Qualifying Recognised Overseas Pension Schemes (QROPS) providers are signalling increasing profits as sales of the offshore pensions take off.
The latest HM Revenue & Customs (HMRC) figures revealed around 10,000 British expats and international workers switch their pensions offshore every year.
This flood of transfers is leading to a huge flow of funds from onshore pensions as QROPS become more popular with expats and more people decide to move permanently out of the UK.
The latest firm to announce profits based on improving QROPS sales is STM Group, a provider based in Gibraltar.
The firm has issued a statement highlighting pensions were one of the main drivers in turning around a £4 million loss in 2012 to a £269,000 pre-tax profit in 2013.
QROPS in Europe
The report explained an increase of nearly two-thirds in writing pension business – from £3.6 million to almost £6 million – was one of the main drivers in the recovery, while total revenue was up 16% to £13.4 million.
Chairman Julian Telling said profits in 2013 “lagged, relative to turnover” mainly due to a large investment in new businesses, especially in Germany.
“The board is confident this will improve in 2014 with increased efficiencies as well as the development of new products and distribution networks,” he said.
STM Group was also involved in developing a Malta QROPS and specialist pensions for transferring funds from the UK to the USA.
Earlier this month, Skandia International also announced a surge in QROPS sales helped increase global sales by 14% in 2013.
The firm quoted ‘strong QROPS sales in Europe’ underpinned a rise in sales of 16%.
Controlling retirement savings
Skandia, the offshore arm of Old Mutual Wealth, saw gross sales rise £240 million to £1.92 million during the year ending December 31, 2013.
The QROPS market is going from strength-to-strength with providers opening a new offshore pension on average every day during the past 12 months.
To date, 42 different financial centres offer more than 3,300 QROPS to expats and international workers, according to the latest QROPS list published by HMRC.
The next list is due on March 15.
Although many of the selling points encouraging expats to invest in QROPS involve taking larger tax-free lump sums, more flexible investments and a tax-effective structure, taking control of retirement savings is also an important factor as more onshore company pensions fall into deficit.
Tax free lump sums are now much greater onshore in a UK sipp
The charges are less than a tenth of the offshore variety
You have much greater freedom to buy and sell in a sipp than an offshore bond where the charges are extortionate and you might swell use carrier pigeon – it takes that long for them to buy/sell offshore
not forgetting the trustee fees- 5x what they are in the UK