The Federation of European Independent Financial Advisers

New data from HM Revenue & Customs reveals that the combined value of retirement transfers to QROPS fell to £740 million in the 2017-2018 tax year, the first period since the government introduced a 25% tax charge, with the number of pension transfers down to 4,700 from 9,700.

Given the scale of the pension transfer tax, the drop recorded by HMRC in QROPS transfers should come as no surprise. However, as the figures do not differentiate between transfers made by UK citizens and expat retirement transfers, it is difficult to know what, if any, difference the new levy has had on the decisions of expats.

When a QROPS isn’t right

Whether you are a member of a defined benefit plan or another scheme, you may worry about the talk of a UK pension crisis, particularly as the State Pension, as important a safety net as it may be, is worth less than £9,000 a year.

Even with the 25% tax, a QROPS transfer may still be a useful and suitable option for you, especially if you have moved abroad and intend to stay abroad.

But what do you do if your wealth manager advises you against a QROPS – is there an alternative?

For many, in this situation a SIPP (a Self-Invested Personal Pension) may be the flexible vehicle necessary to help you reach your retirement goals.

It gives retirement savers a broad spectrum of investment choice and allows seasoned investors to self-manage their investment, while the less experienced investor can choose to have someone manage the investments on their behalf.

A SIPP can be comprised of bonds, funds, shares and other types of security, so allows for a great deal of diversification.

Furthermore, as you don’t have to make regular contributions, it is possible to set a strategy and then wait for the results; in its own way a SIPP can be surprisingly low maintenance.

And because you can withdraw up to 25% of your SIPP in a lump sum, tax-free, from the date of your 55th birthday, you are able to reinvest, spend or gift a large proportion of the money entirely on your own terms. You then have the option of income drawdown, so that you can receive income while having the security of staying invested.

Expat retirement transfer advice

Blacktower FM can help you decide whether an expat retirement transfer into an HMRC QROPS is suitable for you and your circumstances – for example, whether it is the best way to draw income, and whether it is beneficial from the perspective of inheritance tax and legacy planning.

 

​​​​​​​​​The above article was kindly provided by Blacktower Financial Management Group and originally posted at: ​​​​​​​​​​​https://www.blacktowerfm.com/news/666-hmrc-records-drop-in-qrops-transfers-but-suitability-still-key