Sam Kelly DipPFS, EFA, BA (Hons)
Managing Partner Chorus Financial
QROPS, or Qualifying Recognised Overseas Pension Schemes, are a type of overseas pension that have been a popular option over the last 10 years with British expats, so why do Chorus not recommend them as the default option to our clients?
QROPS used to offer several benefits over UK based pensions as a transfer option if you lived abroad, but changes in legislation mostly equalised the benefits of transferring to a UK based, FCA regulated pension, rather than a QROPS.
In addition, HMRC removed 9 countries and over 30% of existing QROPS providers from their approved list due to potential rule breaches and introduced new legislation that could lead to a potential tax charge of 25% on QROPS, if you aren’t advised correctly.
There does remain significant benefits with a QROPS for clients approaching the lifetime allowance (currently £1,073,100), but for the majority of people out here in Spain, there is often a better alternative.
So, what is the alternative? At Chorus we recommend you consider a UK based pension called an International SIPP (Self Invested Personal Pension). An International SIPP offers all the main benefits of a QROPS – flexible access from 55, passing on more to your loved ones, consolidating multiple pensions into one plan – but generally has much lower charges and the protection offered by UK FCA regulation coupled with the Financial Services Compensation Scheme, neither of which are available with a QROPS.
International SIPPs are subject to strict regulation, including full transparent charging, and strict rules for the investments held within your pension. This can lead to substantially reduced annual costs, often saving clients thousands of pounds a year, and leading to superior growth of your pension funds.
It is worth bearing in mind that many financial advisors in Spain do not have the correct licences or regulation required to recommend an International SIPP so may only use QROPS, even if it is not necessarily the best option for you. We would always recommend getting a second opinion and work with UK regulated pension experts to ensure you receive the best advice.
Chorus are currently offering to review your existing QROPS or potential pension transfer so that we can demonstrate where you could save money, and increase the security of your pension by moving to an International SIPP.
Clients often tell us that they are happy knowing their pensions are being managed in the UK, rather than overseas, where they are not familiar with what financial protection and regulation may or may not be in place. Also remember, at Chorus we offer fully transparent charging, and will always offer a solution with no tie-in or exit penalties, ensuring a fully flexible, transparent solution for your pension.
If you are considering a new pension transfer or have an existing QROPS or International SIPP, please call me on 664 398 702 or email [email protected] and I will be happy to review your options for free and without obligation.