Qualifying Recognised Overseas Pension Schemes (QROPS) were designed to provide portable retirement benefits for expats and international workers with UK pension rights who had permanently left Britain.
The underlying structure of a QROPS mirrors a UK registered pension scheme like a personal pension or self-invested pension plan (SiPP).
The role of the IFA is to match the most appropriate QROPS to the expat’s personal financial circumstances, but somewhere along the way, some advisers and providers lost sight of this.
Many advisers and retirement savers dismiss QROPS as their best pension vehicle because of scare stories of high commissions, tax abuses and scams.
But the same people also forget once respected banks and financial institutions in the UK have suffered damage to their reputations with dubious business practices – but just like QROPS only a small number are tarred with this brush.
FSA urges QROPS advice
Since QROPS were introduced in April 2006, less than 350 providers have closed or been prevented from taking new business.
That sounds a lot, but with 3,000 QROPS spread across 46 nations and financial centres, a lot of reputable and sound companies are left in the picture.
The fact is to ignore QROPS is a big mistake for many advisers in the UK – and regulator The Financial Services Authority has come out with a statement to that effect recently.
The FSA says financial advisers should tell clients about QROPS under certain circumstances, including:
- If they are thinking about leaving the UK
- If they have citizenship in another country
- If they work outside the UK
- If they are married to someone from outside the UK
- If they intend to retire overseas
The message the FSA is giving to advisers is the regulator believes many more retirement savers should be told about QROPS pensions and that IFAs need to up their game and learn how they work so they can give better advice.
Nothing to fear from QROPS
QROPS are not scary if retirement savers have professional, regulated and experienced advisers who understand the market.
These advisers must consider a welter of tax advice, so should either work closely with a qualified international tax professional or for a regulated firm with access to this advice.
In many cases the problems with QROPS are self-made – by retirement savers looking for grey areas in pension law that let them access their money against the rules.
Any investor with genuine investment intentions who wants to move money to a QROPS to provide for their later years has nothing to fear from making the move.
If you are interested in transfering your UK pension to a QROPS and would like to be put in touch with a qualified financial adviser, please contact us via the contact form here for a referral.