QROPS: More seek bridge over Brexit uncertainty

This summer’s Brexit vote — with Britain leaving the EU — continues to produce waves of speculation, as investors and financial experts try and determine what comes next. The truth is that no one knows for sure. Qualifying Recognized Overseas Pension Schemes (QROPS), therefore, become a logical solution for expats in the U.S. looking to safeguard their hard-earned retirement funds.

And those speculating a retirement move from Britain to another EU country — before things get too complex — are likely to speed up the timeline and investigate QROPS as well.

Factors at play

Pension deficits already exists; and now, with Brexit a reality, they aren’t likely to improve. It seems British employers may be forced to make some harsh changes to stay afloat.

A drop in the pound means a higher cost of living for British residents, a drop in liquidity for pension schemes with reduced gilt yields, and reduced value in invested sectors — and more expats transferring pensions out of the UK as a result.

QROPS investors are simply better equipped to weather this volatility by taking control of their pensions.

Benefits abound

As we’ve previously stated, QROPS operates under agreements with individual jurisdictions, such as Malta. So they will be upheld after the UK’s formal exit in about two years. This alone is a comfort for those with retirement accounts in the UK.

Other reasons QROPS provide a safe exit, financially:

• Investors can leave 100 percent of their QROPS funds to their heirs after they have lived outside of the UK for five years.
• QROPS savers can sidestep UK income tax or death charges, which can be close to 50 percent.
• Exchange-rate curveballs are avoided, as QROPS investors can choose how they want to be paid, and aren’t locked into one particular form of currency.

If you and your financial advisor decide that a QROPS transfer is the best investment tool for you, don’t be tempted to wait and see if the UK pension deficit improves, even if retirement is a long way off. Take control of your future retirement now.

The likelihood of UK pension funding is getting dimmer; investigate the advantages of a QROPS transfer with a registered financial advisor today.

Alconbury Trust LLC is a Registered Investment Advisor in the State of Florida and Texas – USA.

The post QROPS: More seek bridge over Brexit uncertainty appeared first on Alconbury Trust.

from Alconbury Trust https://www.alconburytrust.com/qrops-seek-bridge-brexit-uncertainty/

Brexit’s impact on QROPS transfers

Anyone who tells you that they know for certain how Brexit — Britain’s vote to exit the Eurozone — will impact pensions and Qualifying Recognized Overseas Pension Schemes (QROPS) is lying. Much is still unknown; reactions Friday included the pound going into freefall against the dollar and 10-year UK government borrowing costs sinking below 1 percent for the first time ever.

Now-resigned UK Prime Minister David Cameron will leave his post by October. Then — no longer part of the union — the UK will renegotiate its trade, business and political arrangements — a complicated process which could take up to two years.

Expats in Europe and British expats living elsewhere have questions, but there are no quick answers.

Sources of concern

Expats in Europe are concerned not only about their pensions and how they will be paid, but also about taxes and levies on those payments. With the UK no longer a member of the European Union (EU), it’s an unfamiliar playing field.

QROPS transfers for British expats living in other countries fall under Her Majesty’s Revenue & Customs (HMRC), not the EU. Therefore, it needs to qualify under HMRC rules. According to Alan Kentish, interim chief executive of STM Group, UK citizens will still be able to transfer their pensions to Europe via a QROPS.

Don’t forget, also, that expats are long-term investors; some still have property and savings in the UK, as well. So it isn’t just pension transfers that are a worry for them. The long-term impact on asset prices in the UK from property to shares will take time to become apparent.

Defined-Benefit (DB) schemes could also come under pressure, however, due to lower economic growth in the UK that stems from the overall uncertainty. With lower economic growth potentially reducing equity returns, an argument to transfer out of DB schemes could certainly be made.

So while Britain’s invocation of the Lisbon Treaty’s Article 50 is sorted out — the formal, two-year process for Brexit to be official — it should not take long to get a better understanding of the impact that Brexit will have on UK-based pensions.

In the meantime, keep your panic at bay and keep your portfolios liquid and flexible, and count on Alconbury Trust to keep you informed.

Alconbury Trust LLC is a Registered Investment Advisor in the State of Florida and Texas – USA.

The post Brexit’s impact on QROPS transfers appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/brexits-impact-qrops-transfers/

What Is A QROPS Scheme?

