Contents For QROPS

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The Ultimate Guide

QROPS Qualifying Recognised Overseas Pension Scheme (QROPS) are pension schemes for people who live, work, are retiring or who have retired  in a country outside of the UK, which have substantial tax benefits.

QROPS are fully recognized by HMRC and the UK Government in law and as such they offer substantial benefits for non UK residents.

If you have a UK pension and you are a non-UK resident then please read further.

QROPS Pensions STOP Paying UK Pension Tax On Your UK Pension

A QROPS pension could save you £1,000’s in UK Pension tax.

Transfer your UK pension to a QROPS (QROPS Pension Transfer) and STOP paying UK tax on your pension income.

A QROPS can increase your pension income to spend as you wish, and remove your pension from ALL the UK pension taxes, specifically:

  1. UK income tax on your pension income up to 45% (2016)
  2. UK Inheritance Tax (IHT) 40% (2016).
  3. The UK Lifetime Allowance set at £1 m (2016) down from £1.8 m (2010) taxed at 25% / 55% (2016).

A Qualifying Recognised Overseas Pension Scheme (QROPS) removes you and your pension from ALL of these taxes.

Click the link to get your FREE QROPS Guide

After all is your money that we are talking about.

You worked hard for your money, is your money working hard for you?

Get the information and advice that you need to make an informed decision, simply click the link to get your FREE QROPS Guide


Qualifying Recognised Overseas Pension Scheme (QROPS)

Are you a British Expat who has a UK pension back in the UK, or have you worked in the UK and contributed to a UK Pension Scheme for example a UK Occupational Pension Scheme or a Personal Pension Plan (PPP).

In summary if you have a UK pension and you are living, working, retiring or intend to retire outside of the UK you have come to the right place for information on UK Pension Transfers to a Qualifying Recognized Overseas Pension Scheme (QROPS).

QROPS Pension Transfers have substantial pension benefits for non UK residents who are looking to transfer their UK pension.

Not only will a QROPS Pension put you back in control of your pension scheme (money) but it can increase the amount of pension income that you receive while removing your UK Pension from any UK tax liability.

Your QROPS Pension means that you STOP paying any UK Tax on your Pension.

In addition it allows you to pass onto your beneficiaries 100% of the remaining fund value of your QROPS on your pre mature death without any tax claim by HMRC.

A QROPS Pension removes your UK pension plan from UK HMRC pension taxes specifically:

  1. No UK Pension Income Tax at anytime (currently charged at up to 45% 2016)
  2. No UK IHT at anytime (currently charged at 40% 2016).
  3. No Lifetime Allowance Tax at anytime (currently charged at 25% / 55% 2016).

Furthermore a QROPS Pension can increase your Pension Commencement Lump Sum (PCLS) to 30%.

In summary a QROPS pension removes your UK pension from the UK HMRC Tax system.

This has the potential of saving you £1,000’s in UK taxes.

To good to be true.

No its all true.

QROPS Pensions are fully recognised and approved by HMRC and the UK Government in law. You can check out the HMRC QROPS List of Approved QROPS Pension Schemes and see what HMRC has to say about QROPS.

To find out more why don’t you download your QROPS Guide so that you have all the QROPS information explained in this definitive QROPS Pension Guide.

QROPS Pension Transferring UK Pension Transfers For British Expats To Avoid UK Taxes

We are contacted by many people throughout the world who have a UK pension, and who would like to explore their options about transferring their UK pensions usually for one of the following reasons.

  1. To Secure YOUR pension (money); UK Pensions Deficits YOUR pension (money) is at risk.
  2. To Reduce YOUR Tax and increase you pension income for you to spend as you wish during your lifetime.
  3. To Secure the MAXIMUM benefits for your loved ones on your pre mature death.

Firstly, its all about securing your pension as many pension schemes Occupational (Final Salary, Salary Related, and Money Purchase Defined Contribution) are in deficit (UK Pensions Deficits Retirement Income Risk). This means that you may lose your pension (money) and not receive any pension income at all.

Secondly, its all about reducing your taxation so that you can increase your pension income to spend as you wish in your lifetime.

Finally, lets secure the maximum benefits for your dependents (beneficiaries) your wife or husband, children, or for example charities on your premature death.

We are the go to QROPS UK pensions transfer specialists with UK advisers providing UK pension transfer advice no matter where you are in the world.

If you would like to explore your options further please explore our website and download your FREE QROPS Pension Guide.

Should you feel we can help further you can also contact us here using our contact form.

QROPS Pensions

QROPS Qualifying Recognised Overseas Pension Schemes

Are you aware of the tremendous financial planning opportunities that are available to you today by transferring your UK Pensions to Qualifying Recognised Overseas Pension Scheme (QROPS).

QROPS are available to wide range of people; in fact almost anybody with a UK pension can have a QROPS, including UK residents.

So the question is why transfer your UK Pensions to a QROPS.

Well essentially its all about UK Taxation, and hands up if you like paying UK Tax to HMRC.

Wouldn’t it be nice if you could reduce the income tax payable on your pension income by up to 45%, leaving you with up to 45% more income to spend as you wish.

What about removing the 55% UK Tax rate from your pension fund, would that also be a good idea.

Would you also like to increase your Pension Commencement Lump Sum (Tax FREE Cash) that you can receive.

And of course we all would like to leave 100% of the balance of our pension fund to our loved ones without any liability to UK Inheritance Tax (IHT) payments.

If these are not enough benefits and reasons for you to transfer your UK Pension to a QROPS, then what about the fact that you may not receive a pension at all.

You see many UK Pensions Schemes Are in Deficit (Technically Bankrupt) which means that you may not receive any pension at all or at best a reduced income.

Now remember this is your pension money (your money) that we are talking about, and I ‘am sure you would agree that it is simply not worth the risk of entrusting your pension to a third party, when you could be in complete control of your pension.

So how can you get your UK pension money out and secure your pension?

By transferring your UK pensions to a QROPS.

All of these benefits mentioned are available to you by transferring your UK Pension to a QROPS.

Sounds too good to be true, well the UK pension transfers to a QROPS are fully supported and agreed in UK law by HMRC and the UK government.

Want to find out more then for Full Detailed Information Please Download Your FREE UK Pension Transfers QROPS Pension Guide; QROPS Information Explained, written by UK Pension Advisers, providing UK Pension Advice, wherever you are in the world.

British Expats UK Pension Transfers To A QROPS Pension Wherever You Are In The World How To Transfer My UK Pension To A QROPS

We are here to answer your questions, and explore your options together when transferring your UK Pension we have UK Pension Advisors, providing UK Pension Advice, wherever you are in the world.

UK Pension Transfers Overseas, Transferring Your UK Pension Abroad to a QROPS. If you have a UK Pension and are living, working, retired, or retiring abroad, you can transfer your UK Pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) to minimize your UK Taxes, and remove your pension from your UK Pension Schemes RISK of failure (Bankruptcy), so you can take control of your pension; money.

The Benefits Of Transferring Your Expat UK Pension To A Qualifying Recognised Overseas Pension Scheme (QROPS)

We are contacted by many people from around the world; who have lived and worked in the UK, asking what if anything can be done regarding their UK Pensions that remain or are frozen in the UK. And how can they find a UK trained Independent Financial Adviser with the in depth knowledge that they are looking for.

Fortunately with regard to the following UK Pension Schemes we can help:

  1. Employee Final Salary Schemes (Salary based Pensions)
  2. Employee Salary Related Schemes (Salary Related Pensions)
  3. Occupational Pension Schemes (Money Purchase)
  4. Occupational Pension Schemes (Defined Benefits)
  5. Personal Pension Plans (PPPs)
  6. Self Invested Personal Pensions (SIPPS)
  7. Small Self Administered Schemes (SASS)
  8. Section 32 Pension Plans

If you have a UK Pension Scheme or a Frozen UK Pension Scheme, and are now living, working, retired or retiring overseas, then there is a lot that can be done with your UK Pension by Transferring Your UK Pension to a QROPS, wherever you are in the world.

Including the following:

  1. Many UK Pensions Schemes Are in Deficit (Bankrupt); so how can I get my pension money out? – by transferring it into a QROPS.
  2. Increasing the Pension Commencement Lump Sum (PCLS) (Tax FREE Cash) to 30% of the fund value that you can receive and can spend as you wish.
  3. Reducing the income tax payable on your pension by up to 45%, and therefore increase your pension payments for you to enjoy
  4. Remove the potential 55% HMRC tax rate from your pension.
  5. Removing any IHT liability on your pension.

The transfers of UK Pensions is fully supported and agreed by HMRC. We help people with UK Pensions to compare the UK Pension Transfer Market so that they can make an informed choice of what is available and what their options are.

We are here to answer your questions, and explore your options together when transferring your UK Pension by providing UK Pension Advisers, UK Pension Advice, wherever you are in the world.

Understanding The Benefits Of UK Pension QROPS Schemes Wherever You Are In The World

A Qualifying Recognized Overseas Pension Scheme is an overseas pension scheme that has met the requirements of the HMRC, which can receive the transfer of UK Pension Benefits without penalties for unauthorized payments. QROPS were introduced in April 2006 in order to simplify pensions and allow UK Pension Holders to access their funds in their country of residence, and pay local taxes.

A QROPS will broadly mirror the way a UK Pension Scheme works, meaning you will receive a lump sum and pension when you retire.

We are established worldwide QROPS UK Pensions Specialists within the worldwide UK Pensions advisory environment; considered the go to advisory worldwide for UK Pension Transfers to Qualifying Recognised Overseas Pension Schemes QROPS,  transferring UK pensions to QROPS pension schemes wherever you are in the world.

We help people to transfer their UK pensions to a QROPS pension scheme wherever you are in the world.

Our highly experienced UK advisers will review your UK Pensions and if appropriate, will work with you to transfer them into a Qualifying Recognized Overseas Pension Scheme (QROPS).

We advise, service, and arrange QROPS UK Pensions for clients from all over the world for example in Australia with the main QROPS enquires coming from Australia QROPS, Adelaide, Brisbane, Canberra, Darwin, Gold Coast, Melbourne, Newcastle, Perth, Queensland, Sydney, and Victoria, New Zealand NZ mainly living in Auckland, Christchurch and Wellington, Qatar, United Arab Emirates UAE, Dubai, Bahrain, Spain, Italy, Greece, Portugal, USA, Canada, South Africa from Johannesburg and Cape Town, Brazil, Mexico, Moscow Russia, New Delhi India, Islamabad Pakistan, France, Monaco, Germany, Switzerland, Yemen, Saudi Arabia, Panama, Costa Rica, and all of Asia; Hong Kong, Macau, Belize, Jakarta Indonesia, Tokyo Japan, South Korea, Singapore, Taipei Taiwan, Kuala Lumpur Malaysia, Laos, Cambodia, Mongolia, Myanmar, Phuket Pattaya Bangkok QROPS Thailand, Manila Philippines, Hanoi and Ho Chi Minh Vietnam, including Beijing, Shanghai and all of China, transferring UK pensions wherever you are in the world.

