Qrops

henryjames

Dear Forum team

I have a question re QROPS. I was a prinicpal lecturer in art & design at a university in the UK for 22 years. During that time I paid into a pension which is now worth so I'm told £160 - 200,000.

I took voluntary redundancy two years ago and moved to France. I have since been contacted by the deVere group offering to move my pension from the UK to France where I am now living under the QROPS scheme. I am told the risks are minimal, I will retain my capital, its the interest I will gambling on. I can add to it if I start to work in france ( I am 47), I can draw on it at the age of 55 as opposed to 67, and I can leave 100% of it to my son iof anything happens to me.

Please can you advise on the risks, I have not really been told what these are and I am reluctant to move my pension if I am at risk of loosing the whole lot.

Many Thanks.

HenryJames.

dunstonh

I am told the risks are minimal, I will retain my capital, its the interest I will gambling on.

It is a high risk area transaction wise with a number of dodgy companies acting in that field. Especially those not operating out of a base in the UK (some ex-pat areas are targeted by salesman not advisers)

Is your pension a defined benefit scheme or a money purchase scheme.

I can draw on it at the age of 55 as opposed to 67

What makes you think you cant draw it at 55 now and where does 67 come from?

atush

AFAIK, that pension is a final salary one.

So, there is nothing you or they can do with any transfer value that will beat an index linked FS pension that you can draw for the rest of your life once you reach the RA of your plan.

I suggest you dig out the paperwork, or ask for new copies to be sent to you to read up on what you would be giving up.

And if you didn't ask for advice, and these people contacted you, you need to ask yourself why. As legitimate companies don't act in that way.

Avoid.

hyubh

henryjames wrote: »

I have a question re QROPS.

QROPS = 'Qualifying Recognised Overseas Pension Scheme' = a foreign pension scheme HMRC considers formally legit, in a nutshell: HMRC won't class a transfer out from a UK pension scheme to a QROPS as an unauthorised payment, and as such, subject to a hefty tax charge. Since this charge would be levied against both the individual and the old pension scheme, no UK pension administrator will allow a transfer out to a non-QROPS foreign scheme.

I was a prinicpal lecturer in art & design at a university in the UK for 22 years. During that time I paid into a pension

What's that then - the final salary section of the USS? If so, there would be little sense in transfering out.

which is now worth so I'm told £160 - 200,000.

What does your last annual benefit statement (ABS) say in terms of the actual pension? If it the scheme was the USS, then keep in mind the this will not be an idle projection, but a statement of what you will actually receive, net of the inflation proofing between now and retirement.

I am told the risks are minimal, I will retain my capital, its the interest I will gambling on.

You will be gambling on the fact you no longer have a guaranteed, inflation-proofed income in retirement!

I can draw on it at the age of 55 as opposed to 67

As dunstonh says, where does the 67 come from? There is no necessary link between a person's state pension age and their pension age in any given occupational pension scheme, public or private sector. If your scheme was the final salary section of the USS, then your normal pension age is no later than 65, with a right to take a reduced pension from 55.

OffshoreActuary

No one (unless they are in terminal health) should contemplate transfer of any final salary pension to any other pension scheme - whether a UK scheme or an overseas scheme (QROPS) - without their adviser obtaining a transfer value analysis (TVA) report. The TVA will show the "matching yield" - how much you would need to earn on the transfer value each year in order to match the final salary pension. If you don't like the resulting number (eg if the matching yield is too high for your liking) then don't transfer. Without the TVA, you're blind, because transfer values vary widely from one final salary scheme to another.

Erwan

Here is a situation where it can make sense, to transfer a final salary scheme such as USS to a QROPS -- I think.

Suppose HenriJames takes a new university teaching job in France. But then, does not like it, and decides that the grass is greener in the UK, and returns to USS in his new british position.
As he is thinking of his retirement, he decides to formally keep his job as a detached french academic: this in practice means that he does not get any benefits from France except that he is untitled to keep on paying for the final salary scheme of french academics (much cheaper than USS: for a senior lecturer, about 3000 GBP per year). His phantom career in France then continues, and when he decides to retire, he can claim based on the French final salary scheme. However, if he also gets USS at this time, then the pension he would get from France would sustract the amount he gets from USS -that's the law. So, just before retiring in the UK, he decides to transfer his USS to a QROPS in France (a PERP as it is called), which is not a state pension but a private pension fund, such as one he could have subscribed to as a french resident, and therefore is not deducted. Then, he gets the french final salary pension and the USS money -albeit not reindexed.