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QROPS - the realities of giving and receiving advice

By Robert Burns BA (Hons), FCCA , Cert PFS - Thu 23rd Jun 2011

It would be interesting to know how many column miles have been devoted to QROPS over the last few years. As a concept it has captured the imagination of many advisers. Unfortunately, this often includes those who know so little about UK pension law that any so called advice they give may be considered dangerous.

Many of the latter, though, recognise that the entire area of pension transfer advice (whether to a QROPS or not) is a specialist field and should be accompanied by substantive technical knowledge of how the UK pension system works and knowledge of how the pensions system works in the various jurisdictions where QROPS are to be found. Advisers in this category are open minded enough to introduce their QROPS enquiries to us and we thank them for trusting us to assist with their clients.

Claims of offering access to all QROPS are just plain silly

There are thousands of them and most are in jurisdictions which only open their door to local residents. So for example although a resident of Spain may transfer their UK pension fund to a QROPS in Guernsey, New Zealand, Isle of Man or Malta, they cannot transfer to a QROPS in Jersey or Australia. In fact only a tiny proportion of all QROPS are ‘open’ to the public at large. The real choice is from less than perhaps 100 schemes not from the entirety of the contents of the QROPS list maintained by HMRC.

Transparency of costs and references

If you are receiving advice on QROPS always ask for and accept nothing less than transparency as to costs. Be suspicious of anything being free of charge because it will not be - instead there will be a huge and undisclosed commission lurking somewhere. The advice you receive needs to be paid for as does the QROPS provider, but you have a moral right to know to the penny what those costs are.

Think about asking for a reference from another client who has used the adviser’s services on a transfer to a QROPS: if this is not forthcoming then vote with your feet. Ask the adviser to confirm the level of their pension qualifications - a generalist financial services qualification will not suffice.

The Importance of PROPER Pensions Advice

We see many instances where people have transferred to a QROPS without receiving advice in writing. By that I do not mean some generic QROPS summary which makes no reference to you and your existing pension rights, but a comprehensive letter of recommendation. This should set out in clear language what your UK pension rights currently comprise, any guarantees that apply together with the current transfer value and any cost of transferring. It should then set out the comparative benefits you can expect to receive on a transfer to a QROPS and how those benefit opportunities compare with those associated with your UK pension rights. This should be capable of being explained to you in language you understand.

Ask the specialists

If you do not understand in detail what the adviser is telling you this is more than likely because he does not understand it himself. And if you ask any question of the adviser which he cannot answer but has to go away and ask a specialist - then show them the door and come to the specialists – Premier Pension Solutions.

For further information about QROPS and Pension Planning opportunities please contact us today via clicking the link Here and leaving a few basic details on the form at the foot of the page.

Comment on this Blog

Very good post Mr Burns. This is the type of professionalism that the Pensions Market in Spain needs and deserves. Openness and honest advice must be keys to making this market more customer-led and professional.
David Goodall - Thu, 11th Aug 2011
The benefits are really for somebody, like myself, who moved to Spain 8 years ago at 30 yrs old with 2 small private pensions, Frozen until 65 yrs of age. Even then they were forecast to pay out peanuts on maturity, but able to provide me with a nice tax-free lump sum. HOWEVER, everybodies situation is different, which is why seeking professional advice is important.
Tumbit - Admin - Fri, 22nd Jul 2011
thanks for that my teachers pension is already paying out; that's the only private one I have; I'm 64. So I guess nothing more to do!
Paul Attard - Fri, 22nd Jul 2011
Paul : In layman's terms it is a way of releasing any private UK pension that you may hold, ahead of the stipulated release / retirement date. You can then move it into other investments or take the cash (depending on the amount) without paying taxes to the UK - IF this is done when you have been UK non-resident for 5 yrs or more.
Tumbit - Admin - Fri, 22nd Jul 2011
what on earth are QROPS????
Paul Attard - Fri, 22nd Jul 2011

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