When moving abroad, many pension holders choose to transfer their fund into a Qualified Recognised Overseas Pension Schemes (QROPS). Yet the issues to consider are vast – ranging from where a country holds double taxation treaties to a person’s future financial goals.
The knowledge ‘black hole’
Due to the complexity of this sector, many UK independent financial advisors (IFAs) try to outsource pension and QROPS advice. Yet often, in an infinitely worse turn of events, IFAs are offering advice to those wishing to transfer their pension without the necessary due diligence and experience.
This trend is underpinned by a recent study undertaken by the Technical Connection and research agency So Here’s the Plan, which found that many IFAs are unwilling to give advice about QROPS as they do not know the market well enough, pointing to obvious problems in the market.
Many issues stem from the constant changes to HM Revenue and Customs’ guidelines. These changes apply to every QROPS – over 4,000 schemes in 100 countries – making it difficult for non-international companies to stay abreast of all the finance and tax developments. Add to this the fact QROPS are not currently regulated by the Financial Conduct Authority (previously known as the Financial Services Authority), and it is easy to see why many IFAs refer to offshore planning as a knowledge “black hole”.
This is why it is imperative for those seeking to transfer their pension abroad to take independent, and most importantly international, advice.
Only an international IFA is fully able to recommend QROPS from different jurisdictions around the world, and can therefore offer the ideal product for a person’s needs and objectives.
In addition, only IFAs experienced in all major QROPS markets will be able to undertake the necessary due diligence to ensure a QROPS fund’s current compliancy and future stability.
When clients contact UK-based advisors they effectively choke their range of options to the few jurisdictions their British IFA are aware of. Historically, many UK-based and local financial (i.e. non international) advisors have mis-sold QROPS in this way, which have resulted in unauthorised payment charges for the consumer of up to 55%.
This is why pension holders are now being urged to seek advice from international IFAs; so they benefit from experience that spans multiple jurisdictions. Known as ‘cross-border financial advice’, this experience ensures an IFA takes into account the myriad of tax and wealth implications specific to the client – and then offers the correct QROPS.
In a similar vein, ‘marrying up’ where a pension holder lives and where to place their QROPS takes considerable experience. However with the right international IFA, clients receive the correct advice with regards to their current or future country of residence, and potentially benefits from a ‘multi-jurisdictional’ QROPS (where a fund holder can transfer their fund if they move countries).
A pension is typically a person’s largest asset, and most cannot afford to get it wrong. Whilst QROPS advice is now becoming part of the mainstream offering in UK finance houses, it is not until they are brought up to speed with their international contemporaries that clients will receive the best advice for their situation. In the interim, advice should be sought by international advisors who are experienced enough to pinpoint the best options in the market, and offer stable and reliable QROPS.
Getting QROPS Advice
A financial adviser with QROPS experience will determine whether a QROPS is the best choice for your financial goals, then will guide you through the process.
If you would like to be put in touch with a qualified financial adviser, please contact us for a referral