Paul Davies and co-director Simon Harvey run Global Qrops, an advisory firm specialising in pension transfer and management for migrating Brits.
Davies says: “Overseas pensions is a huge marketplace full of potential. I think many people know someone who is looking to or has moved abroad from the UK. Also, in this financial climate, it is very interesting because a lot of people are getting disgruntled with this country and are looking to leave.”
Davies and Harvey found their way into international pension advice from working with migrant Britons looking to move their money with them as they emigrated to Australia and New Zealand.
Davies says: “The firm we worked for at the time was run by a former migrant himself. He had seen that there were limited opportunities for people moving out there and of course, the best place to advise is pre-migration.”
But it was not until 2004, when HM Revenue & Customs began its plans for Qrops, that the advisers realised their experience and skill in dealing with antipodean pensions could be used to take advantage of the new rules.
Davies says: “The key thing was before 2006 you could only transfer your pension to the country you were migrating to. The moment HMRC decided that you didn’t have to transfer to the country you were moving to that opens up a lot of opportunities. That is really how we evolved in that area.”
Being experienced in dealing with international pensions, Davies was asked by HMRC to its offices in Nottingham while it was preparing the rules for Qrops. “I was one of the few overseas specialists invited to chat about Qrops. HMRC had set out the rules in 2004 but they wanted to talk to people working in the field and get an idea on how it might work in the real world. So we put forward some questions that are now used as FAQs on the HMRC website.”
Davies admits that it was a tough time in 2006 when he and Harvey were forced to learn a whole new set of rules to be able to continue to advise Britons moving Down Under but they were encouraged by the knowledge that their niche and their hard work would open up worldwide opportunities.
He says: “We were already looking after people moving to Australia and New Zealand but we began to look beyond that and we began to look at other areas of the world to put migrants’ pensions.”
Nearly five years into the Qrops regime, the firmcontinues to deal with British migrants from all over the world but Davies admits it is still a challenge to move pensions across the globe, even with the Qrops rules.
He says: “The biggest problem with Qrops is that everyone has a different tax position but it is magnified because this is spread all over the world. So it is crucial that the client gets the right tax advice. In the likes of Spain and France, the tax rules can be confusing and aren’t always clear and the US tax system is very complicated as well.
“But then there are oppor-tunities round the world also. For those who have moved to the Middle East, Qrops could work quite well out there because many of the Middle Eastern countries are not subject to tax.
’We were already looking after people moving to Australia and New Zealand but we began to look beyond that and we began to look at other areas of the world to put migrants’ pensions’
“But the world is getting smaller and we have startedto speak to people who are migrating to places as diverse as Thailand and even to Borneo. We obviously advise those who are migrating but with the internet we do pick up more clients who do live abroad already.”
Davies admits that many advisers are still wary of Qrops, which are seen by some as a new and untried product. But he does think the added qualifications and professionalism that will come with the RDR will make more advisers sit up and note international pensions.
Davies says: “I think as IFAs begin to understand Qrops more and as they deal with them more, they will become easier to advise on. But we are nearly five years in Qrops and there are a lot of IFAs who have either not advised on them or they are part of networks who still see them as a new concept.”
Davies thinks some advisers may be forced to change their opinion of Qrops as more high-net-worth individuals decide the new age of austerity is too taxing.
Davies says: “As each Budget goes by, I would expect people will see it as the final straw. There is hardly anyone who will benefit from the changes, particularly the high-net-worth people. They will find it harder to find reasons to stay in the UK.
“Going forward, IFAs are going to become more qualified and more professional and they may see Qrops as an opportunity for them and their clients, not a danger.”