The Equalizer

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By The Equalizer - Thu 21st Apr 2011

 

I don't consider myself to be an un-intelligent person, but when it comes to anything remotely concerning finance, or anything requireing an attention span of more than a few minutes I generally glaze over. I've never had a problem managing my finances as such, it's just that I am totally incapable of reading and digesting any financial information and as such generally just ignore it.

I think one of the problems for me is that there is so much financial information out there on the net - some of it good, some of it bad, much of it totally conflicting, and as such I usually take the easy route and stick my head in the sand and ignore it.

I'm digressing, so I'll try and skillfully get back on point...

When I was 21 I started a job and was offered a private pension plan. I was flooded with facts and figures and other info that baffled me, and I found myself agreeing to whatever it was that they suggested I did and signed up. I did the same again when I started with a different company 7 years later.

So when I stopped that job to move to Spain I found myself with 2 frozen private pension plans that I could neither withdraw or merge together to manage a little easier. To be honest, I was a little concerned that, assuming I would still be alive when they matured, I would even A) remember having them at all, or B) remember to keep updating my contact details.

Every year each pension sent me a statement telling me both it's total value and what I could expect to take as a yearly payment, and it frustrated the hell out of me that whilst the value of each as a lump sum was quite nice, and would certainly come in handy to me in the 'here and now', each was forecast to be worth peanuts in 30 years time, when I could get my hands on it.

So when a friend (or was it a friend of a friend?) told me about accessing their private pension fund early using QROPS , I recognised straight away that our circumstances were similar and decided to look into doing the same myself.

I decided that I would approach 2 different Expat Pension specialists for advice - as I knew nothing about QROPS or Pensions I wanted to be able to compare the advice that I receieved.

A sound plan maybe, but the first company I contact seemed completely underwhelmed with my request and never responded to my second e mail asking a few basic questions.

The second company called me back in person within a matter of hours as opposed to a 'copy-and-paste' e mail being churned out. They talked about my various funds and the options available to me. One thing that was stressed to me from the beginning was the fact that any funds that I chose to access could be done so but only once I had been resident from outside of the UK for a period of 5 years or more. If this fact was not crystal clear I could find my fund being taxed at the rate of 55%.

The problem for me was that I stopped working for my previous employer at the start of April, however, being a sales manager, I also recieved a Bonus-commission at the END of April - a new tax year - so it was a grey area as to whether HMRC in the UK would apply this tax or not. The safe and best thing to do was to wait until a new tax year came so that I would be in the clear for certain.

So last July I completed the various forms and sent them off to request that my two pension companies sent my details over to my advisor to enable them to put me a proposal together and give me the bottom line - how much cash I could get my hands on, and when.

Of course the pension funds work at their slowest possible pace as they want to make this QROPS procedure as unattractive as possible, and likewise they want to squeeze every last drop of interest out of me as possible, but three months later I had recieved a proposal.

After skipping the many pages that meant nothing to me, and going straight to the bottom line, I decided to go ahead with the proposal and signed the release forms to accept the T&C's. From now on it was just a waiting game until the new tax year, when I could for deffinate withdraw my funds without paying HMRC any taxes.

Anyway, at the start of April I submitted my withdrawal application and just a couple of days later got the transfer - less agreed fees - into my Bank account in the UK.

I suppose I'm just more confident that I can either manage my investments better than any faceless banker or fund manager ever could (the latest recession proves that - I'm still here, a lot of Banks aren't), OR make use of the ready cash today as opposed to in 30 years time.

The whole QROPS process was very straight forward for me, although it was pointed out to me that each and every fund is different so what worked for me and my pension(s) may not work for others.

I think the moral here is to take advice. And good advice at that.