So no matter where you are in the world we can help and advise you; and should a QROPS pension transfer be the right course of action for you then we can make all of the arrangements for you.

We have been at the forefront of the development of QROPS worldwide since their inception; and we retain strong links with the most respected QROPS pension providers worldwide. We are the most experienced independent advisory company in the QROPS pensions worldwide market place. Advising not only private clients, but also private bankers at some of the largest institutions such as UBS, HSBC, and Credit Suisse.

Your FREE Review and UK Pension Transfers QROPS Pension Guide, will answer the following QROPS questions

  1. Many UK Pensions Schemes Are In Deficit (Bankrupt), how can I get my pension money out? – by transferring it into a QROPS.
  2. What other taxes can you save?
  3. How can you pass 100% onto my loved ones?
  4. How to reduce the income tax payable on your pension by up to 45%.
  5. And therefore increase your pension payments for you to enjoy.
  6. How to remove the potential 55% HMRC tax rate from your pension.
  7. How to remove ALL IHT liability on your pension.
  8. How to take investment control of your pension funds?
  9. What types of pensions can you transfer?
  10. How will the Lifetime Allowance reduction affect you?
  11. How will the future government policy pension changes affect you?

As Part Of The FREE UK Pension Review That We Offer We Will Take Into Account The Following

  1. How much you need to retire?
  2. Should you give up the benefits of your final salary scheme?
  3. What currency should you hold your pensions in?
  4. Where you live for Taxation purposes?
  5. How can you keep your costs to a minimum?
  6. What are the costs of transferring your pension?
  7. What taxes will you have to pay?
  8. What is your risk profile?
  9. What fund managers give the best pension returns?

Request a FREE QROPS Review and your FREE UK Pension Transfers QROPS Pension Guide; QROPS Information Explained, below to understand how you and your family could benefit from your UK Pensions by transferring to a QROPS.

What Happens Next?

Should you wish to find out more about these benefits to you, then please contact us by completing our contact form. We will be please to help you further including forwarding to you our FREE Expat UK Pension Transfers QROPS Pensions Guide.

One of our UK advisers will then contact you to discuss your objectives, they will then analyse your pensions and help you come to a decision on whether QROPS is right for you.

Get your FREE UK Pension Transfers QROPS GUIDE; QROPS Information Explained, and always seek out Independent Financial Advice before making any financial decisions “To Avoid Making Costly Mistakes”.


Many people have far more money built up over many years in their pension fund than they realise. It is not uncommon for a fifty year old to have built up twenty plus years of contributions into a pension fund often accumulating a “Money pot” in excess of £200,000.

Failure to plan correctly may result in the loss of your money (UK Pensions Deficits Retirement Income Risk) take control today.

Pension funds will have been built up in many ways and can include anyone with deferred benefits in a company scheme, public sector scheme (including for example, teachers, doctors, nurses, police and members of the Armed Forces) and those with personal pensions.

Now is the ideal opportunity review and to take control of this large investment.


There are various reasons why it may be appropriate to address your pension now. Firstly, your own personal circumstances, and that of your family may change.

Secondly, and perhaps more importantly, future legislation may change restricting or prohibiting transfers to QROPS and SIPP UK Pensions. HMRC regularly reviews QROPS and in 2008 removed QROPS status from all Singapore schemes, and in 2015 from New Zealand and Australia schemes.

Please remember; we are only trying to help you achieve the following:

  1. Secure YOUR pension (money).
  2. Reduce YOUR Tax and increase you pension income for you to spend as you wish during your lifetime.
  3. Secure the MAXIMUM benefits for your loved ones.

Don’t waste your opportunity to achieve all three benefits for yourself and your family; contact us now here on our contact form we are here to help you.

QROPS Frequently Asked Questions (FAQ)

QROPS Frequently Asked Questions (FAQ) Explained Transferring UK Pension Transfer Information the Who, What, When, Where, Why, and How everything you need to know about Qualifying Recognised Overseas Pension Schemes

QROPS Qualifying Recognised Overseas Pension Scheme (QROPS) The Who, What, When, Where, Why, and How of QROPS Pensions

What Are QROPS?

QROPS are money purchase pension schemes in this regard they are the same as a Personal Pension Plan (PPP) in the UK.

Importantly as the name QROPS states Qualifying Recognized Overseas Pension Scheme. They are Qualifying and Recognized by both the UK Government and HMRC.

Who Can Have A QROPS?

If you have a UK Pension and are living, working, retired, or retiring abroad, you can transfer your UK Pension to a Qualifying Recognized Overseas Pension Scheme (QROPS) to minimize your UK Taxes, remove your pension from your occupational scheme RISK of failure (Bankruptcy), and get back control of your pension (money).

How Do QROPS Schemes Work?

QROPS consist of two elements:

  1. The QROPS Trustees: the trustees are responsible for the administration of the QROPS scheme; and to ensure that it operates within the QROPS and HMRC rules and regulations.
  1. The QROPS investment vehicle: this is where your underlying assets are invested.

Because of the significant opportunities for such schemes to be abused; HMRC tend to monitor these closely and penalize members and schemes for making unauthorized payments. During the first ten years QROPS providers are required to report all payments from the scheme to HMRC.

This is another reason why the correct advice and the selecting of a provider (the “Trustee”) that has a good standing with HMRC is paramount here.

With regard to the choice of investment vehicle

We provide:

  • A highly experienced international investment management team.
  • Regular reviews on your investments; and to changes in your personal circumstances.

What Is The Minimum Value I Can Transfer To A QROPS?

In our experience the better QROPS Schemes require funding of around 75,000 GBP. Whatever your situation, contact us anyway as there is usually a solution to be found.

Who May Apply To Transfer Their Pension Into A QROPS?

Anybody with a UK pension (except public pensions for example a NHS pension)

I Have More Than One UK Pension Can I Consolidate Them Into One Scheme?

Yes. One of the many benefits of a QROPS is that you can consolidate all of your UK pension schemes under one roof. This means that you receive a consolidated position of your pension fund and are then able to create an investment strategy for the whole scheme rather than trying to administer various schemes.

I Have A Final Salary Scheme Should I Consider A QROPS?

Yes. Final salary (Defined Benefit) schemes offer certain benefits such as a guaranteed pension, usually indexed to inflation. Therefore to forego this benefit, a clear expert analysis needs to be undertaken to show that the QROPS benefits outweigh the final salary scheme benefits.

Some considerations will be:

What are the death benefits attached to the defined benefit scheme?

Are you convinced that the company you worked for will be around and have the money to fund your future pension?

Can your QROPS grow at a faster rate than your final salary at the same level of risk? together with Taxation and Currency risk?

I Am In Drawdown Of A UK Pension Scheme Can I still transfer into a QROPS?

Yes it is still possible to transfer too and benefit from a QROPS pension.

What Will A QROPS Cost?

As QROPS have become more popular, their fees have also become increasingly competitive. In the majority of cases a QROPS can be set-up for less than £1000 (this set-up fee will be deducted from the pension transfer value by the pension Trustees; so you will not have to fund the fee directly). Being independent advisers, we can compare fees and select the most suitable scheme for you. All QROPS costs are transparent, unlike most UK pensions where you have little idea of costs being charged by administrators, trustees, custodians and fund managers.

Depending on the type of scheme and complexity you require, we will find the most suitable scheme for you and show all costs involved.

Will Payments From My QROPS Pension Fund Be Reported To HMRC In The UK?

QROPS providers are required to notify HMRC of any payments from transferred pensions in respect of a relevant member during the initial 10 years.

And in the event that the member becomes an ordinary resident for tax purposes in the UK; when the payment is made.

If I Transfer My UK Pension Into A QROPS Will I Have To Buy An Annuity?

No, although you may if you wish. Without the need to purchase an annuity it means you can invest into wide ranging assets, and gain the advantage of passing any remaining funds upon your premature death to your loved ones.

Without any liability to UK IHT at 40%.

Who May Apply To Transfer Their Pension Into A QROPS?

Most of the schemes are not available to US citizens and there can be problems with US residents; however any other nationality may apply.

What Investment Choice and Freedom Will I Have With a QROPS?

How To Build And Secure Your Wealth In A Changing WorldThe QROPS investment choice will normally be very wide indeed. Under certain circumstances you can manage the assets yourself with total freedom, or work with an investment manager or financial adviser.

You may also appoint an investment manager to make the decisions for you or with you. It really depends what you are looking to achieve and how involved you would like to be with the investment decisions.

We can arrange for an investment adviser to work with you by reviewing your QROPS fund assets and make recommendations to you on a quarterly basis.

There is no limit to the size of funds that may be accumulated within a QROPS; and a QROPS is exempt from the UK Lifetime Allowance (the maximum value of the underlying fund; before tax on any excess becomes liable; currently at a tax rate of 25% or 55% (2016)).

How and When Can I Take The Benefits From My QROPS?

Typically there is considerable flexibility in the timing of taking any benefits from a QROPS Pension. Usually benefits will be taken from the age of 55, but it can be possible to access funds before or after these ages. Please contact us for further information dependent on your circumstances.

Once I’ve Transferred My UK Pension To A QROPS Can I Access my fund as a 100% lump sum?

Under normal circumstances from the age of 55; 30% can be taken as a Pension Commencement Lump Sum with the remainder subject to income tax depending on your circumstances and tax residency.

How Will Any Benefits or Withdrawals Be Taxed?

The tax treatment of any income you receive will depend upon your QROPS jurisdiction and where you are a tax resident at the time. (Note: we recommend you seek individual tax advice regarding your particular circumstances).

What Will Happen To My QROPS Pension Fund Upon My Death?

Typically – and a major benefit of a QROPS Pension – is that the remaining value of the fund is paid directly to your beneficiaries. Without any liability to UK IHT at 40%.

I May Go Back To The UK In The Future Can I Still Benefit?

QROPS are for people whose intent is not to return to the UK in the future. However if this is some time away – say 10 years plus – then you may still want to consider a QROPS as the benefits of ownership are substantial. Even with your possible future return to the UK there are substantial benefits of transferring to a QROPS. Please contact us to discuss your particular circumstances.

I Have A UK SIPP and I Have Drawn An Income Can I Benefit?

A QROPS Pension can be used to receive transfer values from any UK registered pension scheme whether this is for example a Personal Pension Plan (PPP), a Self Invested Personal Pension Plan (SIPP), a Small Self Administered Pension Scheme (SASS), or an Occupational Scheme whether it’s a Money Purchase Scheme or a Final Salary Scheme (except for public occupational schemes for example a NHS pension scheme) – all can be transferred to a QROPS Pension Scheme.

How Long Will A Transfer To A QROPS Take?

