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Are QROPS a good idea gone wrong?
| Published: | 6 Aug at 6 PM |
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In spite of scams, warnings and general confusion, expat websites are hopefully predicting QROPS’s popularity with expats is on the rise.
One way and another QROPS seem to be a sensible way to reinvest your cash when retirement as an expat investor kicks in, even although several scandals have been uncovered and HMRC is still determined to take its cut. Official data covering 2018 has revealed some 5,000 expats went ahead with their plans to switch their funds from either their existing QROPS or a UK-based pension. The increase represents a six per cent gain on the numbers in 2017, although the total value transferred was down by 14 per cent to £640 million. In addition, the average value of savings transferred to a new QROPS was also down by a hefty 19 per cent on the previous year, totalling just £128,000 per transfer.
Since the scheme began in April 2006, in excess of 123,000 pension savers have used the its offshore pension provision, transferring £11,41 billion at an average of £87,489 per transfer value, although figures showing how many have given up on the scheme aren’t available. Even so, the gilt seems to be slightly melting from the gingerbread, as levels of both interest and activity nowadays are significantly lower than they were some five years ago. In addition, this year’s figures represent the fifth annual decline in transfer values since the peak transfer year of 2014/2015.
According to financial gurus, the nefarious 25 per cent transfer tax as well as other new requirements are responsible for the decline in QROPS take-ups as the answer to expat retirees’ financial dilemmas. Many expat retirees either don’t want to or can’t afford to live in countries which provide QROPS, and restricting this major lifestyle choice to a smaller number of options doesn’t sit well with independently-minded pensioners.
The 25 per cent tax imposed on those determined to live exactly where they wish sounds the death knell for QROPS in such cases, especially as a number of new expatriate destinations are now regarded as Asian tigers and are offering reputable banks’ savings account interest at up to seven per cent. Nowadays, most are able to offer political stability and a comparatively safe, welcoming environment as added incentives to invest. Add in the increasing reports of cold calling in expat destinations and other IFA misdemeanors, and QROPS begins to look like a great idea gone badly wrong.
One way and another QROPS seem to be a sensible way to reinvest your cash when retirement as an expat investor kicks in, even although several scandals have been uncovered and HMRC is still determined to take its cut. Official data covering 2018 has revealed some 5,000 expats went ahead with their plans to switch their funds from either their existing QROPS or a UK-based pension. The increase represents a six per cent gain on the numbers in 2017, although the total value transferred was down by 14 per cent to £640 million. In addition, the average value of savings transferred to a new QROPS was also down by a hefty 19 per cent on the previous year, totalling just £128,000 per transfer.
Since the scheme began in April 2006, in excess of 123,000 pension savers have used the its offshore pension provision, transferring £11,41 billion at an average of £87,489 per transfer value, although figures showing how many have given up on the scheme aren’t available. Even so, the gilt seems to be slightly melting from the gingerbread, as levels of both interest and activity nowadays are significantly lower than they were some five years ago. In addition, this year’s figures represent the fifth annual decline in transfer values since the peak transfer year of 2014/2015.
According to financial gurus, the nefarious 25 per cent transfer tax as well as other new requirements are responsible for the decline in QROPS take-ups as the answer to expat retirees’ financial dilemmas. Many expat retirees either don’t want to or can’t afford to live in countries which provide QROPS, and restricting this major lifestyle choice to a smaller number of options doesn’t sit well with independently-minded pensioners.
The 25 per cent tax imposed on those determined to live exactly where they wish sounds the death knell for QROPS in such cases, especially as a number of new expatriate destinations are now regarded as Asian tigers and are offering reputable banks’ savings account interest at up to seven per cent. Nowadays, most are able to offer political stability and a comparatively safe, welcoming environment as added incentives to invest. Add in the increasing reports of cold calling in expat destinations and other IFA misdemeanors, and QROPS begins to look like a great idea gone badly wrong.
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