Im_and_Er

Oops, somehow managed to double post when correcting a small error.

Im_and_Er

I'm Sorry but you are wrong, see below, (my bold)

I know about the special circumstances surrounding Australian and New Zealand superannuation schemes but they are not really relevant here unless there are similar provisions for The Irish Republic which I'm pretty certain is not the case.

"QROPS providers have a duty to report distributions made to members for the first five years of them being non-resident in the UK to HMRC. Furthermore they have an ongoing requirement to meet the obligations and up-hold their undertaking which lead to HMRC recognition and scheme approval. Some providers have chosen to interpret this to mean that after the five year reporting period is up they no longer have to adhere to the obligations for recognition. The consequence of this has been certain schemes allowing large distribution or total encashment that breaches the 70% rule. This generates a large tax charge for the offending member and a potential disqualification for the provider and implications for all members within that scheme."

Source: http://www.ifaonline.co.uk/professio...ng-qrops-myths

Mitzyboy, the French have very recently enacted a law making lump sums liable to tax, prior to this it was very grey area with most people taking their and staying stum.

http://www.french-property.com/news/...ion_lump_sums/

Im_and_Er

I presume this to be the source of your earlier quote:

http://www.closeprotectionworld.co.u...r-pension.html

Whilst it is not actually wrong in it's elements unfortunately the placing of

Where the payment by the QROPS takes place outside the five years described above and so is not reportable to HMRC, the AMP provisions and the associated UP charges do not apply.

below

As regards lump sum payments, they would have to meet all the three conditions set out below to be within the member payment provisions and so not give rise to a liability to a UK tax charge on the transfer member:

• Be paid on or after reaching ‘minimum pension age’ (currently age 50 but rising to age 55 from 6 April 2010).

• Be paid in conjunction with the commencement of a lifetime income, annuity or scheme pension.

• Amount to no more than 25% of the original transfer payment.

has materially changed the meaning and if you read it the other way around it then it states the correct position and tallies with what is stated on the IFA site I linked to.

kerrygreen

With all respect, the vast majority of IFAs don't have even the basic understanding of qrops.

I used a firm which specialise ONLY in qrops.

The horror stories put about by these IFAs is basically because they don't like seeing potential business disappearing from them.

When a pension is transferred into a qrops, after the 5-years has elapsed, it becomes liable to the pension laws of the country into which the qrops has been transferred. And this does not have to be the country you are residing in.

In this case, NZ for example allow for 100% encashment, irrespective of age and with NO tax liability.

HMRC are well aware of this and are happy to keep allowing transfers. If they were not they would put a stop on it.

By the way, if you know of ANYONE who has ever been landed with this 55% tax charge, please let me know.

Even in the case of one firm (Beasley) which HMRC took away its QROPS status, the members did NOT face this punitive tax.

And to put the record straight, I HAVE ABSOLUTELY NO INTEREST IN PROMOTING QROPS. It is just that this opportunity has not been made aware to a lot of ex-pats. I am quite happy to train and race my greyhounds!

Even if you don't want 100% cash, the QROPS schemes are far and away a better option for anyone's pension.

Mitzyboy

Well if you are going to criticise IFA's for not being knowedgeable about such things, then you have to equally wonder about companies being specialist in only QROPS being "independent" about their views

kerrygreen

Not everyone wants to 'cash out' their pensions. QROPS are undeniably the best option for a pension for ex-pats.

No obligation to purchase an annuity
Ability to bequeath the pension

being, probably, the main 2 advantages.

They are, however, a specialist area and as in all areas of life those that specialise tend to do well.

They do not 'push' the 100% option as, for most people, this is not the most important thing they want to achieve.

It is just another financial option - nothing more, nothing less.

And from what I hear, this may well become available to UK residents in the future.

Who, these days, wants to use their hard earned pension fund to purchase a very unattractive annuity

Mitzyboy

When your pension matures nowadays you will no longer have to buy an annuity. Thats old hat I'm afraid. This is exactly why you need INDEPENDENT FINANCIAL ADVICE
http://www.thisismoney.co.uk/pension...0&in_page_id=6

kerrygreen

Who is really independent?

