QROPS Expert Pension Guide 2017

QROPS EXPERT Pension GUIDE

W: qrops.wealthmanagementhongkong.com

T: +852 5307 3732

E: [email protected] 2017

Do you have a UK Pension - Then read this

QROPS Guide it could save you £1,000's

If you have a UK Pension and are living,

working, retired, or retiring abroad, you

can transfer your UK Pension to a

Qualifying Recognised Overseas Pension

Scheme (QROPS) to minimize your UK

Taxes, remove your UK Pension from your

occupational scheme RISK of failure

(Bankruptcy), and get back control of your

pension (money).

We are contacted by many people

throughout the world who have a UK

pension, and who would like to explore

their options about transferring their UK

Pensions usually for one of the following

reasons.

1. To Secure YOUR pension (money);

Many UK Pensions Schemes are in

Deficits putting YOUR pension (money) at

risk.

2. To Reduce YOUR UK Pension Tax

and increase you pension income for you to

spend as you wish during your lifetime.

3. To Secure the MAXIMUM benefits

for your loved ones on your pre mature

death.

We are the go to QROPS UK Pensions

transfer specialists with UK advisers

providing UK Pension transfer advice no

matter where you are in the world.

http://www.wealthmanagementhongkong.com/

mailto:[email protected]



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Our Client Testimonials “I have known Gary for several years and he has a thorough and diligent approach to wealth

management. He understands there are risks and downsides and is willing to explain those

whilst still identifying realistic and successful opportunities for investment. I would be happy

to recommend him” April 21, 2015, Martin Reynolds

“Having been with FP for almost 10 years, I can say without doubt that Gary is the most

thorough advisor I have used. He takes the time to ensure that your previous choices are still

what you want, and how they have been working for you, explaining alternatives and giving

ample time for questions to be asked. Although I do not invest a great deal each month, Gary

always takes the time to ensure that I am aware and happy with my portfolio, making me feel

a valued customer” Julie Reakes April 2012

“From day one my wife and I have found Gary to be very professional, trustworthy and

reliable. Gary has a wealth of knowledge and a clear and concise way of presenting the

information. We have found him to be very punctual and follows up on a regular basis to

inform us of the performance of our portfolio. We hope that this is the start of a long

successful financial relationship.” August 4, 2011 Top qualities: Great Results, Expert, On

Time Lee Taylor, hired Gary as a Financial Advisor in 2010

“Gary Williams has helped me put together a financial plan that gives me the confidence that

I will be set up for my retirement and solid financial planning for my family’s future. Gary’s

extensive knowledge of and experience in financial planning and wealth management

provides both opportunity and security. I have found him to be very knowledgeable,

professional and responsive. Gary has treated me as an individual and I strongly feel he

tailors his advice to what is best for my financial goals.” July 26, 2011 Top qualities:

Personable, Expert, High Integrity Conor Forkan, hired Gary as a Financial Advisor in 2011

“Gary is a very knowledgeable and conscientious financial adviser I asked him to assist me

with several issues that I was dealing with and he went above and beyond the tasks that were

within his purview and helped me much more broadly. I would have no hesitation in

recommending Gary.” July 24, 2011 Top qualities: Great Results, Expert, High Integrity

Chris Dixon, hired Gary as a Financial Advisor in 2010, and hired Gary more than once

“I have known Gary for over 15 years and found him extremely willing and capable with a

warm and open style. Gary has a keen understanding of people’s needs and I have no

hesitation in recommending him both personally and professionally.” – June 4, 2011 Mike

Thompson



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We hope you will find our guide informative and that it highlights some of the vast financial

planning opportunities available to you by transferring your UK Pension scheme to a

Qualifying Recognised Overseas Pension Scheme (QROPS). Our guide is intentionally

generic and therefore individual questions may arise that you would like answers to. If at any

time you would like more detailed information then please e-mail us at

[email protected] or telephone +852 5307 3732 we will be pleased to

answer any questions that you may have.

Wealth Management Since 1993 Contact Us First

“With over 20 years of experience as International Independent Financial Advisors; we

provide specialist advice, together with extensive international experience. Providing our

clients with the experience and expertise that they are looking for” – Why Don’t you Give us

a try!

We are here to answer your questions, and explore your options together. British Advisers,

British Advice, wherever you are in the world.

We are contacted by many people throughout the world who have a UK Pension, and who would like

to explore their options about transferring their UK Pensions usually for one of the following reasons.

1. To Secure YOUR pension (money); Many UK Pensions Schemes are in Deficits putting

YOUR pension (money) at risk.

2. To STOP YOUR UK Pension Tax and increase you pension income for you to spend as you

wish during your lifetime.

3. To Secure the MAXIMUM benefits for your loved ones on your pre mature death.

We are the go to QROPS UK Pensions transfer specialists with UK advisers providing UK Pension

transfer advice no matter where you are in the world.






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This Is Probably The Most Important Page Of Your QROPS

Guide

QROPS Check List – A QROPS will do the following for you.

Many UK Pensions Schemes Are in Deficit (Bankrupt), how can I get my pension money out?

– by transferring it into a QROPS.

Increasing the Pension Commencement Lump Sum (Tax FREE Cash) that you can receive

from 25% to 30%.

Reduce the UK Pension income tax payable on your UK Pension by up to 45% and therefore

increase your pension payments for you to enjoy as you wish.

Remove the death tax (45% to HMRC) on your UK Pension, leaving more to your loved ones.

Remove the potential 55% HMRC tax rate from your UK Pension, to increase your pension

income and Pension Commencement Lump Sum (Tax FREE Cash).

Remove any IHT liability on your UK Pension, leaving more to your loved ones.

Our FREE UK Pension Review Will Answer The Following Questions.

Many UK Pensions Schemes Are in Deficit (Bankrupt), how can I get my pension money out?

– by transferring it into a QROPS.

What other taxes can you save?

How can you pass 100% onto your loved ones?

How to STOP the UK Pension income tax payable on your pension by up to 45% and

therefore increase your pension payments for you to enjoy?

How to remove the death tax (45% to HMRC) on your UK Pension?

How to remove the potential 55% HMRC tax rate from your UK Pension?

How to remove ALL IHT liability on your UK Pension?

How to take investment control of your UK Pension funds?

How to decide what type of pension you can transfer?

How will the Lifetime Allowance reduction affect you (badly so act NOW)?

How will the future government policy on UK Pension changes affect you (badly so act

NOW)?

