UK Pension fund and benefits! The State Pension's life will probably last much longer, bearing in mind that most people will never be competent of saving up an equal amount throughout their lives. Do you know anyone who is at least 100-years-old? Even with today's enhanced nourishment and therapeutic treatment, living for a complete century is surely a landmark in any Briton's life. In fact, lasting at least 100 years is a marvelous achievement for anyone or anything in this world. For example, in 2008 the UK State Pension system, which still provides UK pensions, celebrated its 100th anniversary. All this began when in August of 1908; the UK approved the Old Age Pensions Act. Then the subsequent year the UK made its initial State Pension payments. All through that first month of 1909, more than 500,000 people went to their confined post office, in order to collect the preliminary UK State Pension payments. The expenses were quite scanty, at five shillings for a particular male or female. That figure is equal to slightly below £20 today! Furthermore, recipients of the State Pension were required to be 70-years-old. Amusingly, only approximately one-in-twenty of the UK's inhabitants were at least that age. Furthermore, one had to meet certain income necessities in order to obtain the pension funds. For instance, one’s income had to be lesser than 12 shilling per week, in order to benefit from it. In addition, the management could trim down the State Pension payments if one owned too many types of equipment. Although the UK government had been tossing around the thought of a State Pension for three decades, it did not occur to pragmatism until the Liberals won an avalanche election in 1906. The UK State Pension was born two years later. All through the decades, the pension reached more Britons and incorporated larger expenditure. The modern UK State Pension system was born in 1948, and was based on the scheme that Sir William Beveridge had projected during World War II. All Britons became entitled to participate in the system, and contributed to their financial records via national indemnity assistance. Additionally, the UK government dropped the pension age for females, to 60-years-old. In conclusion, the actual sum of the State Pension payments augmented. The million-pound query is: will the UK State Pension arrangement rejoice its 200th anniversary? Today, the UK State Pension comprises about 55% of men's total takings, and approximately 65% of women's total income. QROPS (Qualifying Recognised Overseas Pension Scheme) QROPS seems to be a very misunderstood subject, where in fact it is quite simple. Many ex-pats are aware that this is available but are not familiar with how it works and who to contact. I have spoken to many people who have contacted their pension providers in the UK and have been told that they can do nothing until their selected retirement age. As far as you being resident in the UK that is quite correct, you may draw benefits now from age 55 So, we all think that nothing can be done, wrong! Please read on. In April 2006 the British Government passed legislation stating that ‘any British person living outside the UK, or is intending to do so, is eligible to transfer their whole pension fund tax free via a QROPS’. As long as you are between the ages of 18 and 75, subject to other criteria, it may be possible to draw benefits prior to your selected retirement age. All pensions are designed to give you an income in retirement; it is as simple as that, however pension funds of say less than £100,000 for example, would not provide sufficient income for a family to live on. It may be the case that to take benefits early would not be the correct solution, for example certain pensions with guaranteed annuity rates may be best left alone and it is imperative that each client is treated on an individual basis. Anyone aged between 18 and 75 years of age who is living outside the UK and has a frozen personal or company pension in the UK is eligible to transfer their whole pension fund, tax free; via QROPS. This also applies to Income Drawdown plans, SIPPs and SSAS’s. Finally, good news for all UK Expat pensions. Unlock your Pension today!!For more information and a FREE, no obligation review of your benefits Contact: Info@accessyourukpension.es or Call us on 00 34951047209 Dummies Guide To Qrops 1. What is a QROPS? QROPS is an acronym which stands for ‘Qualifying Recognised Overseas Pension Scheme’ which enables anybody who has invested or participated into a UK pension scheme that is now or intends to become and ex pat within the next 12 months to transfer there UK pensions into an overseas pension i.e. QROPS A QROPS is a pension that has been approved by Her Majesty’s Revenue and Customs (HMRC) and must meet the standards and conditions set out by HMRC. A QROPS is a UK pension transfer to another HMRC approved pension scheme, in another jurisdiction (outside the UK), for anyone between the ages of 18 and 75 who has left the UK, or is planning to leave the UK in the next 12 months. HMRC insist that a QROPS provider must meet certain criteria relating to the jurisdiction in which it is established and how it is regulated. 2. What is a QROPS Transfer? This is the passing of your UK pension fund to an overseas pension provider i.e. a QROPS scheme, in effect you are transferring the money in your UK pension to an overseas pension. 3. When was a QROPS Pension Transfer introduced? QROPS were introduced in April 2006 under new legislation by HMRC and was due to the European precedent in creating pension transferability, this now offers a fantastic tax and investment opportunity to those who have UK pensions but now live outside of the UK. 4. What is a good QROPS? One that offers maximum tax efficiency to you the beneficiary and ultimately to your heirs. One that is established in a secure well recognised jurisdiction has tax efficient investment flexibility and a competitive transparent level of charges. 