Most transfers can take 2-3 months. The process is initiated by you completing a letter of authority (QROPS Pensions Information Request form) enabling us to get the relevant information from your existing pension provider; for example the current benefits and a transfer value. This is not binding in any way, and will only allow us to receive the details regarding the pension scheme that you currently have. However it will allow us to provide you with individual expert independent advice reflecting your personal individual circumstances and future plans. You can find this form at back of your FREE QROPS Guide.

What Are The Steps Involved In A QROPS UK Pension Transfer

A QROPS UK Pension Transfer can be broken down into 5 steps

1.  Is A QROPS Pension Right For You

For most people the process begins with the downloading of their FREE QROPS Guide from our website (you can download your FREE QROPS Guide here).

Not only do you receive your FREE QROPS Guide that will provide you with all the information on QROPS pensions that you will need to make an informed choice.

It also explains QROPS pensions in far more detail than we can do here.

In addition by providing your email and telephone number, we are able to contact you to talk further.

I am sure you will agree that a two way telephone conversation is more productive, as it allows you to ask general and specific questions that we can answer regarding your UK pensions and your current individual circumstances, together with your future plans.

We will also, with your permission, ask you some questions that will allow us to advise you on whether a QROPS will not only benefit you but is suitable for you given your individual circumstances and future plans.

All of our advisers are UK trained and qualified with over 15 years’ experience in Financial Services both in the UK and abroad.

So you can have confidence in the quality of the conversation together with the depth and breadth of knowledge that you will receive.

From the initial conversation it will become clear to you whether a QROPS pension would be of benefit to you.

2.  The Gathering Of Information

From our initial conversation together.

If it becomes clear that you would like to further explore your QROPS UK Pension Transfer options regarding your UK pensions.

Then we will need to gather some more specific information regarding your current UK pensions.

We do this by forwarding a QROPS Information Request to the providers of your UK pensions.

This request only allows us to gather information on your behalf and absolutely does not allow us to act or take any action. This is clearly stated on the QROPS Information Request form as you can see here.

We email this form to you for completion and return by email.

We then forward the QROPS Information Request form to the UK pension providers.

On receipt of the QROPS Information Request form the UK providers forward the QROPS Pension Transfer information to us.

This allows us to find out exactly what your UK pensions are and the important aspects of the pension for example is it a Final Salary UK Pension (a Salary Related UK Pension) or a UK Personal Pension Plan (PPP) together with the QROPS pension transfer value.

3.  The QROPS Pension Transfer Suitability Process

Once we have received all of the UK pension information regarding your current UK pensions from your UK pension providers, together we will be in a position to make a decision if a QROPS pension is right for you.

We will forward to you a QROPS Suitability Report.

This QROPS Suitability Report will be based on our conversations and the UK pension information that we received from your UK pension providers.

It will outline your individual current and future plans, in relation to a QROPS pension. It will be bespoke and specific to you.

The UK pension information together with our conversations and our QROPS Suitability Report will allow you make a decision if a QROPS pension is right for you.

4.  The QROPS Pension Transfer Application Process

Only at this stage do you need to make a decision as to whether you wish to proceed with your QROPS Pension Transfer.

Should you decide to proceed with a QROPS pension application, based on your specific individual current and future plans, together with our conversations and the information contained in your QROPS Suitability Report.

Then we will courier all of the QROPS application documentation to you so that you can look through it at your convenience.

Only at this stage if you decide to proceed do you return the application forms by return.

When we receive the forms back from you we will process and take care of all the paperwork for you and keep you informed throughout of the progress of your QROPS pension application.

Importantly we also forward to you complete copies of all of the paperwork for your records.

5.  Your QROPS Pension

Once your QROPS pension is in force we will continue our relationship with our ongoing services:

We provide:

  • A highly experienced investment management team with over 20 years of expertise.
  • Regular reviews on your investments; and to changes in your personal circumstances.
  • Regular HMRC QROPS updates.

So right from the beginning we have an ongoing long term relationship with you, to make sure that you get the most out of your QROPS pension scheme.

QROPS Pension Transfer – Next Steps

How Are You Going To Spend Your Retirement

From the above you can see that the QROPS pension decision and application process is very in depth, thorough and robust.

We make sure that you are fully informed at all stages of the process and we put everything in writing to you in your QROPS Suitability Report with FULL disclosure, including all of the fees and charges.

This will allow you to make an informed decision prior to your QROPS application.

Should you wish to explore your QROPS Pension Transfer options then please take the next step and download your FREE QROPS Guide here.


Can I Transfer Funds and Assets In My UK Scheme or Do I Have To Liquidate Them Into Cash?

This will depend on the UK pension provider you have, and the assets that you hold. Generally a QROPS pension transfer will be quicker if converted into cash. Please contact us to discuss your particular circumstances.

What Are The Key Facts To Look For In A Good QROPS?

Strong investor protection from a well established jurisdiction similar to the UK, investment protection, transparency of charges, and tax efficiency.

My Pension Fund Is Substantial What Tax Implications May There Be?

A transfer to a QROPS will be a benefit crystallization event and therefore will give rise to a tax charge if the amount exceeds the lifetime allowance (currently £1.25 million in the 2015 tax year).

If your fund is in excess of this amount then please contact us for specialist advice.

Are There Any Circumstances In Which I Shouldn’t Transfer To A QROPS?

Yes there are, although in most situations we have come across so far, as long as you are a non UK resident for tax purposes and intend to remain so the benefits to you can be immense.

If you have guaranteed annuity rates set many years ago when interest rates were much higher, this would be one such situation that would need careful consideration and advice.

QROPS Income Drawdown

When drawing down your pension from a QROPS, a more tax efficient income will generally be available in comparison to a UK regulated pension scheme.

There Is No Requirement To Purchase An Annuity At Any Time With A QROPS pension

No requirement to purchase an annuity at any time.

QROPS Income Derived from a UK based pension will be subject to UK taxation at source

Transferring your pension to an appropriate QROPS will ensure that all benefits will be paid without the deduction of UK tax, while you ramain a no-UK resident for tax purposes.

QROPS Jurisdiction Choice

Your QROPS pension doesn’t have to be held in your current country of residence or your country of origin. You have the freedom to place your QROPS funds into an offshore QROPS jurisdiction, ensuring maximum tax savings for you.  

What Are The Main QROPS Jurisdictions

Isle of Man QROPS
Isle of Man from an operating perspective

Moody country credit rating: AA+
EU member: No
EEA participant: Yes
OECD white list: Yes
Dedicated pension regulator: Yes
Tax authority: Treasury, income tax division
Financial services regulator: Insurance and Pension Authority
Compensation scheme: Cash in pensions plus policy holder protection on life contracts
Ombudsman: Yes
Economic risk: Very low
Political risk: Very low
Financial risk: Very low
Double tax treaties: 13
Affinity to personal pensions: High
Depth of labour market: Moderate

Malta from an operating perspective

Moody country credit rating: A-
EU member: Yes
EEA participant: Yes
OECD white list: Yes
Dedicated pension regulator: Yes
Tax authority: Malta Inland Revenue
Financial services regulator: Malta Financial Services Authority
Compensation scheme: Yes, but pensions excluded
Ombudsman: No
Economic risk: Moderate
Political risk: Low
Financial risk: Moderate
Double tax treaties: 60
Affinity to personal pensions: Moderate historic focus on occupational plans with legislation evolving
Depth of labour market: Constrained

Gibraltar QROPS
Gibraltar from an operating perspective

Moody country credit rating: N/A
EU member: Yes (not full)
EEA participant: Yes
OECD white list: Yes
Dedicated pension regulator: Yes
Tax authority: Gibraltar Income Tax Office
Financial services regulator: Gibraltar Financial Services Commission
Compensation scheme: Yes, but pensions excluded
Ombudsman: No
Economic risk: Very Low
Political risk: Very Low
Financial risk: Very Low
Double tax treaties: 0
Affinity to personal pensions: Moderate with evolving legislation
Depth of labour market: Constrained

QROPS Currency

When living abroad, keeping your retirement funds in Sterling will cost you money and increase your risk exposure. Remember what happened to GBP Sterling on Brexit.

As standard UK pensions are aimed at individuals living and staying in the UK, the underlying investment strategy will be predominantly UK focused. The currency of investment will also be GBP and when retirement is taken, any payments received will be in GBP.

In this case the member runs a currency exchange rate risk in respect of pension income, in addition to incurring charges in order to convert the pension payments to the currency of their country of residence.

Transferring to a QROPS currency means that investments and drawdowns can be made in a more suitable currency, thus mitigating any currency exchange risk.

If you are planning to retire outside of the UK, it makes sense to have an investment strategy that focuses on the local economy of your geographic location. A QROPS offers the ability to tailor an investment strategy in accordance with your own requirements.

QROPS Investment Freedom

How To Build And Secure Your Wealth In A Changing WorldDepending upon the size of your pension, you can have “open architecture” (freedom of choice) in terms of your underlying investment portfolio. We can construct a bespoke portfolio for you to reflect your age, time horizon, tax position, and risk profile. Such a portfolio may include for example Capital Preservation strategies, Growth Strategies, Balanced Strategies and so on.

Having access to all of the top financial institutions worldwide makes it easier to protect your retirement income and ensure that the future of you and your family is looked after.

A QROPS pension makes this possible.

Click the link to get your copy of “How To Build and Secure Your Wealth In A Changing World“.


QROPS Transparency

Under UK pension schemes, charges are often hidden so the real cost of the pension is rarely known. When your pension is held within a QROPS, there is full transparency of costs so you know exactly how much your pension is being charged.

Many UK Occupational Pensions Schemes Are In Deficit (Bankrupt).

By transferring your occupational pension scheme to a QROPS you remove the inherent risk of your occupational pension scheme not being able to pay your pension to you because of insolvency and / or liquidity problems

Since their launch in 2006, the popularity of QROPS (Qualifying Recognised Overseas Pension Schemes (QROPS)), a HMRC-recognised overseas pension, continues to grow amongst expatriates and individuals considering a move overseas, are living or retiring abroad.

Demand for QROPS pensions has experienced annual growth – which looks set to continue ongoing throughout 2015 as the market continues to mature, and more people become aware of their considerable benefits.

The recent ‘Pension Flexibility 2015’ changes to UK pensions, have also had a limited but important impact on the benefits of QROPS with Malta QROPS offering the same Flexi Access / Flexi Drawdown.

  1. QROPS Up To 30% Lump Sums (PCLS)

When you start drawing benefits from a UK Pension scheme typically 30% can be taken immediately as a Pension Commencement Lump Sum. This is provided certain limits are not exceeded i.e. total pensions are not larger than the lifetime allowance (LTA) currently £1,250,000 (falling to £1,000,000 from April 6th 2016), unless you have secured one of the protection measures available.

With a QROPS after five years of non UK residence the UK payment rules no longer apply and you will be able to take up to 30% as a lump sum.

  1. QROPS Transfer Testing Against The Falling Lifetime Allowance Now

The LTA has reduced in real terms ever since 2010/11 when Alistair Darling saw it as a means of raising funds through this additional tax. The table below illustrates how it has fallen from its high at £1,800,000 to the low of £1,000,000 set to come into force from April 2016.