What is a Qualifying Recognized Overseas Pension Scheme? It includes a pension scheme overseas which meets specific requirements established by HMRC, or Her Majesty’s Revenue & Customs. A QROPS may obtain transfers of Pension Benefits in the UK without having to incur an unauthorized payment, as well as scheme sanction fee. This program launched on April 6th, 2006 due to the European Union human rights legislation regarding a movement for freedom of capital.

The Qualifying Recognized Overseas Pension Scheme may be suitable for citizens of the United Kingdome who’ve left to permanently emigrate and who have intensions of retiring abroad having built a UK pension fund up. Alternatively, an individual born outside of the UK having built benefits up in a Her Majesty’s Revenue & Customs-approved United Kingdom pension scheme may move a pension offshore if they have a desire to retire out of the UK. United Kingdom state pensions can’t be transferred, yet defined contribution, SSAS, and defined benefit schemes may be transferred abroad.

The Qualifying Recognized Overseas Pension Scheme doesn’t need to be set up within the country in which you retire, instead you may move the pension to a tax efficient jurisdiction then have it paid inside the country you choose.

Pension rule one within section 165 will provide that no pension payment might be made prior to the date on which the member attain usual minimal pension age, unless the condition was immediately met prior to the member becoming entitled to the pension underneath the scheme.

To become a Qualifying Recognized Overseas Pension Scheme, a pension scheme has to apply to and become approved by Her Majesty’s Revenue and Customs. A QROPS list which have consented to get their names published is obtainable on the HMRC site and regularly gets an update.

The post What Is A QROPS Scheme? appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/what-is-a-qrops-scheme/

Find pension contact details

The UK’s Department for Work and Pensions (DWP) has launched a new pension tracing website to help savers track down lost or forgotten retirement pots. Use this service to find contact details for:

• your own workplace or personal pension scheme
• someone else’s scheme if you have their permission

This service can help you find a lost pension.You need the name of an employer or a pension provider to use the service. The service won’t tell you whether you have a pension, or what its value is.

Find Contact Details

The post Find pension contact details appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/find-pension-contact-details/

What are the benefits of QROPS?

Succession Planning

Pension funds can be passed down to family members free of UK Inheritance Tax (IHT) and scheme charges on death at any age.

If a member dies whilst being a member of a QROPS (and after being non- resident for 5 complete tax years) then no UK scheme charges are reportable to HMRC.

As from April 2015 the 55% tax charge on death has been removed from UK schemes on death prior to age 75 but there will still be a tax charge on death after age 75.

Income and withdrawals

Income payments can be paid gross or with a low rate of withholding tax from some QROPS.

Where a lower tax rate applies in the new country of residence or in the absence of a suitable double taxation agreement with that country, remaining in a UK pension fund may not be suitable.

Withdrawals from a QROPS may be taxed at a lower rate than from a UK pension. Withdrawals can be declared in a variety of ways, dependent upon the jurisdiction of the QROPS. For example, withdrawals declared as annuity payments may be taxed at lower rates than income withdrawals in many EU countries.

Income from a UK pension scheme normally has a 20% tax deducted at source even if a member is non resident. It may not always be possible to have income paid gross from a UK pension, and when it is possible it can be administratively onerous.

Access

The lump sum and income distribution will depend on the relationship between local rules and HMRC QROPS rules. Where the QROPS is not regulated, or is not based in the EU (plus some exempt countries), 70% of the fund currently has to be designated to provide an income.

Other Benefits

1. There is no requirement to buy an annuity from a QROPS at any time.
2. There are no income restrictions on protected rights funds in a QROPS.
3. A QROPS can enable a client to diversify currency away from GBP.
4. Multiple pensions can be consolidated into one QROPS.

The post What are the benefits of QROPS? appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/what-are-the-benefits-of-qrops/

UK Pension Review, QROPS, LTA Limits

How often do you review your pension?

Financial experts have likened reviewing your pension pots to going to the dentist. Both are annual necessities, but are also tasks that resident Brits and expats alike often procrastinate until they are faced with a problem. Even if you’ve recently had a UK pension review and all of your schemes are performing on target, savvy financiers know that it is important to continually redefine savings objectives and alter investment strategies accordingly. The local and global economic climate is constantly changing. Seeking advice from a professional in any of the following scenarios enables you to get the most out of your money and comfortably maintain your lifestyle during retirement years.