5. Which pension schemes are HMRC approved? HMRC have compiled a complete list of approved QROPS providers which is updated on a regular basis and can be found on the HMRC government website or go to www.hmrc.gov.uk/pensionschemes/qrops.pdf 6. QROPS Jurisdiction Deciding on the jurisdiction of your QROPS Pension Transfer is one of the most important decisions you will need to make. Each jurisdiction will have its own advantages and disadvantages; ranging from different tax regimes through to different scheme rules and regulations, so it is how these laws affect you and your personal situation that makes a jurisdiction the “best” choice. One should look very carefully at a QROPS jurisdiction but equally due diligence needs to be directed towards the QROPS provider. The jurisdiction should offer significant improvement in investment and benefit options available to you. For example; some jurisdictions require you to purchase an annuity and place major restrictions on the funds you can go into. 7. Minimum Values for a QROPS Pension Transfer This will depend on the QROPS provider and not the jurisdiction. Each scheme will have a different charging structure and as a result they are only worthwhile provided that the charges are not too onerous. We have found that the minimum required for a basic QROPS Pension Transfer could be as little as £25,000. Please bear in mind that you can combine any personal or company acquired pensions to reach this minimum figure. 8. Who runs them? Running QROPS is big business –the attraction to each company is essentially to add as much money into investment funds as possible, as the companies charge a percentage of your holdings the more money they have the more they earn. Just like any other pension scheme in the UK it must have trustees and so too must a QROPS provider. It must be managed in the way permitted by their host country’s pension regulations. Some countries have strict limitations on what can and cannot be invested in a QROPS, but others are more relaxed about what your fund holds, so it is important to identify the best jurisdiction to suit your requirements. 9. Is the system only for UK citizens? No. The system can encumber all those who have worked and contributed to a UK pension in the past. QROPS rules apply to anyone with a UK pension who is moving overseas to become an expat or returning home after being seconded by their company or indeed anybody who built up a fund as part of their employment benefits can transfer the pension fund into a QROPS upon their return. The only exception to this is US citizens and US residents, who cannot apply for a QROPS due to theUS tax regime. 10. Investment Flexibility with a QROPS Transfer Probably one of the biggest benefits, apart from the potential tax breaks, should be the flexibility of investments but be careful here too as some providers will reduce fees or have none at all but you will be tied to their funds (Refer to No. 8 Who runs them?). These companies will restrict your investment choices which could be quite costly in the long run. A truly independent QROPS scheme should not be tied to any investment providers, platforms or fund management groups. The better schemes will offer this greater flexibility. Some schemes will allow you to manage the assets with total freedom, while others have certain restrictions. You may also want to appoint an investment adviser to make the decisions with you or for you; it all depends upon what you are looking for. Therefore the best option would be to discuss the specific scheme with an investment adviser. 11. Are there any pitfalls? Obviously there are many pitfalls to any change when decision making, but some are much larger than others and should be discussed with an IFA. There is a risk that your income and capital could fall and you may not get back as much as you invested as your QROPS is likely to be invested in stock market-based assets whose value may not be guaranteed. The QROPS schemes are suitable for most people, but an independent QROPS adviser should assess your situation and advise you more fully before you make any decisions. An example of where a QROPS may not be beneficial is if you have a Defined Benefits UK pension (Final Salary Scheme) where a former employer has promised to pay you a percentage of your final salary on your retirement. You would be unlikely to get such a deal overseas! That said, there are so many companies now closing or have closed these types of schemes. Some countries with lower tax rates than the UK also offer less investor protection in terms of regulation of financial services and they may not offer any statutory compensation scheme. Some experts believe that the opportunities offered by QROPS are simply too good to last. Critics claim that transferring into a QROPS, offers UK pension holders the ability to obtain generous tax relief while accumulating their pension funds and then avoid British taxes when it comes to enjoying the income, If too many people take advantage of the QROPS opportunities, HM Revenue and Customs may close the facility, if this is likely then you should consider your options carefully but without unnecessary delay. 12. What happens when a QROPS scheme member dies? Yet another tax benefit to QROPS schemes but you must be careful as this does not apply to all jurisdictions!! One of the factors that you should take into account when choosing an appropriate scheme is the inheritance tax treatment of the fund to a beneficiary on death. Some QROPS jurisdictions allow a straightforward transfer to any named beneficiary of the member’s choosing, as long as the pension scheme allows it. 12. Why transfer your pension? No need to EVER purchase an annuity (This is mandatory currently in the UK to invest in a Compulsory Annuity Purchase at the age of no later than 77). Annuity rates in the UK are fixed rates of income and are currently at an historical all time low. This system restricts how your wealth may or may not be passed on to loved ones in the event of your death. With a QROPS scheme you are under no obligation to purchase an annuity which gives you the freedom to invest into assets which may see a much higher return as well as transferring them in full to your beneficiaries. No UK tax charge upon death with inheritance tax set at zero on a QROPS Scheme, compared with as much as 82% in the UK, you can pass the QROPS proceeds onto the beneficiaries of your choice. Greater investment freedom, one of the biggest benefits of a QROPS is the investment flexibility and choice available. Some schemes will allow you to manage the assets with total freedom or you may also appoint an investment adviser to make the decisions with you or for you, this will allow either onshore / offshore funds, fixed deposit rates etc., offering total diversification. Leave all unused pension funds to your beneficiaries, free of tax at source. 