How do you apply for a QROPS?
Applying for a QROPS is not as daunting as it sounds. Moving money around internationally is not just for celebrities and tycoons. Follow these steps and you will be able to deal with the transfer in a matter of weeks.
Step 1 – Compile all relevant information
Before you instruct anyone to act for you or make any decisions, it is important to compile all of the information you have available about your current pension arrangements. Are your statements up to date? Do you have a list of reference and account numbers?
The better information you have available, the better advice the financial adviser will be able to give.
You may be one of the millions of people who have lost a pension somewhere along their working life. If so, try contacting the Department of Work and Pensions’ Pension Tracing Service, so that they can track down your missing fund.
Step 2 – Select an Adviser
When you get advice on your pension, you are placing the responsibility for your future financial security in someone else’s hands. That’s why it’s essential to choose someone with the appropriate outlook and expertise.
Although, by definition, if you are considering a QROPS you will have a foreign or offshore dimension to your retirement plans, you should use a financial adviser who is authorised and regulated by the United Kingdom’s Financial Services Authority. This way you have a guarantee that the adviser meets certain standards, and can be pursued effectively in the event of any misfeasance. The FSA may also provide compensation where appropriate.
Whoever you choose, make sure that you have access to a wide variety of QROPS on the market. A QROPS is a financial product that is there to be sold, like any other. Accordingly, make sure that your adviser is not tied to just one provider, as this would limit the deals available to you.
Generally speaking, a large QROPS adviser has more “buying power”, and can therefore negotiate a better deal for management fees. Accordingly, you might get a better deal if you use a larger adviser.
You may question whether you need an adviser at all. But ask yourself this: are you an expert on pension and tax regulation, both offshore and UK based? Do you have an in depth knowledge of the various QROPS products available on the marketplace? If the answer to both of those questions is “no”, you could risk losing a serious amount of money if you proceed without a QROPS adviser.
Not only are there investment risks involved in going it alone. If you erroneously transfer your pension fund to an overseas scheme which subsequently turns out not to be HMRC approved QROPS, you risk paying a sanction of up to 40% of the transfer value of the scheme.
Step 3 – Speak to Your Family
Deciding to transfer your UK pension into a QROPS is an important step. If you return to the UK within 5 years of leaving, you may incur a severe tax liability as the UK system “bites” again. Accordingly, it is important to discuss your plans fully with your partner and family, to ensure that you intend to stay outside the UK for the same length of time. Leaving the UK and transferring your pension to a QROPS is not necessarily a one way trip, but any return has to be carefully managed and planned to minimise any tax liability.
Step 4 – Consider the whole picture
While you are getting professional advice about your pension, speak to an adviser about your other investments and assets. It is a good time to conduct a review of your whole financial situation.
Step 5 – Fill in the forms
Various advisers have differing systems for actually effecting the transfer. Some require you to fill in the detailed forms, others simply ask for your authorisation to manage the whole process for you.
You might be transferring your pension fund into an off the peg QROPS, or your adviser or provider might be building a custom made scheme for you. Either way, a small amount of paperwork is unavoidable.
Step 6 – Start Packing!
Now that your QROPS adviser has taken responsibility for transferring your pension, you’d better start packing for your new life abroad. Once the pension has been transferred, it is still advisers for QROPS members to keep an eye on their funds. Check statements and query any inconsistencies. Most QROPS advisers are happy to answer questions on anything that seems unclear.
