Are Qrops worth looking at? The Budget stirred things up with its proposal to impose a 25 per cent tax charge on certain transfers to schemes based outside the European Economic Area.
Here is a checklist to help you to decide whether you should consider them for your clients:
- Qrops are specialist pension products. Is your firm a pension specialist? Do your advisers have appropriate knowledge and experience? If not, how will they obtain this?
- Where are your clients based? If non-UK can they obtain access to better pension solutions locally?
- Will your UK-based clients require ongoing service if they emigrate? Most expats retain UK links and may return to the UK?
- If advising clients outside the UK, have you checked the requirements of the local regulator? Pensions advice is not covered by IMD or Mifid passports within the EEA
- How familiar are you with HMRC Qrops guidance?
- Impact on professional indemnity premiums? Your PI insurers must be notified
- Do you have access to suitable training resources?
- Should you use licensing to select the advisers active in this area?
- Who will supervise and monitor advisers?
- Are there financial crime risks to consider?
- How are your Qrops clients referred to you and do you value those introducer relationships?
The above is will help you determine whether advising on Qrops is consistent with your regulatory risk appetite. Whatever you decide, keep your decision under review. Brexit might make a difference and, aside from this, fresh retirement and tax planning opportunities might swerve into view.
Phil Young is managing director at Threesixty