4 April 2014
So the cry goes out “Transfer Your Pension Now” to a Qualifying Recognised Overseas Pension Scheme (QROPS) before it’s too late.
The Foreign Adviser Network is hard at it trying to capture your attention – for some it will be a good move to go QROPS but for others No! No! No! STOP! But for others Go! Go! Go! But which one are you? GO or STOP?
Since the Chancellor’s Budget in March, there have been doom and gloom articles published about QROPS being an 8 year wonder – but why? Double Tax Agreements and local tax rules haven’t gone away and they haven’t changed and foreign exchange rates haven’t been fixed as far as I know.
So let’s put things straight, there will still be times when a QROPS is suitable or partially suitable (as there always were). But it’s going to take much more analysis and research before the financial plan is firmed up to come up with definitive advice.
What appears to be clear is that these seemingly “plucked out of mid-air” changes to
These characters operating outside the
Soon the market will know better and hopefully the product floggers and those who engage these tinkers will be driven out of town
The real big doom and gloom story in the international pension advice world is that pension transfers from the public sector are to cease and that you ‘Must Transfer your Public Sector Final Salary Pension now’. Well, this line or similar is the one being touted around – it has gone global, all too often QROPS advisors are delivering scandalous advice. The truth is that this matter is subject to consultation. In reality, will this happen? Yes it may do.
So what does this mean for you if you are a member or a deferred member of a public sector final salary pension scheme? Must you actually transfer your pension now? Well, no. What is recommended though is that you consider whether or not a pension transfer out of a public sector final salary pension scheme is suitable for you or not. This analysis can only really be completed by a UK-based Financial Conduct Authority (FCA) regulated financial advisor who will analyse your aims and objectives, your future plans, your residency and tax status, your investment risk profile and tolerance to loss, family and health status as well as perform a Transfer Value Analysis (TVAS) calculation to test whether or not a transfer out is right for you.
A UK-regulated pension transfer specialist will always start from the assumption that a transfer out of a final salary pension scheme is the wrong advice and then build a case around their factfinding where a transfer out of a final salary pension scheme is suitable.
Only after this will an ethical pension transfer specialist recommend a different pension jurisdiction, QROPS or SIPP etc. As part of this recommendation, where appropriate, they should also recommend a suitable investment / income strategy for your pension funds. Time and time again our advisors at Montfort International come across the same ‘One size Fits All’ QROPS or SIPP approach being recommended by an offshore or non ethical advisor. And, surprise surprise, an offshore bond has been recommended as the investment vehicle. An offshore bond can be a good arrangement in its own right. Is it right for your SIPP or QROPS? Unlikely. There are a limited number of situations where an offshore bond as the investment wrapper may apply, but these are few and far between.
Montfort International is arguably the market and technical leader in pension transfers to QROPS and, since the inception of QROPS having advised numerous clients over the years, we have found an offshore bond investment wrapper inside a QROPS to be the most suitable recommendation a grand total of ZERO times.
Heed our warning. Do not be rushed in to transferring your public sector final salary pension to a different
There is a saying that there is no such thing as a free lunch. Well, if you are not paying a fee for your financial, retirement planning or pension transfer advice, what are you getting? More than likely you will be getting advice that is biased and only in the interest of your advisor’s commission rather than unbiased independent regulated financial advice.
Ensure you only speak with a UK-regulated financial advisor regarding your (potential) pension transfer.