Australia QROPS are no more and unless financial regulators Down Under radically change superannuation pension rules, they are unlikely to return to the mass market for British expats.
The problem is Aussie superannuation schemes allow pay outs to retirement savers aged under 55 years old, while UK pension rules do not.
Changing the rules in Australia is political dynamite for policy makers as one of the major selling points of a superannuation scheme is early access to cash under some circumstances.
Similarly, changing the rules for a QROPS means changing pension rules across the board in the UK just after the government has carried out a major overhaul allowing flexible access to retirement savings for anyone aged 55 or over.
This leaves a conflict between the schemes that is unlikely to see an early resolution.
Multicentre QROPS
Some providers are looking at designing new Australia QROPS that bridge the gap, but there is no telling how long this might take to come to fruition.
That leaves British expats, Australians and other foreign nationals with UK pension rights with few choices where to go if they want to switch to a QROPS.
Multicentre or ‘third party’ QROPS seem the only likely solution.
These pensions reside in one financial centre, such as Malta, Gibraltar and the Isle of Man, while allowing the retirement saver to live elsewhere in the world.
This has a number of advantages for QROPS investors:
- The host financial centre generally has lower tax on pension payments than the UK or Australia
- Investors can still access the flexible investment opportunities offered by QROPS
- The pension is likely to pay out in major currencies, including US dollars, Australian dollars and Sterling
- Should a QROPS investor move countries, the pension stays put, avoiding advice, transfer and set up charges
- The QROPS is unlikely to fail the pension age test, which HMRC has reportedly applied to all the currently listed pensions online
Unregulated advice trap
Any Australian resident considering a QROPS transfer must take regulated pension advice from an Australian authorised IFA.
Far from being a bind, this is a sensible safeguard as an authorised IFA will be subject to an ombudsman to handle complaints which gives access to a compensation should the QROPS transfer go wrong.
Download The QROPS Guide
Want to find out more about QROPS and your options being an Australian resident, download our QROPS Guide here
