QROPS

The role of a QROPS adviser

If you are considering retiring abroad, you need to take some advice on qrops pensions as soon as possible. Efficient financial planning can make a significant different to the lifestyle you can expect as a retiree.

So how should you choose a QROPS adviser, and what can you expect from one?

Choosing a QROPS adviser

To get the best protection for your money, choose an adviser that is regulated by the UK’s Financial Services Authority. This organisation ensures that the QROPS adviser has the expertise to give good advice, and that they will offer solutions that are suitable for your needs. In the unlikely even of an adviser’s misfeasance, the FSA may provide compensation where no other remedy is available.

What will the QROPS adviser do?

• Listen – The first thing you should expect from your QROPS adviser is for them to listen to your retirement plans and the expectations you have for the kind of lifestyle you want to lead. It is important to mention whether you intend your emigration to be temporary or permanent, because returning to the UK within 5 years of the QROPS transfer reawakens HMRC’s interest in your fund, and could result in a tax charge. If you do intend to return, your QROPS adviser may be able to help you plan your investments more efficiently.
• Assess your situation – Having listened to your plans, the adviser will ask for details of all of your pension funds. Very few people have the same job for life these days, so you may have a number of different schemes to transfer. At this point the adviser will look into whether your scheme will permit transfers. If you have already started taking benefits from your scheme, you may find that transfers are not permitted.

Also, your QROPS adviser will also consider whether it is in your financial interest to leave your current scheme. For instance, there are very few deals that match the guarantee of an occupation final salary scheme, so it might be better to leave your fund where it is.

The adviser will also take into account other investments and assets that you have, in order to get the full picture of your wealth management strategy.

• Consider the options available – There are nearly a thousand QROPS schemes available to choose from on the HMRC approved list. Some advisers are tied to a few QROPS providers. Others are free to shop around for the best deal for their customers and have access to the whole list of available options. Accordingly, an independent QROPS adviser is more likely to find a more suitable option.

There is a lot of variety in the schemes available and the rules that cover them. For example, some schemes allow you to take lump sums even if you have already taken one when the fund was based in the UK. Others allow access to your money at different stages of your life. Your QROPS will have listened to your plans and will be able to suggest something suitable.

• Choose an appropriate jurisdiction – There are two tax regimes that are relevant when making a decision about where to invest in a QROPS. Your adviser must take into account the tax treatment of pensions in the host country of your QROPS provider, and the tax treatment of any withdrawals you make in the country you intend to make your home.

For example, if Mrs Brown (a British national) has worked for two private UK companies during her working life and has occupational pension funds from both to move abroad on her retirement to the South of France. She decides on a Guernsey QROPS fund and lives happily ever after in a villa outside Nice. As long as she has remained outside of the UK for 5 years following the transfer of her pension funds into the Guernsey QROPS, HMRC no longer takes an interest in her pension fund. However, the fund is subject to the Guernsey tax regime, which fortunately for Mrs Brown is generous to non residents. Any withdrawals she makes may also subject to the French taxation system, depending on what double taxation agreements it has with its Guernsey counterpart.

• Negotiate – Like anyone else who provides financial services, a QROPS provider charges fees for managing and administering QROPS pensions. These can be negotiable, especially if your qrops adviser does plenty of business with them and has some bargaining power.
• Arrange the transfer – Once you have selected a QROPS scheme and agreed a fee structure with its trustees, you can initiate the transfer. Some QROPS advisers only require a letter of authority from yourself, after which they will take care of the administration. You can expect the QROPS transfer itself to take around 6 weeks.