Are offshore QROPs at risk following Brexit

Published:  18 Aug at 6 PM
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Perhaps more than any other sector of British society, UK expats are likely to feel the effects of Brexit in most aspects of their lives, especially those related to money. Many British retirees now domiciled in EU member state companies will have paid into private or work-related pensions in order to ensure a comfortable retirement with little in the way of financial worries. At present, transferring a pension pot overseas is straightforward, but it’s possible that the Brexit negotiations may change the rules.

The Qualified Recognised Overseas Pension Scheme, known in official jargon as a QROPs, has been taken up with enthusiasm by a huge number of retirees since 2006, but now has a reputation for sheltering con men posing as IFAs who shift huge quantities of savers’ cash into high risk and unregulated schemes. Some experts believe tightening the rules may result in more protection from these sharks.

However, it’s also possible that the British government may restrict QROPs availability to expats’ countries of residence, thus ending the present choice between many offshore jurisdictions. As the government has stated more than once, the original QROPs plan involved pension transfers only to the expat’s country of residence, thus restricting the chance to minimise or eliminate tax bills.

Should the original plan be re-established, the result may be good news for the government, in that more expats may decide to leave their pensions in the UK, a welcome boost to the Treasury. Not such good news, however, for expat pensioners, as returns will then be subject to increased taxes, lifetime allowance penalties and even inheritance taxes.

Given pundits’ projections of a post Brexit recession, it’s not hard to imagine the new Chancellor tweaking legislation to prevent pension pots from leaving the country with their owners. The upside is that expats living overseas will no longer be subject to hordes of illegally working crooks specialising in mis-selling and worse. Expat retirees aren’t always aware that, once they leave the UK, they are no longer protected by a financial watchdog such as the FCA.
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