If the LTA is exceeded the excess is taxed at 55% if taken as a lump sum or 25% if taken as income although there is still income tax to also be applied.

This makes it painful and extremely tax inefficient for pension holders who may exceed the LTA.

When a UK Pension Scheme is transferred to a QROPS pension its value is tested against the LTA at that point. As the pension has been tested against the LTA at that stage any future growth is then outside of the scope of the LTA. Recent experience suggests that it is difficult to predict where the Chancellor will stop and therefore it may well make sense for someone to consider a transfer to a QROPS pension transfer now to test their pension against the LTA before it drops further.

This is particularly relevant over the next 12 months whilst there is the opportunity to test your pension benefits against the LTA of £1,250,000 rather than £1,000,000.

Just to note any transfer to a QROPS which exceeds the LTA triggers a tax charge of 25% irrespective of how the benefits are later taken i.e. as a lump sum or income.

The recent trend has been quite markedly for the LTA to fall which makes this a reason to consider a UK pension transfer to a QROPS.

UK Pensions Lifetime Allowance

YearLTA Limit
2006/07 £1,500,000
2007/08 £1,600,000
2009/10 £1,750,000
2010/11 £1,800,000
2014/15 £1,250,000
UK Pension Lifetime Allowance

  1. QROPS Income Taxed In Country Of Residence

UK pensions are generally paid out net of basic-rate tax. PAYE applies to all pensions from registered pension schemes. However, non-UK tax resident members can elect for payment to be paid out gross by completing the relevant HMRC form. With a QROPS pension, clients can transfer to a jurisdiction which pays out gross income automatically and charges little or no income tax on their pension benefits so they only pay the tax, if any, applicable in their country of residence.

The new ‘Flexi-access’ rules, subject to the jurisdiction adopting them (Malta QROPS (2016)) and the QROPS rules being amended, will enable individuals to access their pensions in their entirety or through phased lump sums if they wish. It is of course important to understand what the tax situation would be and any penalties the QROPS pension provider may apply, as well as the performance and penalties of the underlying investment before any withdrawal decision is made.

  1. QROPS and Final Salary Schemes

A defined benefit, better known as a final salary scheme (or Salary Related), is the most generous and secure type of pension arrangement you could ever expect to receive. The generosity of these schemes have meant most have been forced to close, restrict access or reduce benefits because they are so expensive for the employer to provide and operate – see UK Pensions Deficits Retirement Income Risk

There are a number of circumstances which may warrant at least the consideration and review from a highly qualified professional holding the necessary UK Pension Transfer Qualifications.

The main reasons to consider a possible transfer to a QROPS pension could include:

  • The expense to the scheme means the future ability to provide benefits has been jeopardised. If the pension scheme collapses and the employer becomes insolvent the UK Pension Protection Fund (PPF) may honour the benefits so long as the PPF can itself take on the burden. The PPF is not Government backed though but by a levy on other similar UK pension schemes.
  • Even if the PPF steps in you must be aware that only 90% of your benefit will be protected with a cap of £32,761 per annum. Therefore people with larger pensions are more likely to be impacted by this.
  • You have a large pension and passing on as much wealth to your beneficiaries is a priority for you. The death benefits available are dependent on whether you are a deferred or active member of a final salary scheme. If you are a deferred member and don’t have a spouse or dependent (child under 23) then your pension income will die with you. Transferring to a QROPS will allow you to pass on a lump sum death benefit to a beneficiary of your choosing.
  1. QROPS Dealth Benefits – No Income Tax Charge On Death – Outside The Scope Of The Up To 45% Tax Charge

For non-final salary UK pensions, so long as an individual is aged below 75 and pensions do not exceed the LTA their pension on death can be passed on to a nominated beneficiary as a tax free lump sum.

However, after the age of 75 pension benefits are subject to a 55% tax charge if paid as a lump sum to a beneficiary. This has been reduced to up to 45% from April 6th 2016 with this likely to be amended again to the marginal rate of tax payable by the beneficiary from April 6th 2016.

If paid as a dependent’s pension the benefits are also free from tax other than any income tax due from the beneficiary.

With a QROPS pension regardless of whether the member has started taking benefits (on or after age 55) or not, dependent on how the pension is structured there ‘may’ be no income tax charge imposed on the payment of a lump sum to the member’s dependents on death providing they have been non-resident for at least 5 complete tax years.

The new rules, which apply to Pension Death Benefits paid out after April 6th 2016 irrespective of the date of death, greatly alter the death benefits on UK pensions.

In summary the rules have altered as follows:

Benefit TypeUK Pension Payment - made before 6 April 2016UK Pension Payment - made on or after 6 April 2016QROPS Pension Payment - And UK Non Ordinary Resident For Tax Purposes for 5 years
Uncrystallised, member dies before age 75A lump sum up to the limit of the deceased remaining lifetime allowance can be paid tax freeThe beneficiary can: Take a lump sum up to the limit of the deceased remaining lifetime allowance, paid tax free, or take tax free income from flexi-access drawdown, or buy an annuity with payments paid tax-freeThe beneficiary can take a 100% lump sum of the remaining fund value
Uncrystallised, member dies on or after age 75A lump sum death benefit taxed at 55% is payable.The beneficiary can: Take income from flexi-access drawdown taxed at their marginal rate, or buy an annuity taxed at their marginal rate, or take a lump sum taxed at HMR up to 45% The beneficiary can take a 100% lump sum of the remaining fund value
Crystallised (drawdown), member dies before age 75The dependant can: Continue in drawdown, or take an annuity which will be taxed at their marginal rate, or Take a lump sum death benefit which will be taxed at 55%The beneficiary can: Take income from flexi-access drawdown tax free, or buy an annuity, which will be paid tax free, or take a tax-free lump sum
The beneficiary can take a 100% lump sum of the remaining fund value
Crystallised (drawdown), member dies on or after age 75The dependant can: Continue in drawdown, or take an annuity which will be taxed at their marginal rate, or Take a lump sum death benefit which will be taxed at 55%The beneficiary can: Take income from flexi-access drawdown taxed at their marginal rate, or Buy an annuity taxed at their marginal rate, or Take a lump sum taxed at HMR up to 45%The beneficiary can take a 100% lump sum of the remaining fund
2016. For the latest information download your FREE QROPS Guide
UK Pension Death Benefits vs QROPS Death Benefits - Possibility Of No Income Tax Charge On Death - Outside The Scope Of Up To 45% UK Tax Charge (2016)

  1. QROPS Exchange Rate Risk – Remember Brexit

For those people based in the Eurozone, holding a UK pension scheme they will have witnessed a roller coaster of a ride over the past 10 years. This has been caused by the appreciation of the Euro, when it almost achieved parity in late 2008 followed by a lot of volatility and then rebounding to almost 2005 levels in March 2015.

The rule of thumb for any financial advice is to have retirement income paid out in the currency expenditure is expected to be paid in. The majority of an individual’s expenditure will be in the currency of their country of residence. This means receiving an income in Sterling which then has to be converted to the Euro for example, provides a huge risk with currency fluctuations making it very hard to plan from month to month.

Using simple figures of a person receiving a scheme pension of £10,000 and its conversion to Euro’s can illustrate this point when using an example (assuming no inflationary increase in the scheme pension).

June 20th 2005                       £10,000 x 1.50 = €15,000

December 29th 2008             £10,000 x 1.02 = €10,200

July 24th 2012                        £10,000 x 1.29 = £12,900

March 11th 2013                     £10,000 x 1.15 = £11,500

March 11th 2015                     £10,000 x 1.42 = £14,200

Using a QROPS pension transfer in Sterling denominated pensions and then utilizing Euro denominated assets to pay out an income in Euro’s could help prevent such large fluctuations in income.

This can also protect against a permanent depreciation of a currencies value.

A QROPS pension can hold various worldwide currency helping to mitigate currency risk wherever you are in the world.

  1. QROPS Benefit From Worldwide Investment Options

A QROPS can access a huge range of investment funds across a multitude of differing currencies using fund platforms or offshore bonds. These will provide diversity and the opportunity to tailor an investment portfolio to an individual’s specific needs.

A QROPS can potentially be used to hold commercial property as well although caution and advice is paramount in this area because of the withholding tax applicable to UK property when held in this way.

  1. QROPS Only 90% Of The Pension Income From A QROPS Is Taxable (on a return to the UK)

Pension income paid under a QROPS to a UK resident is classed as a Foreign Pension which is taxable in the UK on 90% of the amount arising, or, as relevant foreign income if the remittance basis is being claimed.

So a QROPS pension also helps if you return to the UK.

  1. QROPS Portability And Flexibility

UK pensions are understandably structured around UK residents so for an expat who has no intention of returning to the UK they should always consider the benefits that a QROPS pension may bring.

QROPS are a great way to manage pension assets that have been built up throughout your life. With all the other points in mind considering the additional benefit of the administrative efficiency a QROPS pension can bring it really does make a QROPS option compelling.

QROPS have been designed and built in the 21st century for the expat community specifically in mind. This means they are portable and can be used to provide retirement benefits wherever you reside. The correct QROPS can offer similar flexibility to a UK SIPP when it comes to drawing down your income which is great for tax efficiency of income if you match up tax free cash and income.

  1. QROPS Consolidation Of UK Pensions

Bringing all of your historic UK pensions under one roof makes the administration and investment management much more straight forward. This means it is much easier to monitor and make strategic alterations to your pension fund in order to benefit from opportunities but and respond to any potential market downturn.

If you would prefer to take a more balanced approach splitting your pension assets between a QROPS pension and a UK pension based pension always offers the benefit of a hedge between strategies.

  1. QROPS Maximizing A Spouses Pension

QROPS Pension provision for a spouse on the death of a member is often on the forefront of a members mind (QROPS Dealth Benefits). With a final salary scheme after a member begins receiving their pension on death it is the norm for a spouse to continue to receive an income but at a reduced level, ordinarily 50% or less if your spouse is more than 10 years younger.

With a QROPS pension  it is possible to use up to 100% of the fund as a QROPS Death Benefit to provide a spouses pension. This may be through an annuity or income draw down arrangement or cash payment. Many people may wish to consider transferring a UK pension to a QROPS pension to ensure the pension asset is able to provide a more substantial retirement income for their spouse.

  1. QROPS Early Retirement

Since the 5th April 2010 members of UK pension schemes have been restricted to being able to draw benefits from age 55 although most UK final salary schemes will have a default of 65.

It is possible for a pension member to transfer their UK Pension assets to a UK QROPS pension scheme, which resides in another jurisdiction in order to benefit from an earlier retirement age of 55.

  1. QROPS Pension Income Tax Planning

The income payable from a pension is fully taxable as income and is therefore taxable at a member’s highest marginal rate of between 0 – 45%.

