Have you been tempted by reading about Qualifying Recognised Overseas
Pension Schemes? If so, you may be wondering whether they are an option
for you. Are they for the super rich, or can anyone get one?
As
far as the rules are concerned, HMRC say that QROPS are available to
anyone who is a member of a UK pension scheme who wants to transfer
their pension assets abroad. As long as you are going to be non-resident
in the United Kingdom for at least five years after the transfer takes
place, a QROPS may be suitable for you.
However, your own country
of origin may have restrictions on where you can and cannot invest. Or
rather, your own country of origin may restrict the tax efficiency of
getting a QROPS. For example, US citizens may have difficultly getting a
QROPS.
Are they suitable for everyone?
Like any other
financial product, you have to make a strategic decision about whether
investing in a particular scheme will be worthwhile.
There are
many types of UK private pension. Defined contribution schemes leave the
investment risk with the member, and typically do not promise or
guarantee any particular level of income on retirement. Accordingly, you
may feel that getting a QROPS may offer a similar level of risk.
However,
if you have a defined benefit scheme (often referred to as a "final
salary" scheme, because the income you are guaranteed is calculated by
reference to your final salary), then this may offer such a good deal
that it might be difficult to give up or match elsewhere in the world.
The fine details
Aside
from the investment decision about whether to take the plunge or not,
you also have to pay attention to whether the rules of your current
pension scheme will permit a transfer. With some schemes, if you have
started to draw benefits already you may not be able to transfer the
remaining assets to another scheme. Your QROPS adviser should be able to
study the small print of your current scheme's rules and advise you on
this point.
What about fees?
You will find that there is a
variety in what QROPS providers charge for their fees. For a "plain
vanilla" scheme that suits most people, some providers may charge as
little as £500 a year. However, if you want a pension scheme to be
dreamt up and administered from scratch, you may have to pay a little
more.
When a provider gives you their first quote for the job,
always ask them whether that is their best price. Better still, get your
QROPS adviser to negotiate for a reduction in the provider's fees.
Is there a minimum amount for a QROPS?
According
to the rules, there is no particular minimum amount for a QROPS
transfer. However, some QROPS providers may have their own minimum
contribution levels. Even if there is no minimum set
qrops