Certain subjects are intrinsically boring. Pensions planning can be one. Unfortunately, just like going to the dentist and paying your taxes, everyone needs to think about making adequate provision for their twilight years.
Now, if you are still awake, I’m going to tell you how you can make this subject a whole lot less painful and potentially, make your pension fund more lucrative. Since April 2006, individuals who left the UK and who left behind private or company pension benefits, have been able to make a QROPS transfer.
For those of you who don’t know (and for those of you who care) QROPS stands for Qualifying Recognised Overseas Pension Scheme - a scheme set up by those lovely people at HMRC, which allows non-UK residents to transfer their frozen pension outside of the UK. With me so far?
QROPS isn’t aimed solely at British nationals. If you are a foreign national who has worked in the UK and built up a pension pot there, you can also now transfer this fund elsewhere. QROPS transfers are a tax efficient way for expats to enhance their pension flexibility; moving an arrangement out of the UK, will give you a much wider choice of international investments. These may well be less restrictive in the choice of funds or permitted investments and (here’s the good bit), typically these funds do not attract the taxes that UK based funds do.
Also, investments and income payments from a QROPS can be held in the currency of choice. This will reduce the risk of currency fluctuations. Many of us have felt the sting of the pound depreciating over the last few years and a QROPS can help you manage this risk.
A QROPS will also give you the option to pass on the pension fund to your spouse, children and/or grandchildren as a pension or a tax free lump sum. This has got to be better than the marginal rate of the beneficiaries tax that most UK pension funds can be hit with. You will also be able to take a larger lump sum (30% with a QROPS - 25% in the UK) and a good QROPS scheme will give you a degree of flexibility, allowing you to vary your income in the future, rather than fixing it at one rate. This benefit has been affected by the “Flexi Access Drawdown” introduced in last year’s budget but anything over the 25% Pension Commencement Lump Sum in the UK will be taxed as income. The taxation in France can be more cost effective and beneficial. The new rules mean that any amount of pension can be drawn either as income or lump sums on an ad hoc basis.
The only real downside is that QROPS isn’t right for everyone. But, if you are no longer resident in the UK, do not intend to return there and have a pension or pensions with a minimal value of 30,000 GBP, then you should be looking into it for taking control of your pension fund.
“But”, I hear you say, “who can I trust?”
Do not fear, as always SFN is here! We’ve done the leg work and are delighted to recommend Brian Furzer. We know Brian personally and he comes recommended by many SFN members. He has also advised us (in our case NOT to take a QROPS as it would not have been right for us, advice which makes him an all round good egg in my book - how many financial advisors do you meet who don’t try to sell you something?) and is very happy to put people in touch with other satisfied clients.
So don’t just take my word for it, get in touch with Brian, get some sound, free, professional financial advice and see if QROPS is right for you.
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