Qrops Versus Sipps
Author: Colin Johnson
Qualifying Recognised Overseas Pension Schemes ( QROPS )
Transferring to a QROPS may result in the loss of certain protected rights, including contracted-out rights. It is advisable that the member commissions a pension transfer analysis from a suitably qualified professional advisor before transferring any pension provisions from the UK.
If an expatriate returns to the UK, the UK pension legislation will apply to the scheme. This means that the member will have incurred the expense of the transfer with no associated benefits. Transfer to a QROPS should therefore only be recommended to those whom have left the UK permanently.
HMRC takes a dim view of any abuse of the QROPS regime, particularly schemes where the sole intention is to give access to 100% of the pension fund. Action has already been taken in this area with the withdrawal of QROPS status from schemes based in Singapore. This potentially creates a very tricky situation for those who have already transferred their pension funds to a scheme that subsequently has its QROPS status withdrawn. Hong Kong and Guernsey are currently under investigation. Historic transfers would be considered unauthorised payments, which results in a tax liability on the member equal to 40% of their transferred value! SIPPs ,
Self Invested Personal Pension Plans for your retirement
SIPP's on the other hand retain their UK status and are fully approved by HMRC. They provide an unrivalled option for retirement provisions and allow a single arrangement to consolidate all exisiting UK pensions, whether frozen, preserved or not performing well, and therefore administered under one trust.
There is no need to purchase a conventional annuity with the added advantage of access to phased retirement and income drawdown. 25% tax free cash can be taken at retirement age leaving the "income pot" to grow. Moreover, with the wide investment choices available and improved dependent benefits, there really is only one choice.
Retain control and remain worry free, choose SIPP's.
Baywater-Group Offshore Financial Advisors Thailand
About the Author:
Director of Bayswater-Group Thailand, Offshore Financial Advice and Investment
Specialists