If you are speaking to an IFA about pension options and you mention you may become an expat, they should tell you about Qualifying Recognised Overseas Pension Schemes (QROPS).
The Financial Conduct Authority (FCA) made a lot of fuss about telling retirement savers about the pros and cons of a QROPS and suggested advisers who do not include them in their pension review could face misselling complaints later.
As the British top-level financial regulator, that kind of warning from the FCA should be heeded by IFAs, but many seem scared of recommending an offshore pension for the wrong reasons.
Some aspects of QROPS have had a bad name and ended up in court cases.
Then just as many legal challenges and public spats have hit the headlines about standard onshore pensions and self-invested pension plans (SiPPs).
Any British retirement saver intending to become a permanent expat or international worker with funds in a UK pension needs professional advice about managing those pensions.
QROPS features for expats
QROPS can offer a whole host of advantages to anyone who has one or more pension pots in the UK that are not final salary schemes.
Final salary schemes can come with benefits that would cost too much or are impossible to adequately replace with a QROPS, even though the offshore scheme has other advantages.
If you have a pensions adviser who prefers not to discuss the QROPS option, then the FCA’s advice is find another IFA who will give over the information.
QROPS have some excellent features and benefits for most retirement savers:
- Expats can consolidate a number of smaller onshore pensions into one fund to save on charges and maximise fund growth
- Some financial centres allow up to a 30% tax-free lump sum drawdown – compared to the 75% limit in the UK
- QROPS have a much more flexible investment platform than onshore pensions, with opportunities to invest in more markets, commodities and currencies
- QROPS are exempt from UK inheritance tax on undrawn funds under most circumstances
- Tax-relieved contributions from the UK can be transferred without adding back any tax
This is by no means an exhaustive list of QROPS features.
Finding QROPS advice
The right IFA can tailor a QROPS pension to an expat’s personal financial circumstances and retirement goals.
So, don’t forget if you want to know more about QROPS but cannot find a high street adviser who will tell you, then consult a professional and experienced international financial adviser who will fill in the blanks for you.