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Spotlight on... Qualified Recognised Overseas Pension Scheme (QROPS)

With a predicted rise in sales of QROPS this year, it is perhaps a suitable time to ponder the benefits of the scheme and how Fairbairn Private Bank can help.

The growing number of wealthy UK expatriates, expected to grow from seven million currently to sixteen million by 2020, may suggest a dramatic rise in the number of clients wishing to transfer their UK pension to an offshore environment.

According to the Wealth Bulletin, the QROPS market is at present in the region of £400m and is expected to rise as expatriates realise the benefits of moving their pension arrangements offshore.

Too frequently the misconception exists that the main reason for recommending a QROPS is to avoid UK taxes, but in addition to ensuring your client's pension is tax-structured correctly, QROPS additionally offer a wider choice of investments and a higher level of flexibility, not found within some UK pension schemes. Fairbairn Private Bank can offer QROPS through its preferred partners in Guernsey and the Isle of Man.

Why use Fairbairn Private Bank for the investment element of QROPS:

  • A risk profile is agreed with the investor or their adviser which will suit them until their retirement and, through our wealth management service, we can offer preservation of capital and income generation.
  • Our fees are transparent and competitive.
  • Investors can choose their pension scheme administrator and the location of their pension.
  • Banking and investment services available on one integrated platform, with one major advantage of investors being able to hold cash accounts within their pension.
  • Payments, eg, drawdown can be made in different currencies using our foreign exchange facilities.

The risks of QROPS:

  • Investors should choose their pension jurisdiction wisely, otherwise they risk losing the HM Revenue & Customs (HMRC) approval of the QROPS.
  • Investors should be aware that moving their pension assets out of the UK means losing the Financial Services Authority (FSA) regulations protecting the assets. However, other jurisdictions offer alternative protection and compensation schemes.
  • Re-entry into the UK would need to be considered carefully.
  • The price of, value of, or income from your investments can fall as well as rise and you may not get back the original amount invested.
  • Past performance is not necessarily a guide to future performance.
  • Exchange rate changes may affect the value of your investments.

To find out more about this service and explore other options available, please contact your relationship manager directly or our client services team on +44 (0) 1624 645000.