While over one million UK pensioners are choosing to retire abroad, destinations are viewed differently by the UK Department for Work and Pensions (DWP).

A study by the Isle of Man-based international savings bank found pensioners in affected countries do not receive any annual uplifts or inflationary increases to their state pension payments.

Expat pensioners in New Zealand, South Africa, Dubai, Canada, Australia, Singapore and Hong Kong will not see their state pension increase annually.

However, retirees in America, Italy, Portugal, Spain and France will receive uplifts.

With the average 65 year-old man expected to live to 82 and the average woman to 85, there are significant consequences for their retirement finances, says ALIL.

While many of the destinations where pensioners suffer from frozen state pension payments have a lower cost of living, according to the ALIL Cost of Living Scorecard, a basic weekly pension of twenty years ago may not be sufficient to live a comfortable retirement now.

A pint of milk costs 45p in the UK but in countries where the pension is frozen, such as Australia, Canada and New Zealand, it costs £1.10, £1.40 and £1.18 respectively.

This illustrates while some costs may be cheaper in these countries, it si not necessarily the case across the board, says ALIL.

“Many UK pensioners retire abroad to move closer to friends and family or simply to enjoy a better standard of living. However, they don’t necessarily realise that by choosing to move to Cape Town rather than Capri, they will have their state pension frozen at the level at which they first started to draw it,” says Simon Ripton, joint managing director of ALIL.

He believes the fact some retirees in countries where UK pensioners do not receive an annual uplift, living off an income which can be 20 years out of date, brings the need for individuals to have additional retirement savings sharply into focus.

Peter Kennan, chairman of the Canadian Alliance of British Pensioners, says: “Just because a person chooses to retire to Johannesburg, Ottawa or Sydney does not mean they should have their state pension frozen and effectively become a second class citizen in the eyes of the UK Government.”

He believes government policy treats one half of expatriate pensioners as thought they had never left home while freezing the other half.

Article Courtesy: International Investment

http://www.hmrc.gov.uk/pensionschemes/qrops.pdf

Although no reason has been given the Singapore authorities take is that HMRC simply do not understand the Singapore tax regime.

Another possibility of course is that HMRC considers the spirit of the concession is being abused, with some schemes allegedly “winding up and paying out” once the five years reporting period has expired.

No doubt there will be an appeal and regardless of which way that goes it is clear that Singapore based QROPS will continue to come under the watchful eye of HMRC, who will, as we have always acknowledged, seek out and close down abuses.

Under current legislation, scheme members could be subject to an 18% tax charge on withdrawals, in addition to paying income tax in their host country.

All of which makes us wonder why anyone would consider an IOM QROPS in the first place?

Firms marketing IOM QROPS are hoping the Isle of Man treasury will lower its tax charge for scheme members who are already paying pension income tax in their host country as The Island has applied this principal for its own ex-pats.

Frankly we don’t think “hope” is a good basis for planning!

Further information on our QROPS Services.

In an Irish scheme, the pension can be transferred to an approved retirement fund and there is no requirement to buy an annuity. On death, the fund can also be left to beneficiaries, although it will be subject to 20 per cent inheritance tax under the Irish rules.

But transferring the scheme to Ireland is only “wholly acceptable” if there is a genuine existing trading company in Ireland and the member is employed there.

David Seaton, director of consultancy at Rowanmoor Pensions and current Board member of the Association of Independent Financial Advisers, said: “It is our understanding that some practitioners are offering to establish trading companies, employment contracts and even accommodation to UK companies in an attempt to break the UK pension scheme rules.

“IFAs who get involved in such practices are likely to become the subject of enquiries by the Pensions Regulator, HMRC and the Financial Services Authority.

He added: “The Irish scheme must also obtain the status of a Qualifying Recognised Overseas Pension Scheme (QROPS) from the HMRC, as without QROPS status the transfer from the UK scheme will be an unauthorised payment, which could result in a combined tax charge of 104 per cent.

“I was also warned that the Irish Revenue and the UK HMRC both communicate to ensure only genuine transfers take place.”

Article Courtesy; Daily Telegraph

This indicates that Professional Independent QROPS and Pension Advice is of paramount importance. Further information can be obtained from Free My Pension.

What is Free My Pension? and how can I transfer my pension overseas?

If you live overseas you are entitled to move your pension with you and whilst it has always been possible to transfer and or take pension benefits abroad, under pension simplification in April 2006 this became very much easier.

Why leave your funds in the UK?

In the UK the earliest that you can draw on your pension benefits is age 50 (unless you are in a special occupation or are able to claim early retirement through ill health) and this is soon to increase to age 55.

See below for further information on how we can free your pension…

* Funds left in UK
* Living Overseas
* Why transfer your pension
* Direct Benefit Comparison
* FREE – No obligation report!

After a qualifying period individuals can access their funds in their entirety and use the capital and income in the way that is most tax favourable for them and upon their death, they can leave it to whomever they like.

This compares most favourably with the pension regime in the UK and ex pats around the globe should be making it a priority to remove their funds from the UK as quickly as possible.
A degree of caution should be exercised because some QROPS appear to rely on artificial contracts of employment, which would of course incur huge penalties.

For clear impartial and appropriate advice contact Free My Pension.

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Powerpoint

Q. Can I transfer benefits that are already in payment to a QROPS?
A. Yes, so long as the receiving QROPS is willing to accept transfers of funds where the member is receipt of an unsecured or alternatively secured income. Unless the member has not been UK resident during the last five complete tax years then UK rules associated with these benefits are lost. If the member does not satisfy this condition however UK provisions associated with these types of benefits continue to operate until the five-year rule has been satisfied. 


Annuities in payment and pensions in payment from occupational final salary schemes may not be transferred.

Please download the Full FAQ’S to QROPS (PDF)

The site is sponsored by TAG Wealth Management a firm of Independent Financial Advisers who are authorised and regulated by the UK Financial Services Authority.

What is Free My Pension?
Qualifying Recognised Overseas Pension Schemes (QROPS)

If you live overseas you are entitled to move your pension with you and whilst it has always been possible to transfer and or take pension benefits abroad, under pension simplification in April 2006 this became very much easier.

* Why leave your funds in the UK?
* In the UK the earliest that you can draw on your pension benefits is age 50 (unless you are in a special occupation or are able to claim early retirement through ill health) and this is soon to increase to age 55.

For further information on how we can free your pension…