How much should expats expect to pay to switch a UK pension pot to an offshore QROPS – probably not as much as they think is the answer.
Offshore conjures up expensive tax havens charging the ultra-wealthy huge fees for managing their money.
But this is not a true vision of modern financial services for expats.
QROPS are pensions similar to UK self-invested pension plans (SiPPS) that are based overseas and only accessible to British expats or international workers who have built a UK pension pot.
They can offer tax and investment benefits to many retirement savers, depending on their personal financial circumstances.
On top of that, retirement savers can expect to pay transaction costs, such as fund charges, dealing fees and other related charges.
What to pay to set up and run a QROPS
Costs often depend on the size of a fund, which is why providers set minimum amounts for transfers even though QROPS rules do not have any high or low threshold for switching a pension offshore.
QROPS tend to come in three types –
- QROPS Lite for retirement savers with small pots. The definition of a small pot varies between providers but can be any amount under £100,000
Set up fees and annual running costs can start from as low as £250.
QROPS Lite tend to offer fewer investment options, such as a selection of managed funds.
- Standard QROPS for savers with pensions worth more than £100,000
These tend to come with a much larger selection of fund options, ranging from self-managed to fully managed and hybrid QROPS with a mix of self/managed funds.
Set fees and running costs can start from a few hundred pounds
- Wealth management including QROPS pensions for retirement savers with a net worth of $1 million or more.
These schemes come at a premium and are part of a tailored wealth management strategy.
Where to look for a QROPS
If a QROPS adviser rejects an expat as a customer, the reason is probably the adviser’s firm has a minimum financial threshold for the type of client they wish to act for.
Plenty of providers in Gibraltar, Malta and the Isle of Man offer a full range of QROPS to suit the budget of any expat.