Brexit to fuel demand for the transfer of UK pensions – QROPS
As the result of last Thursday’s referendum continues to sink in, and what the Leave victory will mean for personal finances, Brexit will be a trigger for more individuals to transfer their British pensions out of the UK.
It will come as little surprise that demand for HMRC-recognised pension transfers will increase considerably as a result of the UK deciding to leave the EU.
As such, due to the uncertainty generated, more and more people who are able to do so – namely expatriates and those considering retiring overseas – will be looking to protect their retirement funds by moving them into a secure, English-speaking jurisdiction outside the UK.
The main concern, and therefore the predominant reason why more people will look into transferring their pensions outside the UK, will be the substantial drop in the pound after the Brexit result.
Of course, for people residing in the EU with a UK pension, a plunging pound has grave consequences – as the cost of living becomes much higher.
One way to mitigate currency fluctuation problems, which, naturally, can make a serious dent in retirement income, is to transfer your UK pensions into a Qualifying Recognised Overseas Pension Scheme, or QROPS.
One of the principal advantages of a QROPS is that holders can choose which currency they wish to receive their payments in. This, therefore, removes the risk of exchange rate fluctuations, thereby improving the individual’s financial circumstances, making them more consistent and secure.
Other associated benefits of QROPS is that monies can be passed on to heirs after death (after five full years of non-UK residence); there is greater investment flexibility and freedom; and there’s the possibility to dispel UK income tax or death charges of as much as 45 per cent.
Another major factor why demand for QROPS is set to skyrocket, is due to the anticipated increase in expat numbers.
This is mainly down to the fact that whilst Britain is still a full member of the EU over the next two years, people who are considering retiring to locations such as Spain and France, wont hang around too long.
These individuals will want to move whilst it is still relatively straightforward to do so. The impact of Brexit will make moving to other EU countries far more difficult for Brits after the UK has formally left.
Furthermore, with regards to the legalities of QROPS, the Vote Leave victory has sparked numerous questions.
QROPS began under EU law, but there are now separate agreements in place between the UK and individual jurisdictions, Malta for example, in relation to pension transfers.
As such, when the UK officially leaves the European Union, such agreements will be upheld. So the pension funds set up in these jurisdictions will still fulfil the criteria in order to be recognised as Overseas Pensions Schemes under UK legislation.
Therefore, it’s safe to say that the global financial advisory sector, in which deVere is truly dominant force, is set to begin a stage of colossal activity and growth in the aftermath of the Brexit vote.