As Part Of YOUR FREE UK Pension Review, We Will Take Into Account The Following:

How much you need to retire?

Should you give up the benefits of your Final Salary UK Pension Scheme?

What currency should you hold your pensions in – to mitigate Currency Risk?

Where you live for Taxation purposes?

How can you keep your costs to a minimum?

What are the costs of transferring your UK Pensions?

What taxes will you have to pay?

What is your risk profile?

What fund managers give the best pension returns and how you can invest in them?





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Pensions

How many of us make a conscious effort to spend some time

and consider our pension arrangements and planning our

retirements.

Yet providing for our retirement is a mjor consideration and

one that we all need to take a long hard look at, because it not

only effects us but our familys also. Deciding where and when

we can afford to retire and maintain a certain lifestyle requires

careful planning.

This of course is where Professional Financial Planning adds

value to your retirement plans.

But where do you turn to next for the best advice?

Best advice means not just informing you about the benefits, but also any potential pitfalls

that you should consider. That’s where our FREE evaluation service becomes invaluable in

helping you source expert professional independent advice and guidance.

We are established UK Pensions specialists within the worldwide UK Pensions advisory

environment; considered the go to advisory worldwide for UK Pension Transfers to

Qualifying Recognised Overseas Pension Schemes QROPS wherever you are in the world.

Our highly experienced UK advisers will review your UK Pensions and if appropriate, will

work with you to transfer them into a Qualifying Recognised Overseas Pension Scheme

(QROPS).

We advise, service, and arrange QROPS UK Pensions for clients from all over the world for

example we have clients in Australia with the main enquires coming

from Adelaide, Brisbane, Canberra, Darwin, Gold Coast, Melbourne,

Newcastle, Perth, Queensland, Sydney, and Victoria, New Zealand

NZ mainly living in Auckland, Christchurch and Wellington, United

Arab Emirates UAE, Dubai, Bahrain, Spain, Italy, Greece, Portugal,

USA, Canada, South Africa from Johannesburg and Cape Town,

Brazil, Mexico, New Delhi India, Islamabad Pakistan, France,

Monaco, Germany, Switzerland, Yemen, Saudi Arabia, Panama, Costa Rica, and all of Asia;

Hong Kong, Macau, Belize, Jakarta Indonesia, Tokyo Japan, Singapore, Taipei Taiwan,

Kuala Lumpur Malaysia, Mongolia, Myanmar, Pattaya Bangkok Thailand, Manila

Philippines, Hanoi and Ho Chi Minh Vietnam, including Beijing, Shanghai and all of China.

So no matter where you are in the world we can help and advise you; and should a QROPS

UK Pensions transfer be the right course of action for you we can make all of the

arrangements for you.





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We have been at the forefront of the development of QROPS worldwide since their inception;

and we retain strong links with the most respected QROPS providers worldwide. We are the

most experienced independent advisory company in the worldwide QROPS market place.

Advising not only private clients, but also private bankers at some of the largest institutions

such as UBS, HSBC, and Credit Suisse.

After you have read through the rest of our guide, may we suggest you contact us for a

discussion relating to all the points you should consider depending on your personal

circumstances.

At the back of this guide we have provided a “Clients Notes” page for your convenience; so

that you can record your questions and thoughts prior to calling us.

We are here to answer your questions, and explore your options together.

The Starting Point - Do You Have Any UK Pensions

If you already have a UK pension, I am sure that you would like answers to the following:

Where are my pensions

Where is my money is invested

How much pension will I receive

How much tax will I have to pay and to whom

Am I in control of my Pension or is somebody else

How flexible are my pension arrangements to my changing circumstances

What will eventually happen to my pension money; who can I leave it too and will it

be liable to taxation.



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As UK pension specialists we will be able to answer your questions and concerns, and offer

you specific advice tailored to your personal circumstances and future plans. Providing you

and your loved ones with peace of mind.

Pension Transfers For UK Expats

Why A QROPS (a Qualifying Recognised

Overseas Pension Scheme)

Because A QROPS can “Seriously Increase Your

Wealth”

A QROPS is an off shore Personal Pensions Plan (PPP). However they can offer you and

your dependents greater benefits than a UK Personal Pension Plan or a UK Self Invested

Personal Pension (SIPP).

Although QROPS are subject to Her Majesty's Revenue and Customs (HMRC) rules, they are

different from the UK rules and relate specifically to QROPS.

As a consequence under QROPS legislation only 70% of the underlying pension fund value is

required to remain in the QROPS, when you choose to take the benefits from age 55 (at

crystallisation) the remainder is available as a Pension Commencement Lump Sum (PCLS).

In addition a QROPS gives you a greater choice and flexibility as to where and how you

invest the underlying pension money. Eventually the remaining funds can be left to your

beneficiary’s tax free and there is no liability to UK Inheritance Tax (IHT) at any time.

There are several jurisdictions where a QROPS can be placed (see Appendix A - The Main

QROPS Jurisdictions) and of course where you are going to live will have a bearing on the

relevant jurisdiction for you. Talking with our QROPS advisors and the Trustees of the

relevant schemes will enable you to make the most beneficial choice for you.

This is critical as the wrong choice can cost you large amounts of money.

Introduction

We provide you with all the answers and help that you have been looking for in deciding if a

QROPS (a Qualifying Recognised Overseas Pension Scheme) may be right for you! Not only

can you study the information contained in this guide, but if at any time you need more

detailed information, analysis, or friendly advice in plain English then we are here to help

you.

Anyone with a UK pension scheme who now lives overseas as an expatriate, or is planning to

leave the UK, can now transfer their existing pension provisions into a QROPS.





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And the financial benefits can be huge if planned correctly; by improving the investment

growth, flexibility, and future financial security of your pension – “YOUR MONEY”.

Compiled by industry experts with over 20 years of experience, our aim is to maximize your

expatriate status and help you achieve your financial goals by getting more out of YOUR

PENSION – “YOUR MONEY”.

We will only help you transfer to a QROPS provider if they are right for you and your

individual circumstances, and that are 100% approved by HMRC; in addition we can also

advise you as to the best jurisdiction you should use, given your individual circumstances and

future plans.

If, at any time you would like to speak to one of our specialist QROPS advisers then we are

here to help you, please contact us.

How Do QROPS Schemes Work?

