SIPPS to replace QROPS as the way forward for expat pensioners

Published:  2 Jun at 6 PM
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QROPs is no longer the default option for retired expats.

Qualifying Recognised Overseas Pension Schemes, better known as QROPS, came in some ten years ago and were subsequently glorified as the best option for Brits determined to retire overseas. They were also welcomed with open arms by the army of expat independent financial advisors lurking in every favourite retiree destination from Spain to the far reaches of Southeast Asia. However, it seems the days of QROPS as the best option may now be numbered as several legislation changes have reduced their benefits to consumers.

These legislative changes by the British taxman had the effect of equalising the advantages of a transfer to an FCA-based in and regulated by the British authority, thus removing the threat of poor advice given by unregulated, unqualified IFAs working in favourite British expat retirement hubs across the world. Many such don’t have licenses to operate, nor are they regulated by the UK authority, meaning there’s no consumer redress should things go horribly wrong.

One alternative favoured by regulated IFAs is the UK-based pension referred to as an International Self-Invested Personal Pension or SIPPS, which provides all the major QROPS benefits. It can consolidate all personal pensions into a single plan, allow flexible access for the age of 55 and has far lower charges than a QROPs. Importantly, SIPPs are protected via the UK’s FCA regulations as well as by the Financial Services’ Compensation Scheme, neither of which can be had via a QROPS.

Charging is fully transparent and strict rules apply to any investment held within the pension itself, with the charges themselves far less than those of a QROPs. Savings can amount to thousands of pounds every year, thus adding to the growth of the funds themselves. For expats approaching retirement, it’s important to understand that many IFAs in popular expat destinations including Spain do not have licenses allowing them to recommend international SIPPS, meaning they push QROPS as the answer without giving any alternative.

For most expat retirees, it’s the safest idea to have their pensions administered in the UK rather than overseas, as UK law protects their life savings from being demolished due to poor advice, high charges and, worst of all, unscrupulous IFAs more interested in their commissions than in their clients’ welfare.
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