This means that the tax payable can be quite severe. A QROPS has the ability to turn the income withdrawn on and off between limits of 0 – 150% of GAD each year (or Flexi Access for Malta QROPS 2016). For an Internationally mobile individual a QROPS pension can provide the flexibility to draw income whenever they choose which can enable them to be shrewd and protect their pension against the tax man by maximizing what they draw when in a preferable tax people based in the Eurozone, holding a UK pension scheme they will have witnessed a roller coaster of a ride over the past 10 years. This has been caused by the appreciation of the Euro, when it almost achieved parity in late 2008 followed by a lot of volatility and then rebounding to almost 2005 levels in March 2015.

The rule of thumb for any financial advice is to have retirement income paid out in the currency expenditure is expected to be paid in. The majority of an individual’s expenditure will be in the currency of their country of residence. This means receiving an income in Sterling which then has to be converted to the Euro for example, provides a huge risk with currency fluctuations making it very hard to plan from month to month.

Using simple figures of a person receiving a scheme pension of £10,000 and its conversion to Euro’s can illustrate this point when using an example (assuming no inflationary increase in the scheme pension).

  1. Continuing QROPS Advice On Your QROPS Pension Assets

A Pension is often an individual’s largest asset which means that if an expatriate leaves it unattended in a UK Pension arrangement the likelihood is it may receive no ongoing adviser oversight. This can be detrimental when you consider the following:

  • Ongoing alterations to UK Pensions legislation which may impact on your retirement funds; reducing lifetime allowance and the increasing retirement age and UK pension taxation.
  • If you hold a UK SIPP, Personal or Group Pension Plan where is the money invested? This is crucial to whether the pension grows, keeps pace with inflation or at worst falls in value.
  • Is the money invested in the correct areas, and with the best Fund Managers or have highly regarded managers left the company for example with Neil Woodfords decision to leave Invesco Perpetual.

Transferring your pensions to a QROPS will bring your assets under an umbrella from where an overseas adviser can help to advise and monitor the pension wherever you are in the world.

  1. QROPS Clean Break For UK Inheritance Tax (IHT)

Those people with large estates may often wish to lose their Domicile of Origin and gain a Domicile of Choice. This may enable them to avoid paying UK IHT on their non UK assets. It is however very difficult to lose a Domicile of Origin.

Where this is the case a person will almost invariably be advised to cut all ties with the UK, moving everything to the country which they wish to be their Domicile of Choice. This will mean moving everything including business assets, home, will, family and even their place of rest.

Holding a UK Pension is yet another UK based asset, which means by transferring your UK pension to a QROPS you are able to break another tie adding more weight to the argument of no UK Domicile.

  1. QROPS Early Retirement From A Final Salary Scheme

A Final Salary Scheme will often have quite punitive early retirement penalties for those who wish to draw their pension prior to the ‘Normal Retirement Age’ set under the scheme.

Typically a scheme may impose a penalty, known as an actuarial reduction, of 0.5% per month. This means if you retire 12 months early the penalty is a 6% reduction in your annual pension income.

If you retire 5 years early the penalty increases to 30% of your annual pension.

This may mean that should a scheme member wish to retire early it may be beneficial to review and compare what retirement income could be achieved by transferring the cash equivalent of his UK pension to a QROPS and drawing an income from there and in a more tax efficient manner.

  1. QROPS Breaking Away From UK Pension Legislation

In recent years the UK Government have been introducing restrictions on an individual’s ability to shelter tax through the use of pensions. This has been through the reduction in the annual amount that can be contributed to pensions obtaining significant tax reliefs.

The annual allowance has seen a fall from £255,000 per annum in 2010/11 to £40,000 in 2014/15.

UK Pension Contribution Allowance

YearMax Contribution
2006/07 £215,000
2007/08 £225,000
2012/13 £50,000
2014/15 £40,000
UK Pension Contribution Allowance

We have also been introduced to a new term for Tax Free Cash (TFC), now termed a Pension Commencement Lump Sum (PCLS). This may lead the way in the future for ‘PCLS’ being taxable, although it already has become taxable in part in the event that a pension member exceeds the LTA.

The LTA is another allowance which is has seen a fall in recent years as illustrated in point 2 above.

All these factors are clear indicators that the UK Government is trying to limit the tax efficiency of pensions in its bid to deal with the UK deficit. This makes for an additional reason to move away from the UK Pension regime by transferring your UK pension to a QROPS.

  1. QROPS Offers Protection Against Creditors In The Event Of Bankruptcy

If you legitimately made pension contributions to an individual pension arrangement and later became bankrupt then the Courts will find it difficult to retrospectively reverse the contribution made to pay creditors.

When benefits finally commence from the pension arrangement you may be ordered to pay these to creditors. In transferring UK pension assets to a QROPS pension “off shore” it makes it far more difficult for UK courts to take action.

A Home For Divorce Settlements

If a Court puts in place a pension sharing order in respect to pension assets held through a final salary scheme it is down to the scheme trustees to decide whether or not to allow the ex-spouse to become a member of the scheme. If the scheme trustees deny the ex-spouse entry or should they prefer to get a clean break they will have the option to transfer the cash equivalent to a QROPS. This would also be possible with a Personal Pension.

QROPS pensions are outside of the earmarking or pension sharing jurisdiction of the UK courts. In reality if the Courts (and the divorcing client) realise their lack of jurisdictional power they will always have the fall back of reverting to offsetting. This will only be of use to the Courts should the couple’s other assets outweigh that of the overseas pension rights.

Transferring UK Pension assets to a QROPS may be seen by some as a step in protecting assets from a spouse on divorce. Quite apart from both the moral and ethical grounds for even considering this, it is potentially fraud. As the law does not forbid a transfer, advisers should ensure that they are not seen to be promoting this or even supporting the activity.

This could be seen as a bi-product of the QROPS market which otherwise offers non-residents an excellent method of continuing to save toward retirement in an efficient manner.

  1. QROPS Protection Final Salary Funding Levels And The Strength Of The PPF

The promise to pay a future income is only as strong as the pension scheme and the company who ultimately underpin that promise. There is of course the Pension Protection Fund (PPF) which will step in should the scheme and company fail to meet its obligation to pay the pension income.

There are limits to compensation the PPF will pay and this is dependent upon whether the member had retired at the scheme normal retirement age (NRA), retired prior to the schemes retirement age or not yet retired.

Member has retired

  • The Pension Protection Fund will pay 100%
  • Payments relating to pensionable service from 5 April 1997 will then rise in line with inflation each year, subject to a maximum of 2.5 per cent a year. Payments relating to service before that date will not increase.
  • This information may also apply if you retired through ill-health or if you are receiving a pension in relation to someone who has died.

Member retired early

  • If the member had retired early and had not reached the scheme’s normal pension age when the employer went bust, then they will generally receive 90 per cent level of compensation based on what the pension was worth at the time. The annual compensation received would be capped.
  • The cap at age 65 is, from 1 April 2014, £36,401.19 (this equates to £32,761.07 when the 90 per cent level is applied) per year. The earlier the date of retirement, the lower the annual cap is set, to compensate for the longer time the payment has been received for.
  • Once in payment the payments relating to pensionable service from 5 April 1997 will rise in line with inflation each year, subject to a maximum of 2.5%. Payments relating to service before that date will not increase. Member has yet to retire.
  • When the member reaches the scheme’s normal retirement age, we will pay you compensation based on the 90 per cent level subject to a cap, as described above.

Until normal retirement age is reached and the compensation is put in payment, the compensation entitlement will rise in line with inflation each year, subject to a cap 5% for compensation linked to pensionable service prior to 6 April 2009, and a cap of 2.5% in respect of compensation linked to pensionable service on or after 6 April 2009.

Once compensation is being paid, then payments relating to pensionable service from 5 April 1997 will rise in line with inflation each year, subject to a maximum of 2.5 per cent. Payments relating to service before that date will not increase.

These limiting factors harshly impact on a member with a large pension income. To put this in to monetary terms a 65 year old male would need a pension fund of circa £1,000,000 to purchase an annuity of £32,761.07 increasing in line with RPI and providing a 50% spouses pension.

This means if the same male had a pension income of £62,760.68 and their pension fund fell into the PPF then they would lose millions because the PPF would only protect up to a maximum of £32,761.07.

This is all assuming that the PPF was able to meet the obligation which when given that the PPF is funded by a levy on pension schemes (which many are in trouble themselves) and the scheme is not guaranteed by the UK Government, its ability to make pension payments could be seriously troubled.

By taking a cash equivalent UK pension transfer to a QROPS pension scheme a member takes control of their own pension funds and removes it from the risk of the pension scheme going bust.

Individual circumstances, income, objectives, experience and attitude to investment risk must be taken into account when considering the above mentioned points.

It is crucial before making any decisions that you get professional advice from a professional, suitably skilled and experienced financial adviser.

SIPPS, Salary Related, and QROPS Features Summary (2016)

 UK DCMP (PPP or SIPPS)UK Salary Related SchemeQROPS
FundingUp to 100% for UK earnings (Max £40K p.a. & carry forward of unused relief)Governed by scheme rules usually a % of salary plus employers contributionMust be a transfer from a UK registered scheme. Ongoing funding also permitted
InvestmentMember’s choice, wide range of investments and currencies permittedManaged by the Trustees to meet scheme liabilities. No choice by memberMembers choice, a wide range of Investments and currencies permitted
Retirement AgeMinimum 55. Must be in drawdown from age 75Governed by the scheme rules usually from age 60QROPS rules from age 55 typically must be in drawdown by age 75

Retirement BenefitsDepends upon investment fund performance, generally 25% PCLS, then 100% available taxed at highest marginal rateDetermined by the scheme rules, generally a fraction of length of service & salary. Essentially a promise made by the employer and subject to the solvency of the schemeDepends upon investment fund performance. 30% PCLS. Drawdown subject to GAD or actuarial rules by jurisdiction
Income Tax On BenefitsHighest UK marginal rate unless DTTHighest UK marginal rate unless DTTDepends on jurisdiction
Lifetime AllowanceHMRC recovery charge on excess. 55% on lump sum 25% in addition to highest marginal rate on incomeHMRC recovery charge on excess. 55% on lump sum 25% in addition to highest marginal rate on incomeTested upon transfer. Excess of GBP £1 m taxed at 25%. Unless protected. No further test
Death BenefitsUK Rules. Pre Drawdown: Return of fund tax free. Post Drawdown: Special lump sum death charge 45% after age 75 if vested. Subject to Jurisdictional Taxation (i.e. Spain)UK Rules. Scheme rules, usually different for active & deferred members. Refer to the Scheme Booklet. Subject to Jurisdictional Taxation (i.e. Spain)If non UK resident for taxation for 5 Tax years. Pre Drawdown: Return of fund. Post Drawdown: Return of fund. Otherwise UK PPP and SIPPS rules apply. Subject to Jurisdictional Taxation (i.e. Spain)
2016. For the latest information download your FREE QROPS Guide
SIPPS, Salary Related, and QROPS Features Summary (2016)

Can I organize a QROPS myself?

