QROPS - Is A QROPS Right For You?

If you have a UK pension and you are now living outside of the UK, then you should take a look at transferring to a QROPS. Qualifying Recognised Overseas Pension Schemes (QROPS) transfers have been around since 2006. They were forced on the UK government by an EU directive.

If You Are Going To Retire Abroad Soon, Or Have Already, Then QROPS Could Be The Answer

They are great if you are about to retire to Spain, France, South Africa, USA, New Zealand, Australia or anywhere else in the world if you already live outside the UK. A QROPS is like an advanced UK Pension. Anything good that a UK pension scheme can do once you are living outside the UK, a QROPS can do better. You really would have overlooked a golden opportunity if you don't use a QROPS given the extra benefits they give you. Such benefits Include:

• A bigger pension Fund.
• No UK tax to pay.
• A larger tax free lump sum.
• A bigger pension in retirement.
• No currency risk. Maintain your pension in the currency of the country in which you are resident.
• No UK death duties to pay.
  

If you have been investigating QROPS for some time then you may have notice that the transfer costs can be high. If you have had discussions with an IFA in Spain for example, some are looking at transfers with an upfront cost of up to 10% of your total pension value. This really can leave people in a quandry, do I transfer or not.

QROPS - Is It Worth Transferring Into A QROPS?

The answer is most definately YES. Transferring your pension into a QROPS is certainly a worthwhile exercise, one thing to note is that you should always make sure that you don't pay too high a fee. Your pension should still grow at a rate faster than it otherwise would have.

This creates a further question. How can I be sure that my QROPS will grow at a higher rate than if I had just left my pension in the UK? This is where a TVA (Transfer Value Analysis) comes in. A reputable IFA will undertake a TVA as part of your transfer process. This is a projection of what your QROPS could produce as a final fund value at the date of your retirement. It will clearly show how the proposed QROPS transfer compares to your existing UK pension scheme. It should use information supplied by your existing UK pension scheme. This will be compared to the proposed QROPS cost structure.

The Relationship Between a QROPS, An IFA And A TVA

If the IFA you are dealing with will not provide you with a TVA, then you should consider your options. You will not know the full effects of the QROPS transfer on the overall charges. And you can be sure that they will not either.

The TVA should show you that at the same growth rate as your UK pension the QROPS will produce a higher fund value. One of the more important factors is the fee structure of the new QROPS. If the fees are high then they will eat into the fund value. There is a point whereby your fund value could be less than if you had simply left it in your UK pension. If the fees are acceptable then you will find that your QROPS will be beneficial and that you will have a much higher ultimate value

QROPS - A Summary

QROPS is something you should look at if you are leaving the UK or you are already living outside the UK. QROPS is specifically for you to hold your pension offshore and has multiple benefits. Always contact an IFA who can offer you a TVA. If you would like to arrange a no obligation assessment of your UK pension including a TVA report contact us by filling in the Contact form above and we will send you a comprehensive illustration and give you a call back to discuss your requirements.