As coverage of the torrid situation the UK public sector pension market is in continues to be the subject of various articles and forum debates, QROPS providers have reported a huge increase in the number of enquiries they are receiving, particularly from teachers.
Many teachers from the UK now work in the same profession overseas, as the experience and standards of the British nation’s educators are in huge demand across the globe. It is these former UK employees with pension schemes still remaining in the UK that are specifically choosing to consider the benefits of transferring their pension away from the turmoil, and into a more stable economic environment.
The public sector is currently in huge deficit – the actual amount of this deficit is realistically un-calculable, and is largely kept from public consumption by the Treasury, for fear of creating even more panic amongst uncertain savers.
As it stands there are three certainties relating to teacher’s pensions; firstly that the level of benefits are likely to be cut again, to add to the fact that the indexation level was reduced three years ago. The second is that the retirement age extension plans will surely be fast-tracked ready for introduction within the next few years. The final certainty is that after April 2015, no un-funded defined benefit pension schemes will be allowed to be transferred out of the fund they currently sit in.
It is this third point which has led to the huge uplift in QROPS enquiries, as teachers realise that they have just seven months to fully consider the options offered by living and working abroad.
Teachers can transfer their pension to a QROPS, which are available in 42 jurisdictions across the globe, and the benefits offered by these overseas plans cannot be matched by any scheme available in the UK.
QROPS can offer flexibility in terms of the level of investment, they can also be arranged in a currency of the savers choosing – therefore avoiding currency fluctuations. Other benefits include IHT exemption if the saver were to die before all funds were used. 100% of the savings go to the beneficiaries, something never likely to be offered in the UK.
If the jurisdiction and the retirement destination are selected properly, income tax will be applied at potentially minimal levels, sometimes even completely tax-free – dependant on the destination chosen.
The main point with QROPS which seems to be of appeal, is that the fund which money is place into, is not in billion pound deficit territory, something which pretty much answers all the questions on its own.