QROPS Popularity dips by 10%. Perhaps due to a fall in the number of transfers from those not intending to retire overseas or the fall in the charges on SIPP transfers.
The volume of transfers from UK pension to overseas QROPS schemes decreased by close to 10% from a high of 6,263 in 2008/09 to 5,659 in 2009/10, according to information from Sipps provider AJ Bell.
This fall may accelerate in the coming years, the firm has claimed, due to the Treasury’s clampdown on the use of overseas pension schemes by individuals remaining in the UK and the introduction of flexible drawdown.
AJ Bell expects a fall in 2010/11 and a “substantial”fall in 2011/12, following changes to the UK framework and the rules surrounding overseas transfers.
Billy Mackay, marketing director at AJ Bell, claimed that this change will have little impact on transfers to Qrops for individuals retiring overseas.
“The issue which clearly concerns the government is the promotion of Qrops as a tax avoidance vehicle to individuals who have little or no intention of leaving the UK.”
He warned that the fall in the number of Qrops transfers provides evidence that changes to the UK pensions framework, such as the reduction in the tax charge applied on lump sum death benefits from the funds of individuals over 75 and the introduction of flexible drawdown, were already hitting the popularity of these transfers and this trend will continue.
Mr Mackay said: “We have also recently seen changes to the rules on disguised remuneration in EFRBS and the use of scheme pension to meet the minimum income requirement for flexible drawdown.
“All of these changes provide further evidence that the government is keen to support use of pensions in ways that remain consistent with the original intent of providing a secure income in retirement.”
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QROPS Popularity article by QROPS Specialists