QROPS consist of two elements:

1. The QROPS Trustees: the trustees are responsible for the administration of the

QROPS scheme; and to ensure that it operates within the QROPS and HMRC rules

and regulations.

2. The QROPS investment vehicle: this is where your underlying assets are invested.

Because of the significant opportunities for such schemes to be abused; HMRC tend to

monitor these closely and penalise members and schemes for making unauthorised payments.

During the first ten years QROPS providers are required to report all payments from the

scheme to HMRC.

This is another reason why the correct advice and the selection of a provider (the “Trustee”)

that has a good standing with HMRC is paramount here.

With regard to the choice of investment vehicle

We provide:

A highly experienced investment management team with over 20 years of expertise.

Regular reviews on your investments; and to changes in your personal circumstances.

The main benefits of a QROPS are:

There are many beneficial reasons for transferring a UK pension into a QROPS. The most

important are:

1. To Secure YOUR pension (money); Many UK Pensions Schemes are in Deficits

putting YOUR pension (money) is at risk.

2. To Reduce YOUR Tax and increase you pension income for you to spend as you wish

during your lifetime.


100% Death Benefit





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In the UK, pensions can be completely lost or severely reduced upon death. Money Purchase

schemes (PPP and SIPP) are taxed at 45% on death from age 75.

Defined Benefit schemes can, depending on the scheme rules, be lost completely in the event

of your death.

Transferring your pension to an appropriately structured (resident dependent) QROPS can

pay benefits Gross of tax.

Income Drawdown

When drawing down your pension from a QROPS, a more tax efficient income will generally

be available in comparison to a UK regulated scheme.

There is no requirement to purchase an Annuity at any time.

No Liability To UK Tax On Pension Income

Income derived from a UK based pension will be subject to UK taxation at source.

Transferring your pension to an appropriate QROPS will ensure that all benefits will be paid

without the deduction of UK tax.

Jurisdiction Choice

Your pension doesn’t have to be held in your current country of residence or your country of

origin. You have the freedom to place your funds into an offshore jurisdiction, ensuring

maximum tax savings for you. For an overview of the main QROPS jurisdictions please refer

to Appendix A - The Main QROPS Jurisdictions.

Currency

When living abroad, keeping your retirement funds in Sterling will cost you money and

increase your risk exposure.

As standard UK pensions are aimed at individuals living and staying in the UK, the

underlying investment strategy will be predominantly UK focused. The currency of

investment will also be GBP and when retirement is taken, any payments received will be in

GBP.

In this case the member runs a currency exchange rate risk in respect of pension income, in

addition to incurring charges in order to convert the pension payments to the currency of their

country of residence.

Transferring to a QROPS means that investments and drawdowns can be made in a more

suitable currency, thus mitigating any currency exchange risk.





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If you are planning to retire outside of the UK, it makes sense to have an investment strategy

that focuses on the local economy of your geographic location. A QROPS offers the ability to

tailor an investment strategy in accordance with your own requirements.

Investment Freedom

Depending upon the size of your pension, you can have “open architecture” (freedom of

choice) in terms of your underlying investment portfolio. We can construct a bespoke

portfolio for you to reflect your age, time horizon, tax position, and risk profile. Such a

portfolio may include for example Capital Preservation strategies, Growth Strategies,

Balanced Strategies and so on.

Having access to all of the top financial institutions worldwide makes it easier to protect your

retirement income and ensure that the future of you and your family is looked after.

Transparency

Under UK pension schemes, charges are often hidden so the real cost of the pension is rarely

known. When your pension is held within a QROPS, there is full transparency of costs so you

know exactly how much your pension is being charged.

Many UK British Occupational Pensions Schemes Are In Deficit (Bankrupt).

By transferring your occupational pension scheme to a QROPS you remove the inherent risk

of your occupational pension scheme not being able to pay your pension to you because of

insolvency and / or liquidity problems – see Appendix B

QROPS Benefits Summary

Benefits are available from age 55.

There is no requirement to purchase an annuity on retirement or at any other time.

Greater flexibility exits in how you can take an income from the underlying fund.

30% of the underlying fund value is available as a Pension Commencement Lump

Sum (PCLS).

The underlying investments grow in a tax-free environment (other than dividend

withholding taxes).

The full fund is payable free of any UK Inheritance Tax (IHT); in the event of your

premature death whenever and where ever that occurs.

Tax advantages and guarantees provided by offshore investments; whilst remaining

under the comfort of the UK regulatory framework.

There are no UK income tax liabilities on received pension payments; while you

remain a non-ordinary resident of the UK for Taxation purposes.

Greater control over the investment of your underlying investment fund, with a wide

range of choices available to you. This is important because, the greater the

underlying fund value – all other things being equal – the larger your income will be.





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Greater flexibility over the nature and timing of your retirement benefits.

The pension fund can be denominated in a wide range of currencies to suit you (this

may reduce currency risk).

QROPS are exempt from the UK Lifetime Allowance currently 1.25m GBP (the

maximum value of the underlying fund; before tax on any excess becomes liable;

currently at a rate of 25% or 55%; 2015).

Wider limits on pension income levels, which can be varied to suit your individual

circumstances.

A QROPS removes “Your Money” from UK HMRC Pension Tax currently calculated

at 45% for capital repayments after premature death post age 75.

A particularly flexible contract where an extensive range of investments can be made.

Saliently a QROPS puts you back in control of YOUR MONEY.

In addition we provide:

A highly experienced international investment management team.


QROPS then have significant advantages for people looking for greater control over the

investment of their pension fund; and the shape and timing of their retirement benefits in their

lifetime; and who also see the advantages of passing over UK TAX FREE lump sum benefits

in the event of their premature death. With the pension being paid free of UK Income Tax,

there are clearly also advantages for people living in jurisdictions where pension income is

not taxed (note: we recommend you seek individual tax advice regarding your particular

circumstances).

Before transferring away from your existing provider it is important to consider:

Whether there are any Guaranteed Annuity Rate benefits attached to your current

schemes. These benefits were not uncommon in the past, when interest rates were

much higher than they are at present, and therefore look attractive in the current

market.

Charges and penalties on exit.

The charges of the new QROPS scheme, in comparison to your existing

arrangements.

The different benefit structures and tax treatment of your existing schemes and a

QROPS.

Any known future changes to UK pension legislation and the potential impact this

may have on your decision.

Known impending changes in legislation within the various jurisdictions that offer

QROPS.





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A QROPS Pension Scheme

How Do QROPS Schemes Work?

