If you left the UK more recently, have a pension fund of more than £100,000 or so and have no intention of returning to the UK then Guernsey, Malta or the Isle of Man may well suit.

3.) If however you are a recent expat but may return to the UK then you may be well advised not to transfer at all or to transfer to a UK Self invested personal pension (SIPP). If a QROPS is recommended then it crucially must have no exit charge so if you do return to the UK there is no cost for you to transfer to a UK SIPP.

4.) If you are advised to transfer to an Isle of Man QROPS ask if it is a “section 50C” scheme - as non reclaimable IOM tax arises from income received in Spain from other forms of IOM QROPS.

5.) If you are thinking about taking benefit before age 55 and are a long term UK resident then Guernsey is not the best jurisdiction for you, Malta or new Zealand allow benefits to be taken earlier.

Sadly the quality of knowledge and advice available is sorely lacking. In some cases so much so that the client’s financial health can be severely compromised. We have seen instances of people taking benefit having transferred to a QROPS paying tax on their income at 20% or more whereas with competent advice this could be at 2.5% or even less in some cases.

Beware also the adviser who tells you that his advice will not cost you anything as it will be paid for by an investment house. In this instance there really is no such thing as a free lunch.

For further information about QROPS, QNUPS and other pension solutions please feel free to contact us by clicking the logo through to own page (above).

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