QROPS and the Switch from RPI to CPI Could Have a Impact on Future Transfer Values
George Osbourne (Chancellor) announced in his emergency budget on 22 June 2010 that the index used to uprate private occupational pensions and public service pensions would change from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI). The CPI also includes mortgage interest payments in its calculation and has been consistently lower than the RPI.
How does this affect QROPS? This could have an impact on the future transfer values that scheme members are offered for a transfer out of their scheme to a QROPS. If transfer values are lower, this could (dependent upon the benefits an individual has under their scheme) significantly impact the value of an indivuduals future QROPS income. This is because there could essentially be less funds entering the QROPS and with investment return over time and its accumulation, be less funds at retirement. Less funds at retirement means less lump sum and less income.
Before considering a pension transfer to a QROPS you should always seek specialist financial QROPS advice from a Financial Services Authority (FSA) authorised and regulated QROPS advice firm in order that all options available and appropriate to you are considered and advised on.
If you are migrating overseas, planning on migrating or have already migrated, have UK pension benefits and would like to discuss these changes and the opportunities available through the use of QROPS, please contact the Andrew Hains (Senior Client Adviser) on the QROPS advice team at Offshore QROPS on 00 44 (0)1483 202072.
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