QROPS to be given the same flexibilities as UK-based pensions?
The UK government is considering giving the same rights to Qualifying Recognised Overseas Pension Schemes (QROPS) as UK-based British pensions – it’s a move which I’m delighted about, and one that certainly highlights the ongoing maturity of the overseas pension transfer market.
In an HMRC statement that we received today, the tax authority says: “The Government recognises that the changes to the pensions tax rules as a result of flexibility will have implications for the rules relating to Qualifying Recognised Overseas Pension Schemes (QROPS). The Government is considering these implications further to ensure that the rules relating to QROPS are appropriate when the new system comes into force.”
deVere Group is championing these discussions by HMRC and the DWP as they not only reveal that QROPS are now firmly even more a major part of retirement planning opportunities, but also because should they come to fruition – as I’m confident they will – QROPS will instantly become even more flexible and therefore even more attractive. As such, I’m confident their popularity will rise yet further, following a year on year increase, as people become more aware of their numerous advantages.
Whilst we wholeheartedly welcome the possibility of QROPS having equal new privileges as UK-based pensions, there are also possible risks associated with the decision – the same risks we have previously mentioned for all pensions access. Having the ability to access a pension at any time goes against the very notion of their purpose – to provide funds throughout someone’s retirement – and could put financial security in retirement at risk should pension pots be used too early.
It is my belief that people should resist, where at all possible, raiding their pension pots ahead of retirement, and therefore sidestep any potential ill-advised financial decisions that could result in serious and potentially disastrous consequences.
That said, as I mentioned, it’s entirely good news for the QROPS industry and all its stakeholders that the Government is taking this step as it shows unequivocally that pension transfers are now entirely mainstream.
Nigel Green deVere Group
Blog written 19th September