QROPS consist of two elements:

1. The QROPS Trustees: the trustees are responsible

for the administration of the QROPS scheme; and to ensure

that it operates within the QROPS and HMRC rules and

regulations.

2. The QROPS investment vehicle: this is where your

underlying assets are invested.

Because of the significant opportunities for such schemes to be abused; HMRC tend to

monitor these closely and penalise members and schemes for making unauthorised payments.

During the first ten years QROPS providers are required to report all payments from the

scheme to HMRC.

This is another reason why the correct advice and the selecting of a provider (the “Trustee”)

that has a good standing with HMRC is paramount here.

With regard to the choice of investment vehicle

We provide:

A highly experienced international investment management team.


QROPS – Frequently Asked Questions

What is the minimum value I can transfer to a QROPS?

In our experience the better schemes require funding of around 75,000 GBP. Whatever your

situation, contact us anyway as there is usually a solution to be found.

Who may apply to transfer their pension into a QROPS?

Anybody with a UK pension (except public pensions for example a NHS pension)

I have more than one UK Pension. Can I consolidate them into one scheme?

Yes. One of the many benefits of a QROPS is that you can consolidate all of your UK

pension schemes under one roof. This means that you receive a consolidated position of your

pension fund and are then able to create an investment strategy for the whole scheme rather

than trying to administer various schemes.



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I have a final salary scheme. Should I consider a QROPS?

Yes. Final salary (Defined Benefit) schemes offer certain benefits such as a guaranteed

pension, usually indexed to inflation. Therefore to forego this benefit, a clear expert analysis

needs to be undertaken to show that the QROPS benefits outweigh the final salary scheme

benefits. Some considerations will be: What are the death benefits attached to the defined

benefit scheme? Are you convinced that the company you worked for will be around and

have the money to fund your future pension? Can your QROPS grow at a faster rate than

your final salary at the same level of risk? Together with Taxation and Currency risk?

I am in drawdown of a UK pension scheme. Can I still transfer into a QROPS?

Yes it is still possible to transfer too and benefit from a QROPS pension.

What will a QROPS cost?

As QROPS have become more popular, their fees have also become increasingly competitive.

In the majority of cases a QROPS can be set-up for less than £1000 (this set-up fee will be

deducted from the pension transfer value by the pension Trustees; so you will not have to

fund the fee directly). Being independent advisers, we can compare fees and select the most

suitable scheme for you. All QROPS costs are transparent, unlike most UK pensions where

you have little idea of costs being charged by administrators, trustees, custodians and fund

managers.

Depending on the type of scheme and complexity you require, we will find the most suitable

scheme for you and show all costs involved.

Will payments from my QROPS pension fund be reported to HMRC in the UK?

QROPS providers are required to notify HMRC of any payments from transferred pensions in

respect of a relevant member during the initial 10 years.

And in the event that the member becomes an ordinary resident for tax purposes in the UK;

when the payment is made.

If I transfer my UK pension into a QROPS will I have to buy an annuity?

No, although you may if you wish. Without the need to purchase an annuity it means you can

invest into wide ranging assets, and gain the advantage of passing any remaining funds upon

your premature death to your loved ones. Without any liability to the UK PRC at 25% or

55% or UK IHT at 40%.

Who may apply to transfer their pension into a QROPS?

Most of the schemes are not available to US citizens and there can be problems with US

residents; however any other nationality may apply.





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What investment choice and freedom will I have with a QROPS?

The investment choice will normally be very wide indeed. Under certain circumstances you

can manage the assets yourself with total freedom, or work with an investment manager or

financial adviser.

You may also appoint an investment manager to make the decisions for you or with you. It

really depends what you are looking to achieve and how involved you would like to be with

the investment decisions.

We can arrange for an investment adviser to work with you by reviewing your QROPS fund

assets and make recommendations to you on a quarterly basis.

There is no limit to the size of funds that may be accumulated within a QROPS; and a

QROPS is exempt from the UK Lifetime Allowance (the maximum value of the underlying

fund; before tax on any excess becomes liable; currently at a tax rate of 25% or 55%).

How and when can I take benefits from my QROPS?

Typically there is considerable flexibility in the timing of taking any benefits from a QROPS.

Usually benefits will be taken from the age of 55, but it can be possible to access funds

before or after these ages. Please contact us for further information dependent on your

circumstances.

Once I’ve transferred my UK pension to a QROPS can I access my fund as a 100% lump sum?

Unfortunately the answer here is 'no'. This is because the funds that you have built up (after

taking your Commencement Lump Sum) are required under the current QROPS and HMRC

rules to provide an income for you and your dependents for the rest of your life, and perhaps

beyond.

How will any benefits or withdrawals be taxed?

The tax treatment of any income you receive will depend upon your QROPS jurisdiction and

where you are a tax resident at the time. (Note: we recommend you seek individual tax advice

regarding your particular circumstances).

What will happen to my QROPS pension fund upon my death?

Typically – and a major benefit of a QROPS – is that the remaining value of the fund is paid

directly to your beneficiaries. Without any liability to the UK PRC at 25% or 55% or UK

IHT at 40% or the UK HMRC Pension Tax currently calculated at 45% for capital

repayments after premature death post age 75.





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I may go back to the UK in the future, can I still benefit?

QROPS are for people whose intent is not to return to the UK in the future. However if this is

some time away – say 10 years plus - then you may still want to consider a QROPS as the

benefits of ownership are substantial. Even with your possible future return to the UK

there are substantial benefits of transferring to a QROPS. Please contact us to discuss

your particular circumstances.

I have a UK SIPP and I have drawn an income, can I benefit?

A QROPS can be used to receive transfer values from any UK registered pension scheme

whether this is for example a Personal Pension Plan (PPP), a Self Invested Personal Pension

Plan (SIPP), a Small Self Administered Pension Scheme (SASS), or an Occupational Scheme

whether it's a Money Purchase Scheme or a Final Salary Scheme (except for public

occupational schemes for example a NHS pension scheme) – all can be transferred to a

QROPS.

How long will a transfer to a QROPS take?

Most transfers can take 2-3 months. The process is initiated by you completing a letter of

authority enabling us to get the relevant information from your existing pension provider; for

example the current benefits and a transfer value. This is not binding in any way, and will

only allow us to receive the details regarding the pension scheme that you have. However it

will allow us to provide you with individual expert independent advice reflecting your

personal individual circumstances and future plans. You can find this form at back of this

QROPS guide.

