QROPS offshore pensions are designed as tailored retirement strategies designed to match a pension investor’s personal financial circumstances. With more than 2,000 QROPS pensions available in about 50 countries, the choices are vast and sometimes confusing.
QROPS providers insist pension savers take independent financial advice before approaching to set up a scheme. This way, they consider they have met the ‘best advice’ principles that should mean each investor has had individual explanations highlighting investment benefits and risks before transferring any funds. For more information on this, see http://www.qropshelpcentre.co.uk.
Theoretically, the underlying framework of a QROPS should be the same regardless of the provider, as all schemes have to meet HM Revenue and Customs requirements. The questions each pension saver needs to answer have nothing to do with tax benefits, but which QROPS scheme is best match to the individual’s strategy for retirement savings.
Setting up a QROPS – Checklist
Here, several factors need considering:
- The tax rules affecting fund growth in the country where your QROPS is based
- Tax rules affecting income in the country where the pension investor lives
- Investment performance and management between different QROPS schemes
QROPS management and administration charges
Saving tax may be one of the headline points for QROPS sales and marketing, but the real aim is to look beyond the hype at the nuts-and-bolts of each scheme and how they suit personal financial circumstances.
Another issue to bear in mind at this stage is QROPS pension benefits that seem too good to be true – because they probably are.
Any scheme offering 100% drawdown, enhanced cash benefits or the ability to draw cash before the age of 55 years old probably needs avoiding because these concepts break the basic QROPS pension rules.
QROPS are top rate retirement savings products for many expats and overseas workers, but HMRC does not let providers stray outside the basic rules.
For more information on QROPS, see the video below.