An Introduction ToQROPS

Why QROPS?Having a secure retirement fund is paramount as individuals advance in years,

and the British government recognized this fact during the formulation of this

legislation. As a safeguard, traditional UK pensions are only permitted to be

transferred into an account that meets with the same high standards as pensions

based in the UK, although they don’t have all the restrictions. Not only that, the

offshore financial institutions that manage the funds must also meet strict

criteria in order to be able to offer a QROPS solution. These guidelines have been

carefully designed by Her Majesty’s Revenue and Customs department, also

known as HMRC. Financial institutions must meet all requirements of the HMRC

and stand up to close scrutiny before being granted the right to manage QROPS

accounts.

And The HMRC?Over and above the standards that must be met by the financial firms that wish

to offer QROPS services to the public, the HMRC closely monitors the stability of

financial markets around the world. QROPS are only allowed to be based in

countries with stable economies.

An Introduction To QROPSIn recent years the British government has made provision for UKpension holders living abroad to take part in a revolutionary new typeof pension fund. In April of 2006 the government passed legislationthat would allow individuals to transfer their retirement funds into anoffshore pension account. These accounts are known as QualifyingRecognized Overseas Pension Schemes or QROPS for short. They aremanaged by reputable financial institutions with input from thepension holder.

Standard UK Pensions are Governed byStringent Regulations

Although pensions are much appreciated when one reaches their golden

years, standard UK pension plans have incredibly strict regulations in place.

These restrictions hold retirees back and don’t allow them to use their own

money in the way that they may want or need to. They are also often heavily

taxed.

Surprisingly, the vast majority of those holding a UK pension have no idea of

the regulations that are placed on their money. Pensioners often get a rude

awakening when they try to access their funds. Unfortunately, the biggest

(and worst) surprise about traditional UK pensions is brought to light upon

the death of a UK pension holder.

The majority of UK pensions stipulate that when a individual dies their

beneficiaries are left a lot less than the remaining pension. It doesn’t matter

what a will says, an individual’s surviving spouse often only receives fifty

percent of the value of the pension, and can be less depending on the

scheme. Having one’s income slashed in half can have devastating financial

consequences. In some cases, a surviving spouse receives nothing, while a

former spouse inherits half of their ex-spouse’s pension.

The surviving children of a deceased individual with a UK pension fares even

worse. Despite the fact that pensions are funded by an individual’s own hard

earned money, they have no say in what happens to the money when they

die. In the unfortunate event of the death of the pension holder and his or

her spouse, children and other would-be beneficiaries often receive nothing.

UK Pensions Invested InThe UK

Where Does All Of The Money Go?

The money goes right back into the coffers of the pension company. Or if the

scheme allows the transfer to beneficiaries, there is a hefty tax charge (35%+)

that is deducted.

Another downside to a standard UK pension has to do with their growth rate.

In an effort to protect retiree’s funds from being lost due to high risk

investing, the growth rate of UK pensions is often very low or stagnant. UK

pensions are set up to grow at a rate that matches inflation or slightly higher.

This small growth rate is cause for great concern when hard economic times

hit.

Individuals investing in UK pension schemes have additional worries when it

comes to their traditional pension funds. Young pension holders face the very

real possibility that their pensions will not be there for them when they need

the money the most. The old pension system is inadequate. In the very near

future more people will be drawing on large pension funds than will be

paying into them. If the younger generation is fortunate enough to have a

pension to draw on when they reach retirement age, they will have the

government to contend with. Monies received from pensions are also

classified as taxable and taxes can range from twenty to fifty percent. These

are harsh realities that need to be addressed!

UK Pensions Invested InThe UK

A Summary Of QROPSBenefitsThose who have transferred their pension into a

QROPS find that they are now in control of their

own destiny. Indivduals are free to participate in

the managing of their retirement funds as much

or as little as they wish. Those who were unable to

contribute as much as they would have liked

toward their retirement can now make up for it by

investing a bit more aggressively than a typical UK

pension would. Here the main benefits that a

QROPS has to offer:

• Retirees are not required to purchase an annuity.

• Taxes can be dramatically reduced and in some

cases eliminated all together.

• Pensions will be transferred in their entirety to

beneficiaries upon death.

• Pension holders have a say in how their money is

managed.

• QROPS are free from the threat of the UK

pension crisis and increasing UK taxes.

QROPS BenefitsFortunately, all of the above problems canbe solved with a QROPS. Individuals havethe option of transferring all of their UKpensions into one large usable pensionaccount. Frozen pensions are even able tobe transferred.

Do I Qualify For A QROPS?If you are old enough to have a pension, you are old enough to transfer it.

Individuals between 18 and 75 years old are candidates for transfer.

The only other main requirement that governs pension transfers concerns the

individuals’s place of residence. In order to qualify for a UK pension transfer into

a QROPS, the pension holder must live abroad or at least have concrete plans to

move within twelve months.

Those who have chosen to make The United States of America or Canada their

home will have to speak to an advisor about any special stipulations that might

apply.

Transferring your retirement funds into a QROPS might be the best financial

move that you will ever make.

What's Next?If you qualify for a QROPS, or would like more information to make the decision

to transfer your pension to a QROPS, then we suggest that you investigate your

options through a reputable financial advisor. We would be happy to put you in

contact with a couple of QROPS providers that we have worked with in the past

and who are committed to providing sound financial advice.

Find Out More AboutTransferring To A QROPS

Find Out MoreIf you need more information on QROPS please get

in contact.

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