New Legislation

On April 6, 2016 the UK’s Lifetime Allowance (LTA) decreases from £1.25 million to £1 million. If you are nearing the £1 million LTA limits, a pension review may be a good idea.

Occupational Changes

The Telegraph reports that the average Briton will change employers six times during their career, whether in the same industry or a different one entirely. Each new job typically means automatic enrollment in a new pension scheme. Reviewing your all of your pensions and consolidating smaller funds into a single pot not only makes them easier to manage, but could also yield more money. Older pensions may not be as lucrative and competitive as modern schemes. They may also have steep management charges. Each pension should be reviewed individually, however, as transferring certain types of occupation pensions could forfeit guaranteed annuity rates. There may also be exit fees.

Life Events

Occupational changes aren’t the only life events that warrant a UK pension review. At Alconbury Trust, we recommend a consultation:

• Before a divorce
• When moving out of the country
• Upon receiving death benefits
• As you approach retirement age

Each of these happenings has a significant impact on your finances. You may need to adjust the risk level of your pension, transfer assets to an offshore account or change your investment strategy altogether.

The post UK Pension Review, QROPS, LTA Limits appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/uk-pension-review-qrops-lta-limits/

Government review of state pension age

Work until you’re 75 or even 81 under Government review of state pension age

Possible age hike comes as minister hints at pensions tax raid on middle-class savers
March 2016 – By Steven Swinford, Deputy Political Editor http://www.telegraph.co.uk/

Millions of people could be forced to work until they are 75, the Government has hinted as details of a review into the state pension age were published.
Ministers have announced a radical review of the pensions regime amid concerns that he current system is not “affordable in the long-term”.

The review will be chaired by Sir John Cridland, the former head of the Low Pay Commission, and will assess whether the current pensions system is “affordable in the long-term”.

HOW MUCH YOU CAN PAY INTO YOUR PENSION

• Your contribution limits for the tax year 2015/16
• You can contribute as much as you earn in a year, up to £40,000 a year
• You can also use HMRC’s “carry forward rules” to use the past three year’s pension contribution limits – if you haven’t already
• nce you start drawing from your pension your annual limit reduced to £10,000
• he lifetime pension limit is reducing from £1.25m to £1m next year

Read more on Government review of state pension age

 

 

The post Government review of state pension age appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/government-review-of-state-pension-age/

Lifetime Allowance Changes

Lifetime Allowance Changes impact on UK and QROPS Pensions

Previously, the UK’s Lifetime Allowance was set at £1.25m and, in April 6, 2016, the UK Government is set to lower the amount to £1m.

The decision to do so will most likely bring a host of changes. The transformation affects lifetime earners amassing more than £1m in their pension over the course of their career. Pension schemes are tested at certain points during the life of the pension (BCE) and any excess over the LTA results in additional tax charges.

According to The Telegraph, “Last week chief executives of some of Britain’s biggest financial institutions condemned the move to a £1m ceiling as a step too far. They called for the lifetime limit to be scrapped all together, arguing that it will damage aspirations and discourage long-term investing.”

How does the LTA affect my pension?

Pension Schemes could exceed the £1m limit as follows:

1. Defined contribution – also known as Money Purchase Schemes:

Private pensions including pensions that received employer contributions also come under the LTA limit. The limit will include any associated growth. All pension schemes have to be aggregated when performing the LTA calculation.

1. Defined Benefit Pensions or Final Salary schemes – These schemes have a cash value which is based on salary and not contributions plus investment growth. The amount has to be multiplied by a factor of 20 in order to calculate the capital equivalent value. Tax free lump sums are also included in the LTA calculation.

What is Lifetime Allowance Testing?

Events, known as benefits crystallization events (BCE), trigger a testing of LTA. While all events are detailed here, the primary events are:

1. When any income or a lump sum is taken from a Member’s pension upon reaching the age of retirement (55).
2. When members turn seventy-five years of age all pension funds not previously accessed, as well as those pension funds in drawn down, will undergo testing.
3. Death before the age seventy-five, this is also a Benefit Crystallization Event which will trigger LTA testing, affecting payments to beneficiaries.
4. Benefit Crystallization Event also occurs when Members choose to transfer funds from their pension into a QROPS. This is tested at time of transfer only – once in a QROPS no further LTA testing will occur.

How much Tax will I pay?