Can I transfer funds and assets in my UK scheme or do I have to liquidate them into cash?

This will depend on the pension provider you have, and the assets that you hold. Generally a

transfer will be quicker if converted into cash. Please contact us to discuss your particular

circumstances.

What are the key facts to look for in a good QROPS?

Strong investor protection from a well established jurisdiction similar to the UK, investment

protection, transparency of charges, and tax efficiency.

My pension fund is substantial, what tax implications may there be?

A transfer to a QROPS will be a benefit crystallization event and therefore will give rise to a

tax charge if the amount exceeds the lifetime allowance (currently £1.25 million in the 2015

tax year).

If your fund is in excess of this amount then please contact us for specialist advice.





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Are there any circumstances in which I shouldn't transfer to a QROPS?

Yes there are, although in most situations we have come across so far, as long as you are a

non UK resident for tax purposes and intend to remain so the benefits to you can be immense.

If you have guaranteed annuity rates set many years ago when interest rates were much

higher, this would be one such situation that would need careful consideration and advice.

Can I organize a QROPS myself?

No. QROPS providers will only take pension transfers through their appointed intermediaries.

We are appointed intermediaries; and as such we can provide you with all of the information,

and the independent financial advice that is necessary for you to make an informed choice as

to whether a QROPS is right for you.

We can also take care of all of the paperwork; making the transfer as easy as possible for you.

How experienced are we?

We are established UK Pensions specialists within the worldwide UK Pensions advisory

environment; considered the go to advisory worldwide for UK Pension Transfers to

Qualifying Recognised Overseas Pension Schemes QROPS wherever you are in the world.

Our highly experienced UK advisers will review your UK Pensions and if appropriate, will

work with you to transfer them into a Qualifying Recognised Overseas Pension Scheme

(QROPS).

We advise, service, and arrange QROPS UK Pensions for clients from all over the world for

example we have clients in Australia with the main enquires coming from Adelaide,

Brisbane, Canberra, Darwin, Gold Coast, Melbourne, Newcastle, Perth, Queensland, Sydney,

and Victoria, New Zealand NZ mainly living in Auckland, Christchurch and Wellington,

United Arab Emirates UAE, Dubai, Bahrain, Spain, Italy, Greece, Portugal, USA, Canada,

South Africa from Johannesburg and Cape Town, Brazil, Mexico, Moscow Russia, New

Delhi India, Islamabad Pakistan, France, Monaco, Germany, Switzerland, Yemen, Saudi

Arabia, Panama, Costa Rica, and all of Asia; Hong Kong, Macau, Belize, Jakarta Indonesia,

Tokyo Japan, South Korea, Singapore, Taipei Taiwan, Kuala Lumpur Malaysia, Laos,

Cambodia, Mongolia, Myanmar, Phuket Pattaya Bangkok Thailand, Manila Philippines,

Hanoi and Ho Chi Minh Vietnam, including Beijing, Shanghai and all of China, transferring

UK pensions wherever you are in the world.

So no matter where you are in the world we can help and advise you; and should a QROPS

pension transfer be the right course of action for you we can make all of the arrangements for

you.

We have been at the forefront of the development of QROPS worldwide since their inception;

and we retain strong links with the most respected QROPS providers worldwide. We are the

most experienced independent advisory company in the QROPS worldwide market place.





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Advising not only private clients, but also private bankers at some of the largest institutions

such as UBS, HSBC, and Credit Suisse.

QROPS Future Developments

The QROPS market is developing into a mature market with the changes in HMRC rules and

regulations, together with the changes in QROPS providers throughout the world. This guide

upto date with our current understanding of the QROPS rules, regulations, and providers at

this time. For information on the current QROPS market and how you could benefit please

contact us.

Conclusions – a QROPS can “Seriously Increase Your Wealth”

QROPS provide a substantial Pension Commencement Lump Sum (PCLS) – to spend

or invest as you wish in your life time.

They remove “YOUR MONEY” from the punitive UK HMRC tax regime.

They offer the widest possible investment options.

They provide GROSS Income.

On premature death they forward ALL remaining monies TAX FREE; and

importantly outside of your remaining estate; to your dependents, for example your

wife and children; or your chosen charity. This means that the money is forwarded to

the right people at the right time; and that the monies remain outside of your estate

with regard to HMRC calculation of any tax liability regarding Inheritance Tax;

which is currently calculated at a TAX RATE 40%.

A QROPS removes “YOUR MONEY” for UK HMRC Pension Tax currently

calculated at a TAX RATE of 45% for capital repayments after premature death post

age 75.

QROPS are exempt from the UK Lifetime Allowance (the maximum value of the

underlying fund; before tax on any excess becomes liable; currently at a tax rate of

25% or 55%; 2015).

Saliently a QROPS puts you back in control of YOUR MONEY, pays a higher TAX

FREE lump sum and reduces and eliminates your TAX LIABILITES from HMRC.

Summary – A QROPS has the following benefits for YOU!

Many British Pensions Schemes Are in Deficit (Bankrupt), how can I get my pension

money out? – by transferring it into a QROPS.

Increasing the Pension Commencement Lump Sum (Tax FREE Cash) that you can

receive from 25% to 30%.

Reduce the income tax payable on your pension by up to 45% and therefore increase

your pension payments for you to enjoy as you wish.

Remove the death tax (45% to HMRC) on your pension, leaving more to your loved

ones.

Remove the potential 55% HMRC tax rate from your pension, to increase your

pension income and Pension Commencement Lump Sum (Tax FREE Cash).

Remove any IHT liability on your pension, leaving more to your loved ones.





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Our free review will answer the following questions.

Many British Pensions Schemes Are in Deficit (Bankrupt), how can I get my pension

money out? – by transferring it into a QROPS.

What other taxes can you save?

How can you pass 100% onto your loved ones?

How to reduce the income tax payable on your pension by up to 45% and therefore

increase your pension payments for you to enjoy.

How to remove the death tax (45% to HMRC) on your pension.

How to remove the potential 55% HMRC tax rate from your pension.

How to remove ALL IHT liability on your pension.

How to take investment control of your pension funds?

How to decide what type of pension you transfer?

How will the Lifetime Allowance reduction affect you (badly so act NOW)?

How will the future government policy pension changes affect you (badly so act

NOW)?

As part of YOUR FREE British Pension review, we will take into account the following:

How much you need to retire?

