Should I Transfer My Pension into a QROPS?

We’re increasingly seeing queries come through from individuals who are aware of the potentially significant benefits available from a qualifying recognised overseas pension scheme, (QROPS), but who are really unsure about whether they would be best advised to transfer their current pension pot in, start saving into a QROPS from scratch, or disregard the idea altogether.

We have learned that certain onshore advisers are telling clients that QROPS are just too expensive to consider – which is interesting when you go on to discover that these advisers are not even trained to be qualified to advise on QROPS.  Other people are really struggling to find independent assistance because the market seems to be a little over dominated by the product providers themselves, who are naturally enough, trying to sell their own individual QROPS product.

Just a quick look at the HM Revenue and Customs list of qualifying schemes and you will see that there are hundreds of products on the market, so the chances of you finding the best one for you the first time you search on Google and pick a product are slim.  So how can you go about getting the right answer to the question posed by this article, and the question being asked by increasing numbers of individuals, namely: ‘should I transfer my pension into a QROPS?’  Well, the answer is, we can help you – we have some top tips that you can follow to find the correct, qualified and experienced personal advice you need before you take action.

Important Disclaimer

The information contained in this guide does not constitute advice.  Nor does it constitute an invitation to buy or the solicitation of an offer to sell QROPS, or to provide any form of investment guidance in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation.  Finally, we are not financial advisers, we are an independent publication dedicated to expatriates and all those thinking about a new life abroad, so nothing we say should be construed to constitute investment advice.

Should You Transfer Your Pension into a QROP Scheme?

As you may already be acutely aware, QROPS are an exceptional addition to the financial world that’s open to the likes of expats, those working overseas, would-be retirees planning to move abroad in retirement and those who have an international outlook to their financial situation.  However, whilst the benefits of QROPS are clear, the legislation in place to protect those saving for their pension from making an error with the investment of their pension pot is complex.  And rightly so!  After all, we’re all aware of pension mis-selling scandals where the usual problem was that an investor was given incorrect advice about opting out of the likes of a company pension and instead investing on their own in an inferior personal pension.  Therefore, it makes sense that the government in the UK has made it difficult for advisers to gain the qualifications they need to be able to offer their clients guidance.

You have to have specialist training to be able to give ‘best advice’ when it comes to QROPS.  Therefore, if you want to know whether you should transfer your current pension pot into a QROPS, you have to have independent, qualified advice.  For some people the move is a great idea, it can be potentially beneficial over the longer-term in terms of the way your money can be invested for example, and it can be potentially an advantageous move for some who know they will retire abroad for example.  However, it is certainly NOT the right move for everyone.

If you’re close to your retirement age, you’re abroad now but moving back home soon, you’re not sure where you will retire, you don’t have a massive pot to move or your investment is currently performing excellently where it is, could all be potential reasons why an adviser might look extremely closely at your personal situation before advising you one way or the other.  You see, whether it is right for you to move your pension into a QROPS is 100% a personal and individual question that needs careful and close, qualified attention.

Whilst it may be right for me to move my pension, it may be wrong for my partner.  Whilst it may be right for your colleague to move their pension, it could be wholly wrong for you to move your pension.

How Complex is it to Decide?

The good news is that with qualified advice, it can be quite a straightforward decision.  Your chosen adviser will work with you to assess your current situation, they will then talk through your future plans with you with regard to your employment status, country of residence, where you might be planning to retire and so on and so forth.  Armed with this information and an assessment of what you have saved where and which QROPS are likely to a) appeal to and b) suit you, your adviser can tell you whether it makes sense for you to move or not.

You can then choose to take your adviser’s advice, or not!  The onus is absolutely on you to get best advice – however, you don’t then have to be tied to your adviser.  If you want a second opinion you can get one – and at the end of the day, if you are hell bent on going against your adviser, they will not sit on you and try and stop you!

So, with the help of an adviser, the decision can be a relatively swift and straightforward one to make…

If a QROPS is Right For Me – What’s the Next Step?

If you and your adviser have done the hard work and assessed your situation to determine whether it would make sense for you to transfer into a QROPS, the next hurdle to leap is finding the right QROPS for you.  As stated at the beginning of this article, there are literally hundreds of QROPS products on the market from multiple providers.  The vast majority of these are in leading jurisdictions from respected institutions which only serves to make the job harder to find the best one!

However, all are clearly different in one way or another, and from speaking with you, doing their ‘know your client’ due diligence on you and completing a fact find with you, your adviser will be much better informed about which types of products will suit you best.  They will then be in a position to make recommendations, whilst clearly explaining to you why they have opted for one product over another for you, and with you in mind.

You can look at the products suggested to you by your adviser, looking at how your money is invested, by whom, what the charges and fees are, what performance has been like, (although, as you will read in the small print, past performance is no indicator of future performance and the value of your investment can go down as well as up).  You can examine every element of each scheme suggested to you, and see how this all stacks up against you and your financial position, your future monetary ambitions and your fiscal goals.  Then if you and your adviser come to a decision about a given scheme, it is a case of completing some straightforward paperwork to get your QROPS in place.

A Note About Seeking Qualified, Independent Financial Advice

Remember, when seeking advice about QROPS, and more specifically, when trying to determine whether you should transfer existing pension funds into a scheme or not, you have to have advice from a qualified and experienced, independent adviser.  If your adviser is not qualified to advise you about QROPS specifically, they are not allowed to give you any advice about them.  If your adviser is not experienced in dealing with expats and those with international monetary concerns, they will be potentially unable to understand your current and future tax position, nor the entire product landscape before you.  If your adviser is not independent, they are what’s called ‘tied’ to one product house or bank.  So, an HSBC tied adviser for example would only ever be able to tell you about HSBC’s products.

Qualified, experienced, independent financial advisers to expats and those with international monetary matters exist the world over.  You have to find the right one to work with however!  This will be a decision you make based on the quality of the brokerage/advisory behind the adviser, their ability to support you internationally and on an ongoing basis and their access to all the products in the marketplace.  This will be a decision that is driven also by your gut because you will need to find an adviser you are comfortable speaking with. 

An Aside - I once met and spoke with an independent adviser when I was working abroad in Europe, the man was very qualified but at the same time he was the most boring man on the planet who spent hours talking about himself.  Despite the fact I respected what he told me, I knew there was no way I could have him handle my money because the thought of having to meet with him for an annual review would fill me with such dread, that I’d likely keep cancelling the appointments and therefore neglect my moneys’ management!  That’s why it is really important that you find an adviser you like, or at least are comfortable working with.

Can We Help You?

We can put you in direct touch with independent financial advisers who are qualified to give you complete advice about QROPS, simply complete our expatriate financial advice form.  This is a free service that we offer to our readers…note that you are not under any obligation to seek our recommendation, nor are you obligated to speak to an adviser we put you in touch with.  Furthermore, you are not obligated to act on advice given to you by anyone we put you in touch with.  It’s your money – and the management of it is something you have to take seriously…therefore you should always ensure you are 100% comfortable with anything suggested to you, and you should always seek qualified advice before taking any action that could have any impact on your financial status.  It’s not a disclaimer, that’s at the start of the article - it’s just commonsense.