By Sam Kelly, 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 are Chorus not recommending 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 recent changes in legislation have equalised the benefits of transferring to a UK based pension, rather than a QROPS. In addition, HMRC have removed 9 countries and over 30% of existing QROPS providers from their approved list, and introduced new legislation that could lead to a potential tax charge of 25% for new QROPS applications received after March 9th 2017.
So, what is the alternative? At Chorus we recommend you consider a UK based pension called a SIPP. A 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 benefit from lower fees and the protection offered by UK FCA regulation coupled with the Financial Services Compensation Scheme, neither of which are available with a QROPS.
SIPPs are often cheaper and are subject to far stricter regulation than QROPS, 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 licenses or regulation required to recommend a 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 a SIPP.
Clients are already telling 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.
Chorus Financial is a trading style of Tourbillon Limited, authorised and regulated by the Financial Services Commission (Gibraltar), Licence Number FSC1118B and registered with the UK FCA, Ref. 539348.