Should you give up the benefits of your final salary scheme?

What currency should you hold your pensions in?

Where you live for Taxation purposes?

How can you keep your costs to a minimum?

What are the costs of transferring your pension?

What taxes will you have to pay?

What is your risk profile?

What fund managers give the best pension returns and how you can invest in them?





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We trust that you can now see how a QROPS can “Seriously Increase Your Wealth”

Your Next Steps…

QROPS transfers are not right for everybody for example you cannot transfer a state pension

into a QROPS, nor can you transfer a public pension scheme for example an NHS

occupational pension scheme.

However, for the majority of people a QROPS can be significantly beneficial, especially if

constructed with careful and expert guidance. In most circumstances a QROPS offers you

the opportunity to substantially increase your wealth and income.

All of the expatriates and the people leaving the UK that we and our providers have helped

take control of their pensions; have unique financial and individual personal circumstances.

There may also be other personal circumstances, financial assets and liabilities, together with

IHT issues to take into consideration.

How long before the Chancellor realizes how many billions are leaking from UK pensions

PLC, and removes the substantial opportunities that a QROPS can offer YOU, who knows?

Will the availability of QROPS encourage even more affluent people to leave the UK and

move abroad? Probably!

We invite you to take the next step and to contact one of our approved QROPS experts by

calling +852 5307 3732 or send us an email [email protected] with

your contact details and we will be please to telephone you (mobile please).




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Full information and independent advice on QROPS schemes and importantly the jurisdiction

of the QROPS “Trustees” most appropriate to your personal individual circumstances will

then be provided to you. For now you do not need to know the exact value of your pension

but please take the opportunity to find out more – by now we are sure you will agree that it’s

in your best interest to do so.

So please take this opportunity to talk to one of our QROPS experts.

Why don't you

Call us now on Skype +852 5307 3732

Or send us an email [email protected] with your

contact details and we will be please to contact you.

Or if you are ready to proceed then please complete the “QROPS

Pensions Information request” form at the back of this guide and email it back to

[email protected]. This will enable us to gather all of the information

regarding your existing pensions so that we can fully advise you about QROPS in relation to

your personal circumstances and ambitions.

Please note that the “QROPS Pensions Information REQUEST” simply authorizes us to

request information on the stated pension scheme and does not constitute an authority to

make changes to the scheme.

Finally

RETIREMENT SEEMS MANY YEARS AWAY SO WHY

SHOULD I ADDRESS MY UK PENSION FUND NOW?

Many people have far more money built up over many years in their pension fund than they

realize. It is not uncommon for a fifty year old to have built up twenty plus years of

contributions into a pension fund often accumulating a “Money pot” in excess of £200,000.

Failure to plan correctly may result in the loss of your money as many UK Pensions are in

deficits – Appendix B. Take control today.

Pension funds will have been built up in many ways and can include anyone with deferred

benefits in a company scheme, public sector scheme (including for example, teachers,

doctors, nurses, police and members of the Armed Forces) and those with personal pensions.

Now is the ideal opportunity to review and to take control of this large investment.







T: +852 5307 3732


I AM STILL NOT SURE WHY I SHOULD NOT WAIT?

There are various reasons why it may be appropriate to address your pension now. Firstly,

your own personal circumstances, and that of your family may change.

Secondly, and perhaps more importantly, future legislation may change restricting or

prohibiting transfers to QROPS UK Pensions; you will then lose all of the benefits that we

have talked about. HMRC regularly reviews QROPS and in 2008 removed QROPS status

from all Singapore schemes, and in 2015 from New Zealand and Australia schemes.

Please remember; we are only trying to help you achieve the following:

1. To Secure YOUR pension (money); Many UK Pensions Schemes are in Deficits

putting YOUR pension (money) is at risk.

2. To Reduce YOUR Tax and increase you pension income for you to spend as you wish

during your lifetime.


Don’t waste your opportunity to achieve all three benefits for yourself and your family; why

don’t you contact us now and explore your options.

You can also find out more about us and the services that we provide by visiting our website

here qrops.wealthmanagementhongkong.com

ICC Private Wealth Management

1605 Bonham Strand Trade Centre

135 Bonham Strand

Hong Kong


T: +852 5307 3732

E: [email protected]








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Appendix A - The Main QROPS Jurisdictions

Isle of Man

Isle of Man from a legislative perspective

Maximum PCLS payable: 30% of fund value

Earliest retirement age: 55 unless member has ill health

How is the pension income paid/determined: In line with UK GAD rates, up to 5 years of

non-UK residency and via more flexible actuarial tables if non-UK resident for 5+ tax

years Is the pension income subject to tax locally: Yes, 20% (unless a DTA applies)

Is the death benefit taxed: Potentially up to 7.5%

Do pension benefits have to be taken by a certain age: Yes, age 75

Investment architecture: Open

Isle of Man from an operating perspective

Moody country credit rating: AA+

EU member: No

EEA participant: Yes

OECD white list: Yes

Dedicated pension regulator: Yes

Tax authority: Treasury, income tax division

Financial services regulator: Insurance and Pension Authority

Compensation scheme: Cash in pensions plus policy holder protection on life contracts

Ombudsman: Yes

Economic risk: Very low

Political risk: Very low

Financial risk: Very low

Double tax treaties: 13

Affinity to personal pensions: High

Depth of labour market: Moderate

Malta

Malta from a legislative perspective


Earliest retirement age: 55

How is the pension income paid/determined: In line with UK GAD rates for regular

income but additional withdrawals can be provided where a pension is secured Is the pension income subject to tax locally: Yes, up to 35% (unless a DTA applies)

Is the death benefit taxed: No


Investment architecture: Certain restrictions





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Malta from an operating perspective

Moody country credit rating: A-

EU member: Yes




Tax authority: Malta Inland Revenue

Financial services regulator: Malta Financial Services Authority

Compensation scheme: Yes, but pensions excluded

Ombudsman: No

Economic risk: Moderate

Political risk: Low

Financial risk: Moderate


Affinity to personal pensions: Moderate historic focus on occupational plans with

legislation evolving Depth of labour market: Constrained

Gibraltar

Gibraltar from a legislative perspective


Earliest retirement age: 55 unless member has ill health

How is the pension income paid/determined: Non resident for 5 years or more max is 120%

of UK GAD limits (no set min). Non-resident for less than 5 years, 100% of UK GAD