If a member exceeds the LTA, how the excess is paid will determine the LTA tax, for example, if they choose to take a lump sum, they will be subject to a 55% tax on the excess above the LTA.

If the member decides to take a pension income, they will be subject to a 25% tax charge on the excess above the LTA. However, if this was a transfer to a QROPS, members will only see a 25% tax on funds exceeding the LTA. Again, once the pension is transferred to a QROPS, it will no longer be tested against the LTA.

About Lifetime Allowance Protection

Individual protection may be available to you if your pension savings exceeds the lifetime allowance. Use this application for protection of your lifetime allowance. To be considered for protection, submission of your form must occur on or before April 5, 2017. Alternatively, the use of a QROPS could be a solution as once the pension is transferred, no further testing will occur.

Taking Immediate Precautions

With all the talk taking place in various media outlets like The Telegraph, for example, regarding Lifetime Allowance, it’s critical to put your financial picture into perspective. Is it time for you to get advice and make changes to your pension schemes?

Please contact us today with your questions about LTA. Alconbury Trust is a Registered Investment Advisor registered in Fl and TX. Alconbury Trust LLC is not an attorney or tax specialist. For information only and not a solicitation of sale.

The post Lifetime Allowance Changes appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/lifetime-allowance-changes/

Understanding Qualifying Recognized Overseas Pension Schemes

Understanding Qualifying Recognized Overseas Pension Schemes (QROPS) Pensions are a valuable part of financial planning and planning for your retirement.  It’s important for everyone to understand their complexities later on in life when these incomes become reality. The benefits of a QROPS could make a big difference to you and your family or to your beneficiaries if you are no longer living in the UK and you left your pension behind.

Should I consider a QROPS? (Qualifying Recognized Overseas Pension Schemes)

Since launching in 2006, QROPS, also referred to as Qualifying Recognized Pension Schemes, have grown in popularity. They are an overseas pension recognized by HMRC, which continues to see growth amongst those considering overseas moves, as well as other expatriates. QROPS has undergone changes as annual growth for demand endures, which appears set to continue during 2016 while the market continues maturing, and the tremendous benefits become more evident to people.

Here are some of the benefits:

1. Up to a 30% lump sum tax-free withdrawal from age 55.

2. The LTA (Lifetime Allowance) has dropped considerably since 2013-14 where the LTA was £1.5 million. For the tax year 2016-17 onwards, the LTA will be £1 million.

Once the LTA figure has been breached, a tax of 55% will be charged on the excess growth surplus at the next BCE (Benefit Crystallization Event). This is a point in the future which is triggered by a change in the pension status.  QROPS can be used as part of your Lifetime Allowance mitigation plans.

Therefore, it’s recommended that you test for LTA now.

3. Qualified Recognized Pension Schemes are taxed within the country that you reside.

1. Transferring to QROPS allows you to elect a beneficiary for your final salary payments.
2. A diversified investment portfolio can be created and managed more effectively.

What’s Next for Expats?

Many future retirees have plans to move overseas, so, it is critical to plan now. If you are considering transferring your pension to a QROPS, you need to ask the following questions:

• Does the QROPS meet the qualifying conditions of the ROPS (Recognized Overseas Pension Schemes)?
• Does it meet the age test minimum requirements (age 55)?
• Will it appear on the QROPS public lists?

Unless citizens are experiencing severe health conditions, they must be at least 55 years old to take benefits from a QROPS. The HMRC (HM Revenue & Customs) wants these questions answered to confirm those under the age of 55 are not withdrawing benefits in countries where their scheme was established, or the scheme’s rules will prevent this from happening where UK tax relief was already paid.

The best way for you to determine if a QROPS is a good option for you, explore the pension options, and determine the pros and cons.

 

The post Understanding Qualifying Recognized Overseas Pension Schemes appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/understanding-qualifying-recognized-overseas-pension-schemes-qrops/

HOW TO WATCH BBC IPLAYER OUTSIDE UK FOR EXPATS

I remember when I was living in Qatar a lot of my UK expat friends used to talk about their favorite BBC soap operas, documentaries and shows. For the UK expats it was not just about the shows, it was more about having a piece at home in their chosen location of expatriation and about keeping up with local culture and news.  So I did sit together with my techie friends and looked into available solutions. We tested quite a bit of different setups and providers, but it was worth the effort as we all enjoyed BBC One, BBC Two, BBC Three, BBC Four, cbbs andCbeebies “Well the kids enjoyed that last one :p ” in the end.

