qrops pension

Woodface

Please do me the courtesy of not casting aspersions about what my agenda might be. Some of you guys have posted many many times over the course of years. I do not come on here speculating on your agendas, altruistic or otherwise. I am sure you have your own reasons.

Since the question has been asked, I will answer. I have worked on both sides of the coin, as a UK and offshore IFA. When in the UK, I knew relatively little about QROPS - it does not form a part of UK financial planning. My previous view probably would have been similar to yours.

My motivation to registering and posting was to provide some balance that I felt was lacking, especially since the original poster did not mention his location. Surely that is allowed? Some of you are keen to dismiss the idea before you know even half of the situation. I have no doubt that your client meetings in real life are more consultative than that!

Dunstonh, you have really failed to recognise my point. The 55% tax on death is a real concern to many. Most people *do* crystallise their pensions - it is therefore not simply a theoretical notion - it affects most people once they retire.

Secondly, regarding final salary transfers - when was the last time you requested a transfer value on such a scheme? I'd be very surprised if it was recently, assuming you are based in the UK - there is simply no place for final salary transfers there. There is a much stronger argument for final salary transfers if the client lives overseas, at least from the standpoint of death benefits.

You also miss my point about underfunded schemes. My point is that many will offer generous transfer values to offload the liability.

I do agree entirely however that QROPS is not suitable for UK residents.

atush

So you do work int he industry and have a vested interest.

Do US the credit of mentioning it in your signature like the IFAs do?

And we asked the OP the question of why Qrops and where they live now, as this was pertinent. In the interim, for others, then we needed to mention it could be a liberation scam. Esp if they were cold called.

Generous transfer values virtually always fail to buy the same pension in the open market. And the PPF covers things substantially. I doubt sincerely the TV would even match the PPF.

It would be a very limited sample who would benefit from transferring a DB pension. Incl those who are unmarried with no spouse/dependents, and those likely to die soon.

AS this is a UK forum, we are going to have to assume, until told otherwise, those here are UK residents. So not suitable for Qrops in your own words.

jamesd

Woodface, we know that the vast majority of QROPS posts are relating to scams, not to legitimate use cases, so it's natural that the majority of the posts will initially feature the problem aspects while including a mention of the legitimate use situation so that if it turns out to be a legitimate use the person asking the question can follow up on that. Four of the five posts before yours did that.

Nobody here has any problem at all expounding on the benefits of QROPS for suitable cases, it's just relatively unusual to encounter those. For the suitable cases it's a completely legitimate and useful tool.

The majority of cases of death after taking benefits do not involve any need to pay a 55% tax charge. That's because the benefits paid into the pension pot of a spouse or certain types of dependent is exempt and most cases do have a spouse involved. Since the spouse will need income it's natural for the spouse to want the money to go into the pension to generate an income. Even under current rules, a 3% gilt yield and 150% GAD multiplier, a spouse who's say 85 years old or older can take out 22.5% of the pension pot value each year. A lower 8.85% if they are 65, gradually increasing to that 22.5%.

Of course the first person could start withdrawing at the maximum rate as soon as they are able as well and that can dramatically reduce the pot size.

For other situations there's the option of buying life cover to meet the need. QROPS can still have a place but there's a lot of 55% hype about in the QROPS promotion area and not so much explaining of how easy it is to avoid without QROPS. Do decent early planning and it'll be way less than 55%.

That's all before the plan to allow unlimited withdrawing as taxable income arrives and makes it easy to withdraw at high rates.

Pension discussion aside, nice to meet you.

Woodface

Hi James,

Thank you for your post which is significantly more polite and less presumptive than some of the previous comments.

I can appreciate now why there is some suspicion towards QROPS if UK investors are being targeted. I work with clients overseas on a face-to-face basis, so I suppose my attitude towards it is different.

I take your point about the fact that the 55% tax can be avoided where there is a spouse; however, the resulting pot still provides an income that is taxable. One of the benefits of QROPS is that the lump sum death benefit is free of tax (at least in most jurisdictions).

I also recognise your point about buying life cover to deal with the potential 55% tax deduction. This needs to be done early if it is to be cost-effective, and doesn't provide a means to avoid the tax - merely to replace the deduction. The problem is that many people leave their planning too late.

atush

yes, UK posters are being targeted in their thousands, and there are many who have been scammed down this route (a thread on page one for instance).

If you think we were rude, then sorry. But as a newbie your first post here was also I felt rude to DH. We may have been presumptive, but our presumptions were correct- you do work in the industry. So do amend your signature to say so.

Your_Hero

Woodface wrote: »

For balance, how about some information on the benefits of QROPS for overseas individuals? It exists for a reason.

What about the 55% death tax that applies to personal pensions in the UK? Presumably some of the UK financial advisers on this forum wouldn't regard this as being worth avoiding. QROPS provides a legitimate means to do so.

What about the numerous defined benefit schemes that are underfunded in the UK? Some of these are keen to offload their ongoing liabilities and therefore offer generous transfer values. A good adviser will conduct a transfer value analysis to see how benefits under a QROPS would compare to the existing scheme.

Even if benefits can't be matched, what about individuals whose overwhelming priority is to leave a legacy for their children? Defined benefit schemes don't generally provide this.

What about currency risk? Is it preferable to have your pension paid in your local currency or are you happy to take the risk that the relationship between your local currency and GBP might shift.

Those are just *some* of the benefits of QROPS. That isn't to say it is the right thing to do; merely that it might be worth investigating through a reputable IFA who specialises in this area.

I actually didn't see anything wrong with Dunstonh's post.


He stated some obvious facts about QROPS and tried to establish from a high level overview of whether or not it is suitable (i.e. if OP lives overseas). He wouldn't begin by listing all the benefits of QROPS if it's not right for him in the first place.

Debt_Free_Chick

If the company has only been formed in the past year, that would ring alarm bells with me. Most of the pension "liberation" scams are recently formed too. So I'd certainly want to be doing much more research on them.

More oddly though, Harbour Pensions does not appear on HMRC's list of recognised QROPS here

Taking those two things alone, I'd be avoiding this. If a QROPS is the right option, there are plenty of other schemes to choose from.

DonM

First and foremost question is whether Stevo412 is based in the UK or not? If yes, then don't move to a QROPS. It is completely pointless as it will be treated no differently to a UK registered pension scheme.

If you have moved abroad Stevo then yes, QROPS still have a place. For info just google "QROPS transfer benefits". Any further queries feel free to ask.

BTW Can someone pm me on how to add a sig.
Also, I work in the QROPS field but not as an FA. The company is linked on my profile already.

jem16

DonM wrote: »

BTW Can someone pm me on how to add a sig.
Also, I work in the QROPS field but not as an FA. The company is linked on my profile already.

Click on User CP in the green bar above the forum posts. Once there you will see a section Edit your Signature.

Kit_Carson

I have seen evidence today of an unregulated cold calling firm transferring a fund of less than 30,000 pounds into a Harbour QROPS. The investor lives in the UK.
Any real IFAs think of how this can be justified? The QROPS fees in the first year are 3% of the fund and I have not seen where the money was invested yet.