HMRC Considers Extending Pension Flexibilities to QROPS
The UK Government’s discussions to afford the same new rights to Qualifying Recognised Overseas Pension Schemes (QROPS) as traditional UK-based pensions are being hailed as “further evidence of the pension transfer market’s maturity.”
The comments from Nigel Green, founder and chief executive of deVere Group, which has 80,000 clients, also come with a warning.
Industry Reactions to Proposed QROPS Changes
Mr Green says: “We welcome that the Government is considering bringing the rules governing QROPS into line with the reforms to UK-based pensions that were announced by George Osborne in the Budget.
“This is unequivocal further evidence of the pension transfer market’s maturity.
Nigel Green – CEO deVere Group
“The fact that HMRC and the DWP are considering this demonstrates yet again that QROPS are now entirely part of mainstream retirement planning options.
Growing Popularity and Mainstream Acceptance of QROPS
“QROPS are continually becoming an ever-more established pension’s option with expats and those who are considering a move abroad, with an annual rise in popularity since they were officially recognised by HMRC in 2006.”
He continues: “Should HMRC decide to go ahead with the plans, as I expect it will, QROPS would become even more flexible. This combined with growing public awareness of their many benefits will ensure that the popularity of QROPS will increase further, and at a faster pace than ever before.”
Potential Risks of New QROPS Flexibilities
However, despite the deVere Group CEO’s unswerving support of the move, he warns clients of the potential risks of taking advantage of the new flexibilities.
He comments: “The concept of accessing a pension early flies in the face of the overriding principle of pensions – to provide a secure income throughout retirement.
Importance of Responsible Pension Access Decisions
“Despite the new freedoms, people must remember that the funds should still be used as a pension.
“Where at all possible, it is better to resist accessing pension pots to avoid any potential risk of making ill-informed decisions that could jeopardise your retirement plans; to avoid hefty tax charges; and because while your funds are invested they are relatively tax efficient.”
