20 | LETTERS
YOUR SHOUT
www.opp.org.uk | DECEMBER 2011 What do you think?
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Expats blinded by QROPS tax sweeteners
Dear Editor, Far too many ex-pats are overlooking key factors when choosing a
Qualifying Recognised Overseas Pension Scheme (QROPS). I believe that it is increasingly important that they consider more than just the tax benefits involved. There is little doubt that QROPS are a useful and popular UK financial
planning tool, but our experience shows that ex-pats are increasingly being blinded by tax sweeteners, rather than taking full stock of the right scheme for their particular retirement aspirations. As choice increases, I believe it’s crucial expats should address any regulatory
implications and not be swayed simply by an attractive tax inducement. In particular, expats must look at the where the QROPS is based and question whether it is located in the best jurisdiction for them. Unfortunately, there is a general misunderstanding among British ex-pats
that because schemes are HMRC recognised, they are also regulated by the UK’s Financial Services Authority (FSA). This is not the case. The rules that
govern these schemes are those of the regulatory authorities in which the scheme is based. And, as we all know, regulations of any country can and do change swiftly. Your client might start out with a QROPS with an attractive “no withholding tax” promise, but there’s no guarantee this will remain, nor is there any guarantee that the scheme itself will remain recognised by the UK’s HMRC once the foreign jurisdiction’s government has changed its own regulations. QROPS are a really useful financial planning tool, but it’s important
that advisers and overseas property agents don’t simply focus on ‘jam today’ when choosing the right scheme for their clients. Regulatory considerations are equally important, along with how to achieve retirement income expectations in their chosen retirement location. I firmly believe that if your ex-pat clients want a successful retirement, they need to assess all of these options equally carefully.
Gavin Pluck, European director of Guardian Wealth Management.
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