It doesn't need to be said that is no shortage of information out there concerning QROPS - Qualifying Recognised Overseas Pension Schemes - and much of the advice given is very good. The problem is that unless you have an honours degree in advanced Economics or something similar, much of the information is often too complex to understand, and difficult to get a feel for exactly how this can relate to your personal circumstances or be of benefit to you.
It should go without saying that there is no substitute to seeking advice from an experienced and appropriately qualified professional QROPS advisor, as they will be able to give you a proposal that is specific to your personal circumstances. This article is intending simply to cut through the jargon and give you a basic idea as to what QROPS is and how it may apply to you :
What is QROPS ?- It is a means of releasing any privately managed pension fund that you have in the UK, in many cases without taxes or penalties.
Who can use it ?- Once you have been legally resident outside the UK for 5 years or more as of the start of each tax year (6th of April) you can access any funds you may have. If you access funds before this time you will need to pay taxes and penalties, which can be considerable, so you need to be sure about the dates.
How do I do this ?- Your pension can only be released from the UK through a specialist company in a foreign country - sometimes New Zealand or Guernsey, depending on the best solution proposed for your needs. These companies will only usually work through approved Financial Institutions and advisors - it is not something that you can arrange yourself directly and as such there would be 2 sets of fees payable.
Is this legal ?- Yes, totally. Although there is no guarantee that it will not be something that comes under scrutiny as a means of securing more taxable revenue for the UK in future. The UK Treasury even provide a leaflet to talk you through the whole process , together with a list of around 1400 QROPS scheme providers worldwide, ( Which you can see by clicking here. ) Note : This does not in anyway approve the scheme, not any advisor submitting the application or proposal on your behalf.
What do I need to do to get started ?- To begin with you should locate any documentation relating to any privately held pensions that you may have contributed to in the past. Once you have done this you should seek out an advisor to obtain a proposal as to how you could proceed in releasing your pension, should you wish to do so.
What are the benefits to me ?- There are a few benefits : a cash lump sum without penalties and taxes in some cases, an investment portfolio that you can manage offshore and have closer control over in others. It can also mean that the money tied up in your pension is available to you sooner than by simply leaving it in the UK until it matures.
What are the risks ?- There is a risk that your pension fund may mature with better financial reward than by closing you fun prematurely (However all risks, together with benefits should be pointed out to you in your independent personal proposal for your consideration). The greatest risk, however, is receiving poor advise and therefore you need to ensure that you approach a Pensions advisor who is both professionally qualified and experienced.
Who should I approach to help me ?- There are a number of QROPS advisors here in Spain that can help you with this matter, however, Tumbit strongly recomend that you ensure that the advisor that you speak with is professionally qualified, has experience with QROPS issues and is regulated by the appropriate authorities - for example the CMNV.
And then what ?- Once you have found an advisor that meets your requirements they will ask you to complete a form giving some basic details of the pensions that you hold, together with a form giving permission for them to obtain certain details directly from your pension fund manager. A few weeks later they should be in a position to provide you with a proposal stating the value of the pension and how they recommend that you should proceed.
Once you have the proposal you should consider all options available open to you, which are usually :
- To proceed with the proposal you have received. Although there should never be any obligation to do so
- To decide not to release your privately held UK pension at this time.
- To seek a comparison proposal from a second advisor.
If you DO decide to proceed with the proposal you will be asked to complete a form giving acceptance to the usual terms & conditions together with permission for the advisor to act on your behalf.
Once again, the issue of QROPS can be a complicated matter and the intention here is simply to give a very basic overview. There is no substitute for taking professional advice here !
Those considering releasing a UK pension through QROPS may be interested to read a first hand 'lay man's' account of his experience by clicking the link HERE .