0% Income Tax. Depending on the jurisdiction you have chosen, it is possible to take the income from your QROPS scheme completely TAX FREE. No currency risk. You can take an income and benefits in a currency of your choice. QROPS arrangements allow for the payment of pensions in currencies other than GBP providing a valuable safeguard for ex-pats, this is a major factor when living outside of the UK. Protection against possible future creditors. (Dependent on QROPS jurisdiction) A QROPS scheme gives much greater confidentiality against ex spouses, business partners and creditors. Stop Worrying, Start Planning - The Key to a Good Retirement Retirement is that phase of life when you finally want to relax, step out of the rat race and do what you want to at your own pace. But why are so many people scared of this phase of life and do not want to retire early? Find out how to stop worrying and start wanting to retire early. Retirement is that phase of life when you finally want to relax, step out of the rat race and do what you want to do at your own pace. It is like a new beginning,when the struggle is over and you want to enjoy life, reap the fruits of what you sowed till now, benefit from all the money that you have saved as your retirement pension and dedicate time and energy towards your loved ones. Basically, retirement is the time when you can have a good time minus the pain and the fight of the daily grind. But if retirement means such a beautiful time, why are so many people scared of this phase of life and do not want to retire early? People are scared for the simple reason that their income stops but the expenditure doesn’t. For those who have medical problems due to ageing or for other reasons such as accidents etc. have more expenditure as they need to spend on their treatments as well. In short, there is no inflow of money (as there is no income) but there is a lot of outflow of cash on various kinds of expenses that include medical treatments, essential goods like grocery, gas, electricity, rents, fees and other necessary items needed for survival. Despite all the expenses, one can still enjoy retirement and really look forward to it. The key to a happy retired life is to plan it much ahead and take necessary actions while you are earning. The first and most important thing that you need to do – is to start saving as early as possible. Save as much you can – irrespective of how little you can afford to, but do keep aside a certain part of your income to start off your retirement plan. Yes, a retirement plan is a must. You need to think what your monthly expenditure will be when you retire and save accordingly. It is not possible to estimate the monthly expenditures, given that prices fluctuate and things get expensive. But what you can do is take up a retirement plan with a good company or opt for SERPs. This will help you meet your basic expenditures on essential goods and other requirements, and with the money that you save outside your retirement pension plan, you can use it to spend on your loved ones or on things that you always wanted to do to enjoy life after retirement. Retire Happier with State Pension QROPS was launched by the British Government to allow British expats to move their pension benefits to a QROPS with the UK revenue’s approval. With the help of a good financial advisor, you can not only understand all the technicalities, but also enjoy your hard earned pension in UK. The State Pension in UK, which was earlier known as the Retirement Pension, is one of the three parts of the United Kingdom Government pension arrangement; the other ones are Graduated Retirement Benefit and State Earnings-Related Pension Scheme (or the State Second Pension). Those who work in the UK or have previously worked here are entitled to the State Pension. This is applicable for UK expatriates as well. Whether you have worked in a private company or have served in any of the civil jobs, you are entitled to your State Pension under the QROPS scheme. QROPS or Qualifying Recognized Overseas Pension Scheme is a legislation that was launched in April 2006. QROPS was aunched by the British Government to allow British expats to move their pension benefits to a QROPS with the UK revenue’s approval. If you have worked in the UK at any point of time during your career, then you are entitled to move your pension plans into a QROPS. If you have not retired yet, but intend to shift away from the UK, lock, stock and barrel, then also you can also benefit from the QROPS scheme. Within the first 5 years of leaving UK or being a non UK resident, your tax-free income and your withdrawals will depend upon the jurisdiction of the QROPS and on your personal situation. After the first 5 years, the pension fund will be subject to the laws of the jurisdiction of the country that you live in currently or the relevant overseas jurisdiction. This may sound Greek and Latin to you at first, but with the help of a good financial advisor, you can not only understand all the technicalities, but also enjoy your hard earned pension in UK. To ensure that you get the amount you rightfully deserve, you need to hire a well qualified financial advisor who specializes in State Pension in UK and laws of Retirement Plans as per the jurisdiction of the country. When you meet a promising financial advisor, he should be able to explain to you the fundamentals of QROPS, how you can benefit from the scheme and how you can save your pension from various issues like taxation, governing laws and decisions of the management. Moving your pension into a QROPS is absolutely legal and fully sanctioned by the HMRC. Your hard earned State Pension is your right and you should never let it get wasted.
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