QROPS confusion

Digi59

I have an NHS pension which has been on hold since I left the NHS some years ago (to change careers). I would normally have received this at 55 (as I was a 'special class', being a nurse) but due leaving and not paying further contributions, I now have to wait until I am 60.

The current issue is that I now live in Cyprus, and I have been informed that I can move this pension into a QROPS. I have done as much research as I can without my head exploding, but I am still not sure if this is a good idea or not. I am not sure where this pension will be transferred to yet, but Prudential was mentioned. It was also mentioned that I could get some of this pension money earlier than if I left it where it is.

The pension is not a huge amount, as I had cashed in some of it early on in my nursing career, so it amounts to about 10 years' worth. My lump sum, when last calculated about 5 years ago, was just over £8,000 and an annual income of £2,500ish. Does this seem like it will be worth doing? I am now 56, and my husband is 65 and we do not intend to return to the UK in the forseeable future.

HappyHarry

I have an NHS pension which has been on hold since I left the NHS some years ago

The current issue is that I now live in Cyprus, and I have been informed that I can move this pension into a QROPS

You could transfer it to a QROPS and access it early. However, it is likely to be an expensive process, and may very well not be in your best interest.

See http://www.nhsbsa.nhs.uk/Pensions/4210.aspx

It's worth having a read through the NHS leaflet as well: http://www.nhsbsa.nhs.uk/Documents/Pensions/Overseas_Transfer_Guide_(V7)_06.2015.pdf

Your safeguarded benefits in your NHS scheme will be considered to be in excess of £30,000. this means that you will need to get advice from a UK authorised IFA. It would also be sensible to get advice from an adviser in Cyprus.

I suspect that you will find that adviser and investment charges will mean that the transfer is unattractive.

In addition, all the usual warnings about moving away from a defined benefit scheme would apply.

However, you should bear in mind that the NHS scheme will pay your pension in pounds sterling. This may itself have a negative impact on your eventual income, if the exchange rate moves against you.

Digi59

Thank you Harry.

I am not sure exactly how much this will cost, only that I was informed that any charges would be made clear before going ahead, and I think payment to the person sorting this out would come from that institution managing the pension and be taken from the funds invested (as I understand it, anyway). I was told that these charges are less than those made by UK pension fund trustees who manage the NHS pension funds.

I've looked at the links and I have seen and read those before, but it all seems a little confusing. I am still not sure whether it is going to be worth my while doing this, and what benefits I will be giving up if I do move the pension.

HappyHarry

Alarm bells are ringing in a big way. This is starting to sound like it's in somebody else's best interest, not yours.

I was told that these charges are less than those made by UK pension fund trustees who manage the NHS pension funds.

Your existing pension is a defined benefit pension, and there is no "pension fund".

Your existing pension is a defined benefit pension, and there are no charges applied that affect the amount you would get as a benefit in retirement.

I think payment to the person sorting this out would come from that institution managing the pension and be taken from the funds invested

It sounds like a big commission is going to be paid out of your funds to somebody.

Was this a solution that you actively sought, or has somebody approached you with this idea. If someone has approached you, be very, very wary. Giving up an NHS pension is not something to be done lightly.

In your shoes, I would be seeking out a second, possibly third opinion from different local advisers. Is there a way to see if they are regulated / authorised / recommended in Cyprus?

Digi59

Alarm bells are ringing for me, actually, which is why I asked the question here. I had also thought of speaking to someone else about this. We do have an advisor who is dealing with my husbands state pension (opting to pay tax here instead of UK), so I might speak to her. I know the NHS pension is a good one, which is why I am wary.

The person advising me of this was someone we met through another matter, and as we were discussing a number of things over a drink the pension issue arose. I did not actively pursue this.

HappyHarry

We do have an advisor who is dealing with my husbands state pension (opting to pay tax here instead of UK), so I might speak to her.

That sounds like a good place to start.

You may want to ask her if she knows any authorised advisers in the UK (with the pension transfer specialisation) who could provide advice to you. You will need to take UK advice beforehand, as the NHS will insist on it.

Good luck!

Digi59

Will do, Harry, thanks.

hyubh

Digi59 wrote: »

I am not sure exactly how much this will cost, only that I was informed that any charges would be made clear before going ahead, and I think payment to the person sorting this out would come from that institution managing the pension and be taken from the funds invested

That implies transferring out to a DC arrangement. Doing so was banned from unfunded public sector schemes like the NHS one back in April (the only exception is if you have less than 2 years membership, and so don't have the right to a deferred pension in the scheme).

I was told that these charges are less than those made by UK pension fund trustees who manage the NHS pension funds.

Rubbish - 'trustees' would not put charges on a DB pension, and even if they did, the NHS scheme has no trustees in the first place (it is a 'statutory' rather than a 'trust-based' scheme).

I am still not sure whether it is going to be worth my while doing this, and what benefits I will be giving up if I do move the pension.

Sounds like a rather pathetic chancer has contacted you to be honest.

We do have an advisor who is dealing with my husbands state pension (opting to pay tax here instead of UK), so I might speak to her.

If this advisor knows what she is talking about the conversation will be short - even if a transfer out were a good idea, it wouldn't be possible anyhow.

Digi59

Thank you for the additional information. I have read conflicting information about whether it would be allowed to transfer out, but I had contacted NHS pensions with my change of address and mentioned I was thinking of doing this. The email reply included a link for me to read for further information.
http://contactcentreservices.nhsbsa.nhs.uk/selfnhsukokb/AskUs_Pensions/template.do?name=%60Transferring+out+to+a+Recognised+Overseas+Pension+Scheme+%28ROPS%29+Scheme&id=29122

hyubh

Digi59 wrote: »

Thank you for the additional information. I have read conflicting information about whether it would be allowed to transfer out

The 'loophole' regarding foreign transfers out was closed a few months after the original legislation. The relevant amendment is here:

http://www.legislation.gov.uk/uksi/2015/1614/pdfs/uksi_20151614_en.pdf

The link you've been given clearly postdates the original legislation but (I imagine) predates the amendment.