Qrops providers have hit back at suggestions that annuitisation reforms will dramatically reduce demand for overseas pension schemes.
Last December, Standard Life head of pensions policy John Lawson said the new flexible drawdown regime, which will come into force in April, will be a “game changer” for Qrops.
Under the new rules, people will be able to take 100 per cent cash on pension income above the annual minimum income requirement of £20,000. Twenty- five per cent will be tax-free and the tax treatment of the remaining 75 per cent will depend on residence status on withdrawal if outside the UK for five years.
Lawson said: “I have seen people being charged tens of thousands of pounds in initial fees for a Qrops. Why would you transfer to a foreign pension when you are already in about the most flexible retirement benefit regime in the world?”
Montfort International managing director Geraint Davies says that ignoring the regime of a country of residence is “unacceptable”. He says: “The global thinking adviser will always know he or she has to look at the rules in the country of residence as well as non-country of residence options before delivering advice.”
Baker Tilly Isle of Man principle Stuart Clifford says: “There will always be reasons why Qrops will be beneficial, irrespective of any changes in UK legislation. Advisers should still consider Qrops as an alternative to an existing UK scheme.”