No. QROPS providers will only take pension transfers through their appointed intermediaries.

We are appointed intermediaries; and as such we can provide you with all of the information, and the independent financial advice that is necessary for you to make an informed choice as to whether a QROPS is right for you.

We can also take care of all of the paperwork; making the transfer as easy as possible for you.

Want To Know More Why don’t you Download YOUR FREE QROPS GUIDE

Still Not Convinced, well please read the following independent sourced evidence about the fact that you may not receive a pension at all

You see many UK Pensions Schemes Are in Deficit (Technically Bankrupt) which means that you may not receive any pension at all or at best a reduced income (UK Pensions Deficits Retirement Income Risk).

Now remember this is your pension money (your money) that we are talking about, and I ‘am sure you would agree that it is simply not worth the risk of entrusting your pension to a third party, when you could be in complete control of your pension.

Companies Press For Cut In Pension Promises Oct 19, 2016 Josephine Cumbo Pensions Correspondent

Trade body for UK’s biggest schemes suggests less generous inflation rises

Pressure is growing on the government to let companies water down their pension promises to millions of workers, as rising inflation threatens to push up the cost to employers.

A report by the trade body for 1,300 schemes — including those of Tesco, British Airways and Marks and Spencer — has said that allowing salary-linked pensions to pay less generous inflation rises could help keep them solvent.

These “defined benefit” schemes — which promise to pay an inflation-linked level of income for life — are responsible for paying about £81bn of pensions in the UK each year.

About 4.3m people receive a private-sector DB pension and some 27m are set to benefit from a DB pension at some point in the future.

But in a new report, the Pensions and Lifetime Savings Association said the DB system was “rigid” and work should be undertaken to investigate how a more “flexible approach” could be implemented to help keep DB schemes afloat.

This could include reviewing the rigidity of the inflation-linked rises that are hard-wired into company pension schemes, suggested Joanne Segars, chief executive of the PLSA.

Ashok Gupta, chair of the PLSA’s DB task force and a former member of the Bank of England’s working group on Procyclicality, said: “The current state of DB poses a significant risk to members’ benefits for all but the most strongly funded schemes.”

Currently, if an employer backing a scheme goes bust, members — with rare exceptions — end up in the lifeboat Pension Protection Fund where they face income cuts of up to 20 per cent, noted the report.

According to the PLSA, employers paid about £31bn into their DB schemes in 2015, with about £11bn of this spent plugging deficits that have widened in the low interest rate environment.

“That money could have been spent elsewhere in their business, for example on wages, business investment, dividends or on pension contributions to employees in defined contribution schemes,” said Mr Gupta.

These findings contrast with the position of The Pensions Regulator, which last month rebuffed suggestions that DB schemes had become unaffordable for employers.

Andrew Warwick-Thompson, executive director for Regulatory Policy with the pensions regulator, said: “A minority of DB schemes and their sponsors are in distressed circumstances but the data doesn’t bear out the argument that in general DB schemes are unaffordable — nor are they about to fail, nor are they about to bankrupt their sponsors, nor will they overwhelm the pensions life raft, the PPF.”

Richard Harrington, the pensions minister, on Wednesday was drawn in to the debate when responding to a question about what the government could do to help final-salary pension schemes become more affordable.

He said: “Companies should think of pensions in the same way as they think of any other liability, such as the wage bill. I don’t understand the mentality of boards saying that pensions are not quite the same as other liabilities. I don’t but there’s a conflict between paying pensions and paying dividends.”

However, he added that the government would issue a Green paper soon on options to keep final salary schemes sustainable. “We are looking at everything we can do but won’t do anything until the pensions regulator has finished negotiations with Philip Green [over the BHS pension deficit].”

FTSE 100 Firms’ Pension Deficit Soars

Source: 16th August  2016

The combined pension funds deficit for companies in the FTSE 100 has seen huge increases in the past year, according to pension’s expert LCP.

LCP, in its annual report on the pensions market, said that by the end of July, the deficit was an estimated £46bn, as against £25bn a year earlier.

And this month, the deficit has widened further to £63bn, LCP told the BBC.

The position has deteriorated because of lower bond yields, with a sharp fall after the UK’s vote to leave the EU.

But sterling’s fall after the Brexit result has partly offset this effect, LCP said.

‘Ridden Out Brexit’

Falling bond yields cause problems for pension funds, because they reduce the amount of income available from investments.

Bond yields have fallen even further this month, in the wake of the Bank of England’s decision to cut interest rates from 0.5% to 0.25% and step up its bond-buying programme in an effort to stimulate the UK economy.

However, at the same time, the fall in the value of the pound has meant that overseas investments by pension funds are worth more in sterling terms.

LCP added that companies had also used interest rate hedging to negate much of the impact of falling bond yields.

“FTSE 100 companies seem to have ridden out Brexit reasonably well, reflecting the level of protection that many put in place against fall interest rates,” the report said.

However, LCP added that Brexit, along with the collapse of department store chain BHS and the potential sale of Tata Steel’s UK operations, had “highlighted the significance of corporate pension liabilities”.

Since both firms were suffering because of underfunded pension schemes, their plight illustrated “the impact that a large defined-benefit scheme can have on a UK company”.

Pension Schemes Explained

  • Final-salary scheme: Guaranteed pension based on earnings at end of your career and length of service. Also known as defined-benefit schemes
  • Career average scheme: Guaranteed pension based on your average pay over your career
  • Defined contribution scheme: Determined by contributions and investment returns. Usually worth less than final-salary pensions. Savings used to buy an annuity, or retirement income – until now

‘More Closures’

The position has worsened since February, when FTSE 100 companies briefly had a combined pension surplus for the first time in seven years because of a fall in liability values.

But in the ensuing months, “liability values increased again and earlier gains were more than offset”.

“None of the FTSE 100 companies we have analysed provide traditional final-salary pensions to new employees and only two continue to provide any form of defined-benefit pension provision as standard to new recruits,” said LCP in its Accounting for Pensions 2016 report.

“These are Diageo and Johnson Matthey, which both provide cash balance schemes.”

However, 57 FTSE 100 companies still allow at least some employees to pay into existing defined-benefit schemes.

“Legal & General and Marks and Spencer were the only companies to announce they would be closing their schemes to future accrual, or proposing to do so, since last year’s report,” said LCP.

But it added: “We expect to see many more pension scheme closures announced in the coming months and years – unless something is done to make pensions more affordable.”

1,000 Final Salary Pension Schemes Face Going Bust

Source: December 14, 2015

Today (14 December 2015) a new report from the Pensions Institute, part of Cass Business School, has shown up to 1,000 defined benefit schemes are at ‘serious’ risk of falling into the Pension Protection Fund.

The report, ‘The Greatest Good for the Greatest Number’, predicts that the businesses of hundreds of employers will become insolvent well before the end of their recovery plans, under which the trustees and sponsor agree contributions to make good the deficit over an agreed number of years.

It shows that on insolvency, these schemes may have insufficient funds to pay members’ pensions in full.

Of the 1,000 defined benefit schemes at ‘serious’ risk of falling into the Pension Protection Fund, 600 schemes may only receive PPF compensation, and many sponsors are expected to become insolvent in the next five to 10 years.

Additionally, the remaining 400 sponsoring employers might initially survive, but may eventually fail if they are not able to off-load their pension obligations.

The argument in the report is the worst case scenario of insolvency can be averted if the approach to managing pensions changes to one that is prepared for many more schemes to pay less than full benefits on a planned and co-ordinated basis, with all parties in agreement on how best this is achieved.

The Pensions Institute stated freeing an employer from the burden of its pension fund whilst avoiding insolvency, can create extra value which can be shared with the members to achieve a better outcome.

David Blake, professor of pension economics at Cass Business School, said “In aggregate the schemes have liabilities of £225bn, assets of only £180bn and therefore deficit of £45bn.

“If this situation is not urgently addressed, business which may be saved will be lost to the UK economy and those members will end up receiving PPF compensation.”

“Government policy is predicated on the assumption that employers with DB schemes, over time, will be strong and prosperous enough to pay benefits in full.

“The report challenges this rose-tinted view and seeks answers to the following question: What actions should trustees take, to secure the best possible outcomes for the members they serve, if the employer is not strong, is unlikely to prosper, and, the prospect of the Pension Protection Fund ‘lifeboat’ looms?”

He added that in reality, many trustees are trying to manage significant conflicts of interest.

Additionally, Mr Blake said there was a collective silence amongst trustees.

UK Pension Deficits Widen As Contributions Drop

Source: August 10, 2015

UK companies are paying less towards meeting their pension shortfalls than at any point since 2009, even as aggregate pension deficits reach their highest level in five years.

The widening gap means companies are likely to face pressure this year from scheme trustees to increase payments towards their deficits, according to Barnett Waddingham, a consultancy.

FTSE 350 companies paid £7bn towards their defined benefit pension deficits in 2014, 20 per cent less than the previous year and 40 per cent below the amount each year between 2009 and 2012, the survey found.

At the same time, the aggregate deficits for FTSE 350 companies increased from £53.3bn to £64.7bn during the year, as falls in corporate bond yields pushed down so-called discount rates, which are used to calculate the present value of payments the scheme expects to make.

Most companies have closed their defined benefit schemes to new employees, but some still face heavy liabilities from existing members, who number at least 7m in total.

Market conditions suggest deficits will probably continue widening, with falling bond yields counteracting strong investment performance within many schemes’ portfolios, said Barnett Waddingham.

A code of practice introduced by the Pensions Regulator in 2014 allows employers more flexibility in paying down scheme deficits where this may affect the companies’ growth. BT, which faces a £7bn deficit, said in January it had agreed with scheme trustees a plan to reduce its annual payments.

However, Nick Griggs, head of corporate consulting at Barnett Waddingham, said: “The increase in deficits seen towards the end of 2014 will almost certainly translate into pressure from scheme trustees to reverse, or at very least address, this trend [of lower deficit contributions] in 2015 and beyond.

“If you look at the levels of cash that a lot of companies are holding, there does seem to be potential for increased deficit contributions.”

A small group of companies face the most severe pension deficit risks: 18 have deficits exceeding 10 per cent of the company’s market capitalisation, while seven hold equities within their pension schemes with more than 50 per cent of the company’s market capitalisation.

“This is a recurring problem but it has been acute in recent years. The regulator has to balance the interests of members, employees and shareholders,” said Tom McPhail, head of pensions research at Hargreaves Lansdown.

An interest rate rise may help by diminishing projected liabilities, he said. “But if those falling liabilities are offset by falling asset values, that could mean they are just running to stand still.”

Companies are shifting rapidly towards defined contribution pension schemes, in which members buy annuities or enter income drawdown based on the total assets in their pension pots, rather than on their final salaries or years worked. The average amount paid into such schemes increased by a fifth in 2014.

However, about 170 FTSE 350 companies still have a defined benefit scheme; in total, these are expected to pay out £970bn in the next 30 years.