Most IFAs will push a product that gets them the most commission.

Personally, I don't give a flying one what constraints UK pension holders have put on them, but for the ex-pat qrops are truly a no-brainer decision when there is no obligation to purchase an annuity.

And also, the website you highlighted did say that the changes to UK pensions would ONLY be available to those already with an income of at least £20,000 - how fair is that. How many pensioners will have that sort of income when they are no longer working

Im_and_Er

Rubbishing the veracity of ifaonline.co.uk is facile as is suggesting that they have some axe to grind with QROPS.

The thing you are consistenly glossing over is the fact that to qualify as a QROPS a scheme has to have rules which conform to HMRC requirements. These stretch beyond the 5 year reporting period into perpetuity and do not permit 100% encashment. Australia and NZ are special cases due to their domestic treatment of such funds.

Contrary to what you believe the fund does not automatically fall under local rules after 5 years, it remains under the QROPS rules, and I recommend you read the HMRC QROPS iapplication form and it's attendant notes:

http://www.hmrc.gov.uk/pensionschemes/apss251.pdf

http://www.hmrc.gov.uk/pensionschemes/apss251-notes.pdf

In each case it is very clearly specified that 70% of the fund must be preserved to provide an income for life automatically ruling out 100% encashment. You will note also that the period of 5 years is mentioned nowhere.

What some unscrupulous providers are taking advantage of is sloppy policing but that does not make what they are doing right nor exonerate recipients from tax penalties if found out. If a provider is found to be breaking the rules in this way then the whole scheme is liable to be declared void hence exposing it's clients to the 55% tax penalty.

HMRC publish a monthly list of QROPS providers but add these comments:

"It [Inclusion on this list] is not to be taken as a recommendation for a particular scheme or product.

This list is based on information provided to HMRC by these schemes when applying to be a QROPS. As part of its application the scheme notifies HMRC that it fulfils the requirements for being a “recognised overseas pension scheme.

Publication on the list should not be seen as confirmation by HMRC that it has verified all the information supplied by the scheme in its application”

With the disclaimer, the taxman is explaining:

* QROPS providers self-certify they meet QROPS rules when applying to be listed
* No QROPS are recommended or endorsed by HMRC

Just as a final point though who was your QROPS provider ?

Mitzyboy

A qrops provider will push only a product that he sells An IFA HAS to be independent, because he is controlled and monitored by the FSA. My old IFA gave up in the end because he had to complete so much paperwork. My present IFA doesnt push me into anything. He provides the info, recommendations, and I make the decision. He has no "favourites". He has no product he pushes me towards

It's not a no brainer. Everyones circumstances are different, and thats why to jump into something without the right information is pure sillyness. You didnt know about the rules on annuities being changed. You didnt have all the information. Although it's not the answer for everyone, its another avenue to explore.

Tax. I might get tax free with qrops in the UK. It's taxable where I live. My wifes tax free pension lump sum wouldnt have been tax free in Spain, we would have had to pay more than we would in the UK.

We can discuss this forever, but the irrefutable fact remains that you need sound independent financial advice before you start throwing your lifes savings around And incidentally, thats been proved so many times before.

kerrygreen

If HMRC are against 100% encashment why don't they just do away with the 5 year reporting rule - why do they no longer want to know about what happens to a pension after 5 years?

The facts are that NOBODY HAS HAD A 55% PENALTY HEAPED ON THEM FOR TAKING 100% CASH.

That's why NZ is a popular destination for those who do want to cash out their pensions - because they allow it.

If HMRC truly wanted to end this they could do so in an instant.

Even qrops destinations close to the UK (Isle of Man) will soon be offering 100% encashment.

Using the HMRC bogeyman is not really an argument

kerrygreen

As I stated previously, the 'new rules' regarding UK annuities only affect those pensioners who already have an income over £20,000!!

How many of them are there?

One rule for the rich . . .

Mitzyboy

Read the article fully. It doesnt only apply only to £20k+, but the rules are different for smaller pensioners

Londonuck

Get a room you two

Mitzyboy

Steady now