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QROPS are seemingly all the rage for expats and those who want to retire abroad – you’ve probably heard all about them already and are wondering whether you can benefit. To find out you need to take advice – but you need to ensure this is best advice – we show you how to get the right advice about potentially transferring your pension offshore.

You could say that QROPS, (Qualifying Recognised Overseas Pension Schemes), were introduced by the British government in a bid to encourage baby boomers to move abroad in retirement.  It’s cheaper when your non-contributing pensioners are living elsewhere and using up health services and social benefits abroad after all…but perhaps that’s too cynical a way of looking at it!

The benefits of QROPS are that they allow anyone who wants to retire overseas a very flexible way to manage, invest and enjoy their pension income – QROPS are therefore pension passports.  Furthermore, they are certainly an attractive and advantageous investment solution for anyone living overseas long-term, and/or who wants to retire abroad permanently.

However, the trouble with QROPS is that they have to comply with the British rules…as well as the rules defined for them in the jurisdiction in which they are housed and managed.  This has led to some hiccups along the way when advisers have failed to recognise issues with a scheme, or given the wrong advice to those who wanted to transfer their pensions offshore.  Because getting best advice is technical and yet critical, we have produced this guide to show you how to get the best QROPS advice you can to enable your decision-making.

As stated some QROPS have come unstuck in terms of reaching the ‘qualifying’ status required for them to be accepted by the British authorities for the receipt of British pension funds.  This has led to a few QROPS being knocked off HMRC’s list of qualifying schemes: for those invested therein there is now the very real threat of a massive penalty as a result. 

What all this comes down to however, is that fact that in order to determine whether you should transfer your pension offshore and into a QROPS you have to have qualified, best advice.  This advice has to cover many aspects and considerations that you may not even be aware of…therefore we have decided to produce a short guide for you to show you how to get best QROPS advice.

There is a great deal of research that needs to go in to determining whether or not a given individual should transfer in to a QROPS, furthermore, a great deal of care has to be taken in determining which QROPS and which jurisdiction to select.  An adviser has to understand a client’s short, medium and long-term plans and position, they need to look at currency and tax aspects of a transfer and a future draw down too.

Advisers need to understand pension rules in the UK, and in any jurisdiction they are including in their considerations for a given client – i.e., the jurisdiction favourable for the QROPS as well as perhaps the jurisdiction where the individual plans to retire.

Technically there is a lot to understand – which is why your adviser has to have the correct qualifications proving that they have the knowledge required to advise you.  Generic financial planning qualifications may not be sufficient.  Ask for evidence of your adviser’s relevant qualifications and specifically request that they explain to you how and why they are best placed to advise you.

QROPS have been around for a few years now, and they have evolved and developed.  Ideally your adviser will have substantial knowledge of the market and the changes it has faced.  Furthermore, ideally they will be backed by a brokerage which has put plenty of QROPS business through various providers and which is therefore experienced in managing transfers and client QROPS business.

But taking an adviser’s word for all of this is not sufficient…which is why you should ask for client testimonials and/or a reference.  Good advisers will find it only too easy to provide you with this data.  Ensure it’s a recommendation/testimonial from a QROPS customer…

You need to find out where your financial adviser is regulated – they will possibly be a member of a brokerage team, in which case find out how and where the brokerage is regulated.  Know also that the jurisdiction in which you receive advice is critical if ever it comes to you making a complaint about advice received.

Look at the rules governing the giving of financial advice in the jurisdiction in question and ensure they are sufficient to protect you, the client.  Ask your adviser about their personal indemnity insurance also, and what their company’s complaints procedure is like.

You need to know that in the worst-case scenario if something goes wrong with the advice you’re given, you can seek recompense.

Whilst there are hundreds of QROPS listed on HMRC’s qualifying list and still more that do not appear on the list, and whilst they are dotted about in jurisdictions all over the world, you cannot have access to all of them!  Many advisers claim to have access to the entire product marketplace, but this is misleading information.

Not all QROPS are open to all individuals from different nations – many are not.  You will not therefore be able to have access to the entire QROPS marketplace with any single adviser in the world.  What you want and need to have access to through an independent adviser is all the QROPS that could be of benefit to you.  This may not be a particularly long list because a lot will depend on the jurisdiction you’re living in and where you plan to retire.

Your adviser should be able to explain this to you clearly and also explain to you why he is going to consider whichever QROPS he examines for your potential transfer.

There is no such thing as free advice – even an independent adviser who does not charge you fees for his time will be seeking financial compensation in the form of commission from whichever provider he recommends you place your QROPS with.

Other advisers get paid for the time they spend with you.  They claim that they are more likely to be less influenced by commissions (even though they still receive them) as they are not wholly, solely reliant upon them for their income.

Either way you can get a bit of clarity on the situation by asking your adviser about how they get paid, and how much commission they will get from each of the QROPS providers if you agree to go with them.  This information is useful to you to ensure your adviser is not just suggesting you go with the QROPS provider who pays the most commission!

Your adviser will need to spend time getting to know you, your financial position, your plans for the future and even your tax status.  They will need to know all of this information to help them build a financial picture of your future.  It is with this overview that they will be able to work out where you would be better off transferring your pension to – assuming a transfer is right for you.

Having taken the time to gather and assess all the information from you, they will they come up with a list of recommendations and advice.  You should receive a comprehensive document detailing exactly how the adviser has come to the decisions they have.  This should cover everything from how they perceive your risk profile, what they understand about your personal position, what they think your goals are and how they therefore come to any conclusions they do come to about your QROPS transfer.

This document should be in plain English.  You should read it carefully to ensure it is accurate and that assumptions made are correct.  You should be able to see clearly how and why your adviser has reached the decision they have, and with this information, as well as detailed product literature supplied, you should be in a position to accept or decline the offer made.

If you would like to be put in touch with an adviser qualified to advise you and manage your QROPS transfer, contact us.  At Shelter Offshore we do not give personalised advice as we are not qualified to do so – however, over the years we have established a working relationship with independent financial advisories that now provide any readers who come through, and who are seeking assistance, with the support that they need.  We will put you in direct touch with an adviser.

Alternatively, you can do your own personalised research into the best financial adviser/advisories, taking recommendations from friends and colleagues for example, or from independent online forums and sites.  Always do your due diligence into an adviser to ensure they are qualified, experienced, regulated and insured…and use the above information to help you make an informed choice about whether the advice you receive is the best advice or not.

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