“It is remarkable to consider the level of resources that UK businesses are having to contribute towards legacy benefits,” Barnett Waddingham said.

Lower deficit payments contributed to a more positive picture for investors in companies with defined benefit schemes: net dividend payouts have risen steadily as deficit payments declined since Barnett Waddingham began its surveys in 2009.

Dividend payouts reached £56.9bn in 2014, up from £47.3bn in 2009, but in 2014 there were still 24 companies that paid more in pension deficit contributions than they handed to investors via dividends.

Funding Shortfall For Final Salary Pensions Worsens

Source: May 22, 2015 Josephine Cumbo; Pensions Correspondent

Funding shortfalls in many defined benefit pension schemes have worsened despite £44bn of extra contributions, prompting the regulator to remind employers of the options they have to deal with the deficits.

The aggregate deficit of more than 6,000 private sector defined benefit schemes covered by the Pension Protection Fund soared to a record £375bn in January this year, compared with £215bn the same time three years ago. Market movements had reduced this figure to an estimated £242.3bn at the end of April but the deficits remain stubbornly high.

The Pensions Regulator said trustees and employers sponsoring some schemes could consider taking longer to eliminate the deficits, or change their assumptions about future investment returns to help mitigate the problem.

The regulator said in a statement on Friday that persistently low interest rates and falling gilt yields had created a “very challenging environment” for schemes conducting their regular statutory three-yearly check on financial health.

“Despite all major asset classes having performed well and schemes having paid £44bn in deficit repair contributions over the past three years, our analysis suggests that many schemes with 2015 valuations will have larger funding deficits due to the impact of falling interest rates and schemes not being fully hedged against this risk,” said the regulator.

“The extent of the impact of market conditions will depend on a scheme’s specific circumstances such as the exact dates of valuations, asset allocations and interest rate and inflation-hedging strategies.”

Towers Watson, the pension consultants, said the regulator‘s analysis showed that, for the median scheme, deficit contributions would need to rise 66 per cent if the timetable for eliminating the shortfall were not pushed back.

“For most schemes, the deficit recovery period would need to be extended by more than three years if contributions stayed the same,” said Towers Watson.

“The regulator no longer says that deficits should be cleared as quickly as employers can reasonably afford; companies who don’t want to put their hands in their pockets are very conscious of that.”

During the scheme valuation process, trustees acting on behalf of members of final salary schemes and the employer sponsoring the scheme agree on ways to plug any funding gap.

Last year, the regulator set a new objective allowing for business growth to be taken into account when determining how much cash should be set aside for shortfalls.

On Friday the regulator suggested that schemes with “capacity to take additional risks” could look to “modest extension to their recovery plans, a modest increase in deficit repair contributions and/or changing their assumptions relating to investment returns.” Other schemes with “less capacity to take risk” should seek higher contributions, it added.

The statement came as industry observers noted an increasing trend for employers to push out their recovery plans.

A survey by PwC, the consultancy published in March found more than half of 200 company pension funds had lengthened their recovery plans by three years or more.

“It’s concerning that while the economy is recovering, pensions deficits are still increasing and employer deficit contributions are falling,” said Lincoln Pensions, which advises trustees.

“Our experience is that sponsors regularly cite the regulator’s sustainable growth objective as a reason to propose lower deficit contributions even when deficits increase. In doing so they are increasing risk for both the company and for members.”

The National Association of Pension Funds, which represents workplace pension schemes, welcomed the regulator’s statement saying it reiterated the need for scheme trustees to “manage, rather than eliminate”, risk.

UK’s Largest Companies Under Pressure Over Pension Contributions

Source: May 5, 2015

Some of the UK’s largest companies will come under pressure to ramp up contributions to their company pension schemes, advisers warn, as deficits continue to soar.

The alert comes as 30 FTSE 100 companies are due to begin triennial financial health checks on their defined benefit pension schemes — with most facing ballooning deficits.

Advisers say that since the last round of valuations three years ago, deficits have worsened — despite the improving economy — largely in response to falling gilt yields which are used to calculate scheme liabilities.

The total deficit in FTSE 100 pension schemes was estimated to be £80bn at the end of 2014, £26bn higher from the same time a year ago, and up from £73bn in March 2012, according to JLT Employee Benefits, a pension and benefits consultancy.

“The lower gilt yields go the bigger scheme deficits tend to grow,” said Charles Cowling, director with JLT.

“Three years ago we thought interest rates were low and it was a bad time for markets, but it’s just got worse.”

Companies scheduled to have their actuarial valuations this year include Lloyds, Shell, BP, International Airlines Group (British Airways), HSBC and Aviva.

During these valuations, employers agree a recovery plan with trustees, acting on behalf of scheme members promised a pension, to plug any funding deficit.

“We expect to see some difficult negotiations between trustees and employers and inevitably there are going to be demands for (potentially significant) increases in employers’ funding contributions as pension scheme deficits continue to grow,” said Mr Cowling.

According to JLT, FTSE 100 companies ploughed £14.1bn into their pension schemes over the last accounting year, down from £16.3bn in the previous year. However, only £6.9bn actually went to cut deficits, as new pension benefits accrued, down from £9bn the previous year.

The squeeze on contributions follows the Pensions Regulator’s move in 2012 to give employers with scheme funding gaps greater flexibility to stretch out their deficit recovery plans.

The Confederation of British Industry, which represents employers, said: “In all cases, due regard must be given to the Pension Regulator’s new objective — to consider the company’s ability to contribute. The best security for any defined benefit scheme is a solvent, profitable sponsoring employer.”

The aggregate deficit of the 6,057 schemes in the PPF 7800 index was estimated at £292bn at the end of March 2015, up from £248bn the previous month. There were 4,995 schemes in deficit and 1,062 schemes in surplus.

Final Salary Pension? Your retirement income is at risk

Source: The Telegraph February 21, 2015

These ‘gold-plated’ schemes are supposed to be guaranteed – but savers are being misled, a top pension’s official has warned.

Savers in their forties and fifties are being “misled” over the safety of their final salary pensions and could suffer a 10 per cent cut to their retirement incomes, a senior official has warned.

In a stark warning, the head of the government’s pension’s lifeboat said five in six final salary schemes had fallen into the red and faced a struggle to pay savers a full pension.

Alan Rubenstein, chief executive of the Pensions Protection Fund (PPF), said that many of the 11 million people with a supposedly guaranteed, inflation-linked pension were being led to believe their pension was safe, when “for many that isn’t the case”.

Savers who tried to cash in their final salary pots early, by using the new pension freedoms due in April, face losing up to 40 per cent of the value of the pension they’ve built up, he said.

The comments, in an interview with The Telegraph, represented the most overt warning from a government-backed organisation since the crisis in the early 2000s when thousands of workers faced the loss of their pensions as companies collapsed with deficits in their schemes.

Mr Rubenstein, whose organisation was set up in the wake of that scandal to rescue final salary plans when they fail, said: “It is misleading to allow people to expect promised pensions when in fact there is only money enough to pay about 60 per cent of those pensions [should they be cashed in today] and where nothing is being done about the shortfall.”

Final salary pensions are typically worth a maximum two-thirds of a worker’s wages on retirement depending on their years of service, with payouts rising with inflation and half going to a spouse on death.

The pensions are more generous than schemes where the size of the pot is linked to the stock market.

George Osborne’s pension freedoms will arrive as the health of final salary pensions is deteriorating dramatically. Around 5,000 pension schemes face a funding shortfall of at least £300 billion, the largest since 2012, figures show. Low interest rates and the fears over Greece’s exit from the Eurozone have conspired to increase funding costs for firms that offer final salary pensions.

A customer seeking to transfer their entitlements out so they can cash in the pension would typically get just £6 for every £10 in their name, Mr Rubenstein said, because schemes were so far in deficit.

If the company behind the pension was unable to meet its promises, it would have to be taken over by the protection fund. In such cases, most members are given 90 per cent of their predicted retirement payments each year. Wealthier savers stand to lose more as annual payouts are capped at approximately £30,000.

Those already retired will be protected, leaving those in their forties and fifties, who will claim benefits in future years, most at risk.

It is unclear how many schemes would fail, Mr Rubenstein said, because companies were hiding the scale of the problem.

“We should be having this conversation now, rather than leaving people under the impression they will have a pension as promised,” he said.

Mr Rubenstein added that while pension schemes with large holes in their finances were required to have “recovery plans”, some were unlikely to work, having been stretched over a nine-year period on average. Recovery plans are easily derailed if returns fall below expectations. Many companies were “travelling in hope”, he said.

Stephen Soper, chief executive of The Pensions Regulator, which oversees the funds, said:

“We are prepared to work with [struggling schemes] to try to deliver a solution that balances the interests of the members, PPF and employer.”

Many final salary schemes have closed as a result of long-term funding problems, with just 8 per cent open to new members, according to the National Association of Pension Funds.

The gap between the money held in such schemes and the pensions they have pledged to pay is widening dramatically.

While such pensions hold £1,200bn of investments, the most conservative valuation of their pension promises is closer to £1,500bn. This £300bn gulf has grown from almost nothing in just 12 months (see graph, below). The shortfall highlighted in this data, however, is not the real extent of the gap. The £300bn figure is based on the reduced pensions that workers would be paid if their scheme collapsed and had to be taken over by the PPF.

QROPS Pension Transfers

In broad terms, if your scheme fails – in most cases because your current or former employer goes bust – the PPF will step in, paying 90pc of promised pensions up to an annual cap of £30,000. For most workers the cap is high enough to mean they receive 90pc of their promised income. But for higher earners, with big pension entitlements, the cap can inflict a brutal loss of retirement income.

The gap between pension schemes’ investments and the value of actual promises made to pensioners is therefore far higher than the £300bn that would deliver the PPF level of payouts. One independent estimate, by Citigroup, put the real gap at £850bn.

Even figures from the Pensions Regulator, the body charged with monitoring schemes’ solvency; suggest that if schemes had to pay all their pensions as promised today, they would be 45% short.

It is possible that shortfalls could shrink in time if investment returns grew and companies contributed more. Mr Rubenstein said: “You shouldn’t be scared by one month’s numbers. But companies need realistic recovery plans. Many are on life support at the moment, kept alive by cheap loans.”

Actuary Henry Tapper, of consultant First Actuarial, said: “There is no silver bullet. There is no obvious factor that will induce growth. The only guarantee is what the PPF would pay if it had to take over your pension.”

The PPF expects to bail out twice the value of pensions in the coming year as in the previous one. This increase is not due to a rise in insolvencies, but to the growth of the shortfalls in the funds that fail.

Pilot’s pension cut from £47,000 to £26,500

The Pension Protection Fund, the lifeboat scheme for savers in stricken salary-linked pension schemes, is able to guarantee most people 90pc of their promised pension.

But for bigger pensions the scheme has a cap. The most you can receive is £36,000 per year – less if you retire before you are 65.

