Standard Life says the Government’s annuitisation reforms will dramatically reduce the demand for qualifying recognised overseas pension schemes.
But Qrops specialist adviser Monfort International has attacked Standard’s stance and suggests there will be a continuing need for Qrops among expats.
Last week, the Government set out plans for a flexible and capped drawdown regime to replace annuitisation at 75. Individuals in flexible drawdown who take benefits abroad will not face an income tax charge if they are a non-UK resident and do not return to the UK within five years.
Standard Life head of pensions policy John Lawson says to get the full benefits of Qrops, the individual needs to live outside the UK for five years.
He says the flexible drawdown regime compares favourably with other jurisdictions in terms of cash restrictions. People will be able to take 100 per cent cash, above the minimum income requirement, 25 per cent tax-free and 75 per cent according to residence status on withdrawal if outside the UK for five years.
Lawson says it is “a game changer” for Qrops . He says: “I have seen people charged tens of thousands of pounds in initial fees for a Qrops. Why transfer to a foreign pension when you are already in just about the most flexible retirement benefit regime in the world?”
AJ Bell marketing director Billy Mackay agrees the reforms will dampen appetite for Qrops but adds: “A number of firms will aggressively target UK pension money and play quite heavily on things like the 55 per cent tax on death penalty.”
Montfort International managing director Geraint Davies says: “If a person is going to live in another country, you have to know what the impact is of retaining a UK pension whenever UK or local legislation changes. To say they will be significantly damaged is rubbish. This is insular, parochial and worrying thinking.”
AES International managing director Sam Instone says: “I think overseas pensions, provided they remain HMRC-sanctioned, will remain very clearly in the best interests of lots of clients.”