(no set min) Is the pension income subject to tax locally: Yes, a withholding tax of 2.5%

Is the death benefit taxed: No


Investment architecture: Open

Gibraltar from an operating perspective

Moody country credit rating: N/A

EU member: Yes (not full)




Tax authority: Gibraltar Income Tax Office

Financial services regulator: Gibraltar Financial Services Commission

Compensation scheme: Yes, but pensions excluded

Ombudsman: No

Economic risk: Very Low

Political risk: Very Low

Financial risk: Very Low





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Affinity to personal pensions: Moderate with evolving legislation

Depth of labour market: Constrained





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Appendix B – UK Occupational Pension Schemes

Companies Press For Cut In Pension Promises

FT.com Oct 19, 2016 Josephine Cumbo Pensions Correspondent

Trade body for UK’s biggest schemes suggests less generous inflation rises

Pressure is growing on the government to let companies water down their pension promises

to millions of workers, as rising inflation threatens to push up the cost to employers.

A report by the trade body for 1,300 schemes — including those of Tesco, British Airways

and Marks and Spencer — has said that allowing salary-linked pensions to pay less generous

inflation rises could help keep them solvent.

These “defined benefit” schemes — which promise to pay an inflation-linked level of income

for life — are responsible for paying about £81bn of pensions in the UK each year.

About 4.3m people receive a private-sector DB pension and some 27m are set to benefit from

a DB pension at some point in the future.

But in a new report, the Pensions and Lifetime Savings Association said the DB system was

“rigid” and work should be undertaken to investigate how a more “flexible approach” could

be implemented to help keep DB schemes afloat.

This could include reviewing the rigidity of the inflation-linked rises that are hard-wired into

company pension schemes, suggested Joanne Segars, chief executive of the PLSA.

Ashok Gupta, chair of the PLSA’s DB task force and a former member of the Bank of

England’s working group on Procyclicality, said: “The current state of DB poses a significant

risk to members’ benefits for all but the most strongly funded schemes.”

Currently, if an employer backing a scheme goes bust, members — with rare exceptions —

end up in the lifeboat Pension Protection Fund where they face income cuts of up to 20 per

cent, noted the report.

According to the PLSA, employers paid about £31bn into their DB schemes in 2015, with

about £11bn of this spent plugging deficits that have widened in the low interest rate

environment.





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“That money could have been spent elsewhere in their business, for example on wages,

business investment, dividends or on pension contributions to employees in defined

contribution schemes,” said Mr Gupta.

These findings contrast with the position of The Pensions Regulator, which last month

rebuffed suggestions that DB schemes had become unaffordable for employers.

Andrew Warwick-Thompson, executive director for Regulatory Policy with the pensions

regulator, said: “A minority of DB schemes and their sponsors are in distressed circumstances

but the data doesn’t bear out the argument that in general DB schemes are unaffordable —

nor are they about to fail, nor are they about to bankrupt their sponsors, nor will they

overwhelm the pensions life raft, the PPF.”

Richard Harrington, the pensions minister, on Wednesday was drawn in to the debate when

responding to a question about what the government could do to help final-salary pension

schemes become more affordable.

He said: “Companies should think of pensions in the same way as they think of any other

liability, such as the wage bill. I don’t understand the mentality of boards saying that

pensions are not quite the same as other liabilities. I don’t but there’s a conflict between

paying pensions and paying dividends.”

However, he added that the government would issue a Green paper soon on options to keep

final salary schemes sustainable. “We are looking at everything we can do but won’t do

anything until the pensions regulator has finished negotiations with Philip Green [over the

BHS pension deficit].”

FTSE 100 Firms' Pension Deficit Soars,

Source: BBC 16th August 2016

The combined pension funds deficit for companies in the FTSE 100 has seen huge

increases in the past year, according to pension’s expert LCP.

LCP, in its annual report on the pensions market, said that by the end of July, the deficit was

an estimated £46bn, as against £25bn a year earlier.

And this month, the deficit has widened further to £63bn, LCP told the BBC.

The position has deteriorated because of lower bond yields, with a sharp fall after the UK's

vote to leave the EU.





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But sterling's fall after the Brexit result has partly offset this effect, LCP said.

'Ridden Out Brexit'

Falling bond yields cause problems for pension funds, because they reduce the amount of

income available from investments.

Bond yields have fallen even further this month, in the wake of the Bank of England's

decision to cut interest rates from 0.5% to 0.25% and step up its bond-buying programme in

an effort to stimulate the UK economy.

However, at the same time, the fall in the value of the pound has meant that overseas

investments by pension funds are worth more in sterling terms.

LCP added that companies had also used interest rate hedging to negate much of the impact

of falling bond yields.

"FTSE 100 companies seem to have ridden out Brexit reasonably well, reflecting the level of

protection that many put in place against fall interest rates," the report said.

However, LCP added that Brexit, along with the collapse of department store chain BHS and

the potential sale of Tata Steel's UK operations, had "highlighted the significance of

corporate pension liabilities".

Since both firms were suffering because of underfunded pension schemes, their plight

illustrated "the impact that a large defined-benefit scheme can have on a UK company".

Pension Schemes Explained

Final-salary scheme: Guaranteed pension based on earnings at end of your career and

length of service. Also known as defined-benefit schemes

Career average scheme: Guaranteed pension based on your average pay over your career

Defined contribution scheme: Determined by contributions and investment returns.

Usually worth less than final-salary pensions. Savings used to buy an annuity, or

retirement income - until now

'More Closures'

The position has worsened since February, when FTSE 100 companies briefly had a

combined pension surplus for the first time in seven years because of a fall in liability values.

But in the ensuing months, "liability values increased again and earlier gains were more than

offset".

"None of the FTSE 100 companies we have analysed provide traditional final-salary pensions

to new employees and only two continue to provide any form of defined-benefit pension

provision as standard to new recruits," said LCP in its Accounting for Pensions 2016 report.





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"These are Diageo and Johnson Matthey, which both provide cash balance schemes."

However, 57 FTSE 100 companies still allow at least some employees to pay into existing

defined-benefit schemes.

"Legal & General and Marks and Spencer were the only companies to announce they would

be closing their schemes to future accrual, or proposing to do so, since last year's report," said

LCP.

But it added: "We expect to see many more pension scheme closures announced in the

coming months and years - unless something is done to make pensions more affordable."