The pension scheme of Monarch Airlines is currently being taken over by the PPF following a restructuring of the company. There was not enough money in the fund to meet all the pension promises made in earlier years. While most staff’s pension will fall below the cap, meaning they will get 90pc of their entitlements, some high-earning pilots will see drastic cuts.

One Monarch pilot, 51, who did not want to be named, planned to use his generous promised pension of £47,000 per year to help his children and pay off his mortgage. But he and his wife have been forced to rethink their plans because under the PPF they will get a maximum of £26,500. “I’m still in a state of shock,” he said. “It’s like a grieving process. There’s this sense of injustice. My pension is something I’ve paid into over the years and it’s something I was promised. I was paying around £1,000 a month from my salary, excluding the company contribution, and I’ve always regarded my pension as deferred pay. It wouldn’t be so bad if I was in a position to do something about it, but for me the time available is short.”

UK Pension Deficits Double To More Than £100bn

Source: January 6, 2015

Pension deficits at the UK’s largest companies nearly doubled over the past year to exceed £100bn, as record low interest rates continued to take a toll.

The combined accounting deficits for FTSE 350 companies with final salary pension schemes ballooned from £98bn to £107bn between November and December, compared with £56bn a year ago, a survey published on Tuesday by pension consultants Mercer found.

Consequently, funding levels — or the ability of schemes to make payments as promised to members of final salary plans — reduced from 86 per cent to 85 per cent over the same period.

Mercer said the deterioration was “substantially” driven by a further fall in corporate bond yields, which are used to measure the pension liabilities reported in company accounts.

“The sharp fall in both corporate and government bond yields to historic lows during the second half of the year has resulted in a sharp rise in pension scheme deficits,” said Ali Tayyebi, a senior partner at Mercer.

“The accounting deficit is 90 per cent higher at the end of 2014 compared to the position at the end of 2013.”

According to the Mercer estimates, pension assets held by the top 350 UK companies rose £2bn to reach £608bn between November and December last year. But over the same period liability values rose £11bn to £715bn.

Mercer said a “huge variety” of financial and economic factors worldwide had affected yields in 2014 but it expected continued volatility in 2015.

“Whilst the recent fall in yields may cause many pension schemes to review the hedging of their interest rates, schemes should be open to the opportunities that volatility provides,” added Mr Tayyebi. “Companies and trustees should be prepared.”

With UK pension scheme deficits continuing to soar, some commentators are calling for a review of the Bank of England’s Quantitative Easing policy, or asset purchase programme, which is designed to revive economic growth but depresses bond yields.

Ros Altmann, an independent pension expert and investment adviser, said: “The impact of Quantitative Easing on corporate pensions and annuities has not been properly appreciated and is one of the dangerous unintended consequences of this policy experiment.

“The stronger economy and sharply falling unemployment would normally have heralded rising interest rates and equity prices. Instead, interest rates remained low and gilts became increasingly expensive as long yields fell to record lows towards the end of the year.”

In recent years pension funds have switched away from equity investment towards gilt and bonds, making them much more sensitive to movements in bond yields.

In 2006, more than 60 per cent of pension fund assets were in equities, but this fell to 35 per cent in 2014. In contrast, holdings of gilts and bonds have risen from 28 per cent to 44 per cent over the same period.

Pensions Black Hole Rockets To £250 billion
FINAL salary pension scheme deficits have soared by two-thirds in just 12 months, leaving a £249 billion shortfall.

Source: The Express January 3, 2015

The black hole of all UK private sector schemes – where assets are outstripped by liabilities – rose from £150billion at the end of 2013 as a result of plummeting bond yields, new figures revealed yesterday.

The funding level – the proportion of payouts covered by a scheme’s assets – dropped from 88 to 83 per cent.

Charles Cowling, director of pension advisers JLT Employee Benefits, blamed the sharp rise on stalled UK equity markets and continuing low interest rates.

He said that the Bank of England’s suggestion that interest rates could normalise at an eventual 3 per cent ruled out any respite in the short to medium term.

Deficits of firms in the FTSE 350 rose by 59 per cent to £97billion while their funding level fell from 90 to 86 per cent, according to JLT.

FTSE 100 schemes also suffered, with deficits rising to £85billion from £54billion, pushing down their funding level to 87 from 90 per cent.

Last month it emerged Tesco has a £3 billion hole in its scheme.

Other companies struggling in 2014 to fill the gap included Royal Bank of Scotland and BT.

Brexit QROPS Pension Transferring UK Pension Transfers For British Expats

QROPS Brexit Transferring UK Pension Transfer to a QROPS Pension while you can STOP Paying UK Tax on your pension income.

Brexit Vote May Call For Early Move Into QROPS

The real possibility that rules surrounding offshore pension transfers could change following the outcome of the UK’s EU referendum means advisers considering such a move for their clients may be wise not to delay, says Darren Jones, head of technical sales for Old Mutual International, part of Old Mutual Wealth.

Following the UK’s decision to leave the EU, advisers are now considering what the implications may be for them and their clients. We are starting to see a number of advisers question the impact this could have on pensions and on tax relief, and more specifically the future of QROPS (Qualifying Recognised Overseas Pension Schemes).

QROPS were first introduced 10 years ago after EU legislation forced the UK to formalise its process of allowing people to transfer their pension to a different jurisdiction. Prior to this change, members had to gain HM Revenue & Customs approval on a case-by-case basis, a process that was complex and potentially lengthy.

Usually the receiving scheme was in the new country of residence and often employer sponsored. The member had to certify the permanency of leaving the UK and provide proof that UK work had ceased and new work overseas had commenced. Generally no pensions in payment could be transferred.

QROPS Growth

The QROPS market has grown significantly over the years. QROPS benefits include removing growth from future lifetime allowance testing, potentially reduced taxation on death of the member, no requirement to certify permanency of non-UK residency, potentially reduced taxation of income should the member return to the UK, currency flexibility, choice of retirement date and jurisdictional options to take advantage of favourable double taxation treaties.

The future of QROPS is very much dependant on what the UK government decides to do in relation to Article 50, and whether the UK will stay a member of the EEA. Market speculation around whether we will see a ‘closing down sale’ for QROPS is understandable, but it is perhaps more likely some modifications to the existing rules will be made.

Qualifying Recognised Overseas Pension Scheme (QROPS) “It is a real possibility the rules surrounding QROPS may change in the future, and advisers with clients considering transferring to a QROPS should encourage them to take action sooner rather than later.”

For example, HMRC may look to only allow members to transfer their QROPS to a jurisdiction where they live, removing the ability for members to select the most favourable jurisdiction to hold their pension.

Regulations In The Frame

The government may also want to preserve the benefits QROPS brings to the pension system in today’s transient market place. Attracting offshore investment and entrepreneurs to the UK, and giving them choice and flexibility when it comes to their pension saving will remain a priority for the government.

The Brexit vote may well encourage advisers and their clients to focus on their financial planning needs and, if a QROPS is suitable, it would make sense not to postpone this decision. Once a member holds their pension inside a QROPS it is hard to see how HMRC can make any retrospective changes and, should client circumstances change, it is likely that a transfer back to a UK scheme would remain an option.

So what does this all mean? QROPS will still have a valuable role to play in helping bring flexibility and choice to the UK pension industry, especially in today’s transient market place. However, it is a real possibility the rules surrounding QROPS may change in the future, and advisers with clients considering transferring to a QROPS should encourage them to take action sooner rather than later to ensure they benefit from the current legislation.

By Darren Jones, Old Mutual International

Source: International Adviser 4th July 2016









The Post-Brexit QROPS Landscape

International pensions such as QROPS are certainly going to feel the economic impacts of the UK’s decision to leave the European Union, but there will also be many other effects on these products, says David White, a founding partner at The QROPS Bureau.

Here White lists the main issues facing the future of the QROPS market in the post-Brexit world.

QROPS Increasing Number Of Expatriates

Those who voted Remain and who do not relish a future within a UK that is not part of the EU, may consider leaving the UK and will wish to ensure their pensions are best suited to their changed circumstances. Whilst some of these people will move to EU countries, many others will migrate to countries outside the EU.

Wherever these people move to, this trend, if it occurs, may lead to an increase in demand for international pension solutions such as QROPS.

QROPS Freedom Of Movement Of Capital

Much has previously been made out of the fact that QROPS has a long term future due to the EU freedom of movement of capital rules – the UK government has not been able to restrict the movement of capital within the EU by making QROPS overly restrictive, even if it wanted to. Once the UK is out of the EU this could change and the UK HMRC may be able to introduce further restrictions.

QROPS Lifetime Allowance Planning For UK Residents

One area which this may impact upon is the use of QROPS by UK residents for lifetime allowance planning. Once the UK leaves the EU, HM Revenue & Customs may be able to restrict the use of QROPS by UK residents, which they have not previously been able to do.

QROPS Flexible Drawdown In Malta

Following the introduction of flexible drawdown into the UK pensions regime in 2015, Malta was able to avoid the “temporary “retention of the “70/30” rule (70% of the pension scheme to be used to provide an income for life), because it was part of the EU. Once the link has been severed between the UK and the EU, Malta may have to revert to more closely following UK HMRC rules and introducing the “70/30” rule.


As stated above many UK residents have moved and will continue to move to countries outside of the EU. Many QROPS are not domiciled within the EU and so are unlikely to be effected by Brexit.

QROPS Taxation Of Transfers

Following an exit from the EU it is possible that the UK will continue to allow portability of pensions but introduce a tax on transfers, similar to the US system.

QROPS Restrictions On Advice

The UK being a member of the EU has made it fairly straightforward for UK Financial Conduct Authority regulated advisers to advise clients within Europe under ‘passporting’ arrangements. The UK’s exit from the EU could potentially make this process more difficult.

QROPS Gibraltar

One of the major QROPS jurisdictions is Gibraltar. Following the outcome of the EU referendum, Spain has called for the UK to enter negotiations over co-sovereignty. This would be a further chapter in the long running historic dispute between Britain and Spain over the sovereignty of Gibraltar.

QROPS Transitional Period

The majority of the above potential impacts are unlikely to occur until after Brexit has taken place. During the interim period of at least two years, whilst the exit is negotiated, there is likely to be an increase in demand for international pensions solutions such as #QROPS, while people have some certainty over the rules and the treatment of their pensions.

QROPS No One Size Fits All

As has always been the case the most suitable solution depends upon client circumstances and the regulatory climate at the time. The world changes, the country changes and the regulations change, and so the most suitable solution will change.

By Richard Hubbard

Source: International Adviser 7th July

For more information on why you should consider a QROPS Pension download your FREE QROPS Guide.


QROPS Qualifying Recognised Overseas Pension Schemes

Why don’t you Download YOUR FREE UK Pension Transfers QROPS Pensions Guide; QROPS Information Explained, so that you can decide for yourself if transferring your UK Pension to a QROPS is right for you.

Click here to receive your FREE QROPS Guide

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