Advice & Solutions to Unlocking Frozen UK Pensions

We offer client’s access to QROPS based out of Guernsey and the Isle of Man and SIPPS based out of the UK. We only use ones that have adhered to the HMRC new guidelines; this means tax free cash of between 25%-30%.

SIPPS -.Self Invested Personal Pension Schemes-These offer a 25% cash sum (provided it has not been taken already) with lower fee structures than QROPS and a proven track record since late 1989, this history bodes well for peace of mind, in addition the new legislation allowing the transfer of protected rights pensions has meant SIPPS have become a very big part of expat pension arrangements. Please see other section for key differences between the schemes.

QROPS -Qualifying Recognised Overseas Pension Schemes. Previously it was not possible to legally move your existing pension offshore primarily because, in return for the tax-relief an individual receives on their pension contributions, the Revenue is expecting to tax the income they receive when the compulsory annuity is purchased; and then take any residual value on their death!

However, in April 2006, it was announced that British expatriates could move their pension benefits to a Qualifying Recognised Overseas Pension Scheme (QROPS) with the Revenue's approval. The rules of the scheme must be broadly equivalent in terms of treatment, to a UK registered pension scheme and the QROPS trustee must provide Her Majesty’s Revenue & Customs (HMRC) with information on certain “events”. The key difference is that a QROPS can be transferred to an onshore pension scheme in a more favourable jurisdiction once the individual has been offshore for 5 years.

If structured in this way, transferring pension benefits via a QROPS can have huge benefits: Firstly, if the pension is transferred to certain jurisdictions, the individual can take 25% (30%) of their pension’s value as a tax-free lump sum at any time after the age of 50 (this increases to 55 for any transfers which have not been completed by April 2010).

This is without the compulsion of purchasing an annuity. Annuities are extremely unpopular in the UK since they are extremely poor value and the income is taxed in the UK even if the individual is not resident there.

As there is no compulsion to purchase an annuity, the individual is free to do whatever they want with the released benefits. Some may choose to hold the money in a high interest offshore bank account which returns more than an annuity and is tax-free whilst they are resident outside Europe.

Others many choose to invest the money in an offshore bond or capital protected offshore investment with the view of getting even better returns. Here they have access to an entire universe of funds that cover all asset classes and market sectors, this alone ensures the returns have every chance of outperforming UK based pensions.

Others may use the money to purchase a property with the rental income returning more than an annuity would and, hopefully there would be some capital gain as a bonus!

Then, on the individuals’ death, the value of the bank account/investment/property passes to their loved ones rather than in the Government or insurance groups pockets.