WHY CHOOSE A PENSIONTRANSFER ?

QROPS PENSIONSTHE FACTS

WHY CHOOSEA QROPS ?Making sense of your retirement savings was hard enoughwhen you lived in the UK. Now you are globally mobile it canfeel even more daunting.

Thankfully, there is a type of pension that is both transparent

and flexible, while at the same time offering expats like you,

special tax advantages and benefits.

It is called a QROPS, which stands for Qualifying Recognised OverseasPension Scheme, and is set up within rules designed by HM Revenue& Customs for today’s mobile workers. For many people living andworking overseas, a QROPS is the most effective way to look after allthe pensions they have built up throughout their career.

Recently, the UK government has taken radical steps to make itsdomestic pensions more flexible, but QROPS remain attractive foranyone planning to retire abroad. Even if you are planning to return tothe UK at some point In the future, they still offer valuable featuresyou won’t be able to find anywhere else.

Guardian Wealth Management has been helping internationalprofessionals manage their assets via QROPS arrangements for years.If you are working and earning outside the UK, there is a good chancethat a QROPS is the right pension product for you.

A QROPS enables you to:-

Take control of your pension investments

Receive a bigger tax free lump sum upon retirement

Draw income through retirement to suit your needs

Avoid pension tax allowance charges

Improve your tax efficiency

Pass more on to your loved ones

TAKE CONTROL...of your pension investments

Whether in the UK or abroad, most of us have pension savings scattered invarious plans taken out at different points in our career. You can only build aninvestment portfolio that’s right for you, if you can make sense of what youhave.

By bringing all your pensions into a QROPS plan you will be able see all yourinvestments in one place, allowing you to design the portfolio to best suit youand your retirement goals.

You can invest in literally thousands of different assets through a QROPS.

Furthermore, if you want professional guidance ongrowing your money, we are here to help.

QROPS give you theoption to invest in:-

Shares

Funds

Endowment policies

Bonds

Gilts

Commercial property

Receive a bigger lump sum and more income during retirement

QROPS are far more tax-efficient vehicles than domestic UK pensions for anyonedeciding to retire outside the UK. They allow you access to more tax-free cash plus,depending on where you live, they allow you to pay less income tax on your pensionincome. It’s true, the UK pension system is changing to allow greater flexibility overhow income is drawn, yet there is no reduction on tax rates. In fact, the Treasurypredicts higher tax rates under the new system than the old one.

Tax-free cash

When it comes to drawing your tax-free cash lump sum, a QROPS is the clear winner. Once you sign up to QROPS and remain for the qualifying period, you can draw 30per cent of the fund as a tax-free lump sum. Note this is even better than the 25 percent currently allowed from a UK pension. As with a UK pension, you can draw yourlump sum any time after your 55th birthday.

Lower income tax during retirement

If you were to leave your pension assets in the UK, then the money you draw willnormally be taxed at your marginal income tax rate, which might be 45, 40 or 20 percent. However, as a QROPS is domiciled offshore, there is no UK tax to pay on it. Youonly pay tax in the country in which you reside, according to that country’s treatmentof foreign-earned pension income.

Depending on where you retire, this could leave you with a significantly lower tax bill.In Hong Kong for example, there is no tax on foreign-earned pension income at all -so with careful planning you could reduce your tax liability to just 2.5 per cent.

If you are planning to retire or even spend part of your retirement in a country wewould class as kind to pension income, a QROPS will save you money.

AVOIDPENSION TAXALLOWANCE CHARGES

As recently as 2011 UK residents were granted tax relief onpension assets up to £1.8m. Successive austerity budgetsin the UK however, have seen said allowance steadilydiminish. From the 2014/15 tax year this allowance, knownas the ‘lifetime allowance’, has been reduced and nowstands at £1.25m, with many fearing further reductions.

Now, for those with UK pension funds in excessof this limit, a large tax bill could be applied whenwithdrawing money from your pension. If youbelieve your pension could exceed £1.25mbefore you retire, be sure to review yourplanning now or you may find yourself withan unexpected tax bill.

If you have a private or group pensionplan, checking your pension savingsagainst the lifetime allowance is simple,with a final salary scheme however(defined benefit,) the calculation is farmore complex so it’s important to checkthe ‘worth’ of your plan with an adviser.

The UK government has been withdrawing tax relief onpensions for several years now, and we expect this tocontinue in an effort to recover the national debt.

A QROPS can stop you feeling the effects of thosecuts, in your pension pot

If you have a pension pot that exceeds the £1.25mallowance then anything above that mark will becharged at 55% on withdrawal (if taken as a lumpsum.)If taken as income you will be charged 25 percent in addition to your marginal rate of income tax.Higher rate tax payers, this means income tax at 65per cent.

Fortunately, investment gains accrued in a QROPSwhile you are not a UK resident do not suffer suchtax penalties. If for you, the lifetime allowance lookslike it may be an issue, think about moving yourassets to a QROPS. Even if you are planning to returnto the UK to retire, switching to a QROPS can stillmake sense, contact us for more information.

Pass more on to your loved ones

Funds held in a QROPS can benefit from taxadvantages not available to people investing in UKpensions. These advantages apply whether you retireand die abroad or return to the UK.

Should you die after withdrawing income from apension based in the UK, the remainder of yourfunds will be taxed. From April 2015 the 55%pensions death tax will not apply, instead yourbeneficiaries will be taxed as if it were earned income;this may take them into the 45%tax bracket. In aQROPS there is no tax to pay at all, provided youhave lived outside the UK for the qualifying period.

With a QROPS, should you return to the UK, deathtax on the fund will be lower - in some cases zero.This is because withdrawals made overseas aretreated as reducing your taxable sum.

There is usually little point in putting extra cash intoyour UK pension once you have reached the lifetimeallowance. That aside, investment growth can takeyour pot over the limit; leaving you liable for a bigtax charge on that excess if left in a UK pension.

Where do I go from here?

If you are living, working and saving overseas, there aremany reasons why a QROPS could be right for you.

However, before you transfer pension assets, seek outprofessional financial advice. At Guardian Wealth

Management we have experienced independent financialadvisers who can talk you through your options and

recommend the best course of action.

You’ve worked hard to save money for your retirement.So you deserve to spend as much of it as possible

however you like.

Information correct as of 8th May 2014. The information provided is for guidance only and advice should be sought before making any financial decisions.

Guardian Wealth Management Ltd cannot be held responsible for any errors or omissions which result in financial loss.

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