Why politicians and the Bank of England are prompting Britons to transfer their pensions out of the UK
An increasing number of Britons are continuing to move their money out of the UK and into Qualifying Recognised Overseas Pension Schemes (QROPS). Over the past year, the deVere Group transferred 35 per cent more pension funds from the UK into the HMRC-recognised schemes, than it did in 2011.
So, what has caused this soaring demand for QROPS?
I believe that people are increasingly concerned that their retirement funds will no longer be safe in theUKwith the government’s ongoing policy changes and pension raids, which have included the elimination of age-related benefits and plans to slash pension tax-breaks and annual allowances.
Middle and high income pensioners, and those on the verge of retirement, rightly believe that politicians are continually moving the goal posts when it comes to pensions and pilfering their hard-earned retirement funds and therefore, unsurprisingly feel that they can’t be trusted.
And it’s not just the Conservative/Lib Dem coalition either – Labour’s Ed Balls, the Shadow Chancellor, has also recently announced plans for a £1bn raid on pension contributions should his party come into power at the next general election.
Another reason for the QROPS becoming ever more popular could be the BoE’s Quantitative Easing project – which looks likely to be extended even more in the near future after the governor, Mervyn King, this week backed calls for more QE.
QE drives annuities crashing to the floor, and has made millions of British pensioners poorer in retirement as a direct consequence, but QROPS don’t oblige people to purchase an annuity.
Additionally, the current and seemingly ongoing weakness of the pound, particularly against the dollar and the euro, also makes QROPS look ever-more attractive, as income can be administered in other currencies, meaning QROPS holders can potentially avoid currency volatility.
For all these reasons, and because the concept itself is becoming more ‘mainstream’, it’s likely that a growing number of people who can move retirement funds from the UK into a QROPS – namely that’s expats and people who intend to retire abroad imminently – are taking steps to do so.
Nigel Green deVere Group
Blog written on 21st February