EXPATS IN KSA,UAE,DUBAI,US AND BBC

Well not just the locations in the header above, with the help below you will be able to enjoy BBC Iplayer globally. Basically all you need is to either have a VPN account or a Smart DNS account. There are differences between the way these two work and there is a different feature set for both.  The important thing to keep in mind is that BOTH solutions will achieve your goal of watching BBC Iplayer from anywhere in the world.

BBC IPLAYER : VPN VS SMART DNS

Smart DNS providers such as Unlocator Smart DNS proxy are easy to setup and can get you up and running in seconds. All you have to do is sign up and add the DNS servers to your router or device “Plenty of articles and support available”. If you choose to setup DNS on the router all your devices will work while at home, if you choose to setup VPN on the device it will work from anywhere. The two downsides are that you will only get the UK channels that are supported “All the major ones last time I checked” and only the relevant part of your traffic is piped to the UK which speeds up the connection but does not encrypt all your traffic and thus your privacy is not ensured.

VPN providers such as Hide My Ass VPN Service you will be able to choose from 300 different locations covering almost all countries globally, all you traffic will be encrypted so your ISP will NOT be able to monitor your browsing and Internet activities. Setup is easy as well and there is plenty of documentation and support. The downside is that your device has to support VPN which means that your SmartTV for example will not work, Unless you have a router that does support VPN, then all your devices will work.

The post HOW TO WATCH BBC IPLAYER OUTSIDE UK FOR EXPATS appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/watch-bbc-iplayer-outside-uk-expats/

Overseas Pension Schemes

Control of Your UK Pensions and Investments

It isn’t uncommon for expatriates to remain unaware of the fact that their pensions can transfer from the UK. Did you know you can take control of your UK pensions using QROPS?

Beginning in 2006, those who moved from the UK and left behind their company or private pension, are eligible to transfer to a QROPS, which is overseas pension schemes used to take control of your UK pensions and investments.

QROPS: The Need for More Information

Expats can significantly enhance the flexibility of their pensions by transferring to a QROPS due to their tax efficiency. Restrictive tax rules are applied to UK pensions regarding succession planning, and improvements are possible through moving it to another jurisdiction.

Under some circumstances, transferring your pension may not be appropriate. Therefore, the proper analysis must be carried by a fully qualified and licensed adviser. Analysis should occur if you fit the following criteria:

• You are no longer a UK resident.
• You have no intention of returning to the UK.
• You have a defined benefit (final salary) Scheme.
• You have one or multiple pensions equalling, at a minimum, GBP 90,000.
• You have beneficiaries that may not benefit from your pension on your death.

QROPS: How to Maintain Control of Your UK Pensions and Investments

There are many benefits to transferring your pension to a QROPS. Here are five examples of how you can take control of your pension through a QROPS:

1. Succession: you may want your pension to pass to your heirs upon your death. In the UK, however, high tax charges can occur on the remainder of your pension before it is paid out to your beneficiary. Additionally, the majority of final salary schemes only allow the widow or widower to receive about half the main pension.  With a QROPS You’re given the option to pass the full pension value on your death to your spouse, children, grandchildren or anyone you choose.
2. Choice in Investments: You have a much wider selection of investments available to you. Many pension schemes in existence can be restrictive regarding their choice of funding (only UK), or allowed investments. QROPS can provide a broad range of access to funds and investments that are managed to suit your lifestyle stage and risk profile.
3. Currency Risk Management: The QROPS investment can be can be converted into your choice of currency to reduce foreign exchange fluctuations on drawdown.   The Sterling has experienced depreciation in recent months and many retirees have suffered in the currency zone they reside. You can manage this risk using a QROPS.
4. Retirement Flexibility: During your retirement years, your circumstances may undergo some changes. For example, you may move to another country again, or you may still have some work to do. In these cases, numerous options are available to you regarding maintaining control of your pension benefits.
5. Retirement age:  you can start drawing your pension from age 55 if you wish.

When making plans to control your QROPS, you must choose a highly qualified advisory team. They will provide you with advice regarding retirement options as well as portfolio management.

 

The post Overseas Pension Schemes appeared first on Alconbury Trust.

from Alconbury Trust http://www.alconburytrust.com/2016/01/28/618/