DB Pension Deficits Double To £0.8trn Since 2006

High life expectancy and low returns to blame

Source: Professional Adviser 29th March 2016

The shortfall of defined benefit (DB) schemes has risen from £425bn to £800bn in nine

years, despite employers trying to plug the gap.

JLT Employee Benefits' analysis of private sector DB schemes said this was mainly down to

higher life expectancy and low expected returns from investment.

Scheme assets grew from £0.65trn on 31 March 2006 to £1.3trn on 31 March 2015 while

liabilities rose from £1.1trn to £2.1trn.

The rise in longevity at age 65 by approximately two years between 2006 and 2015 has added

£135bn to liabilities. Despite employers making £160bn in contributions, deficits have

collectively doubled during that period.

The consultancy also calculated that schemes face a funding gap of £2.3trn in terms of the

total £3.6bn cashflow they will need to pay to members in the future.

If low interest rates are the new normal, employers would need to pay £220bn in

contributions over the next decade just to bring them back to the 2006 deficit levels, it said.

JLT actuary and consultant Murray Wright urged schemes to take a look at how they plan to

close deficits, saying they cannot continue on the same strategies as in the last 10 years.

He said: "There is a £2.3trn cashflow shortfall that needs to be met by a combination of

contributions from sponsors and future investment returns. They also need to consider how

the £2.3trn target itself can be reduced through liability management exercises.

"Trustees and employers should ensure they are using all of the levers available to them to

stop pension shortfalls from spiraling out of control."





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The number of DB schemes fell from 7,751 at 31 March 2006 to 5,945 at 31 March 2015.

JLT adjusted historic figures to allow for schemes that have been wound up, merged, entered

Pension Protection Fund (PPF) assessment or transferred into the PPF.

Why QROPS Pension UK Defined Benefit Schemes 2015

Aggregate Deficit £228bn

After another difficult year, according to research from JLT Employee Benefits.

Source: professionalpensions.com January 5th 2016

The figure has dropped slightly from the £248bn shortfall recorded at the end of 2014, but the

firm warned schemes faced greater challenges in the year ahead.

Last year many large firms including Tesco and United Utilities announced plans to close DB

schemes.

JLT Employee Benefits director Charles Cowling said that pension schemes with triennial

valuations last year will have seen record deficits, which could lead to "painful" rises in

company contributions.

He said: "Looking forward, contracting-out will end in 2016, while there will be further tax

changes to pensions, namely the reduction in the annual lifetime allowance (LTA).

"These changes mean that even with deficits and soaring costs aside, DB pension provision is

looking less and less attractive in the private sector."

Cowling expects that the few remaining companies with open DB schemes will throw in the

towel and switch to defined contribution (DC) provision.

He said that, although the recent interest rate rise by the Federal Reserve may offer some

relief to DB deficits this year, other economic indicators did not look promising.

"We believe it is quite possible that we could get through the whole of 2016 without any

interest rate rise. With the added worry for markets of a possible Brexit vote, there is every

possibility that 2016 will prove to be another very difficult year for DB pension schemes."

Cowling thinks trustees and companies should be focusing on liability management, liability-

driven investments (LDI) and buy-ins and buy-outs.

"As a consequence, we believe that 2016 could be another record year for the buyout

market," he said.





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1,000 Final Salary Pension Schemes Face Going Bust

Source: FTadviser.com December 14, 2015

Today (14 December 2015) a new report from the Pensions Institute, part of Cass Business

School, has shown up to 1,000 defined benefit schemes are at ‘serious’ risk of falling into the

Pension Protection Fund.

The report, ‘The Greatest Good for the Greatest Number’, predicts that the businesses of

hundreds of employers will become insolvent well before the end of their recovery plans,

under which the trustees and sponsor agree contributions to make good the deficit over an

agreed number of years.

It shows that on insolvency, these schemes may have insufficient funds to pay members’

pensions in full.

Of the 1,000 defined benefit schemes at ‘serious’ risk of falling into the Pension Protection

Fund, 600 schemes may only receive PPF compensation, and many sponsors are expected to

become insolvent in the next five to 10 years.

Additionally, the remaining 400 sponsoring employers might initially survive, but may

eventually fail if they are not able to off-load their pension obligations.

The argument in the report is the worst case scenario of insolvency can be averted if the

approach to managing pensions changes to one that is prepared for many more schemes to

pay less than full benefits on a planned and co-ordinated basis, with all parties in agreement

on how best this is achieved.

The Pensions Institute stated freeing an employer from the burden of its pension fund whilst

avoiding insolvency, can create extra value which can be shared with the members to achieve

a better outcome.

David Blake, professor of pension economics at Cass Business School, said “In aggregate the

schemes have liabilities of £225bn, assets of only £180bn and therefore deficit of £45bn.

“If this situation is not urgently addressed, business which may be saved will be lost to the

UK economy and those members will end up receiving PPF compensation.”

“Government policy is predicated on the assumption that employers with DB schemes, over

time, will be strong and prosperous enough to pay benefits in full.

“The report challenges this rose-tinted view and seeks answers to the following question:

What actions should trustees take, to secure the best possible outcomes for the members they

serve, if the employer is not strong, is unlikely to prosper, and, the prospect of the Pension

Protection Fund ‘lifeboat’ looms?”

He added that in reality, many trustees are trying to manage significant conflicts of interest.





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Additionally, Mr Blake said there was a collective silence amongst trustees.

UK Pension Deficits Widen As Contributions Drop

Source: FT.com August 10, 2015

UK companies are paying less towards meeting their pension shortfalls than at any point

since 2009, even as aggregate pension deficits reach their highest level in five years.

The widening gap means companies are likely to face pressure this year from scheme trustees

to increase payments towards their deficits, according to Barnett Waddingham, a consultancy.

FTSE 350 companies paid £7bn towards their defined benefit pension deficits in 2014, 20 per

cent less than the previous year and 40 per cent below the amount each year between 2009

and 2012, the survey found.

At the same time, the aggregate deficits for FTSE 350 companies increased from £53.3bn to

£64.7bn during the year, as falls in corporate bond yields pushed down so-called discount

rates, which are used to calculate the present value of payments the scheme expects to make.

Most companies have closed their defined benefit schemes to new employees, but some still

face heavy liabilities from existing members, who number at least 7m in total.

Market conditions suggest deficits will probably continue widening, with falling bond yields

counteracting strong investment performance within many schemes’ portfolios, said Barnett

Waddingham.

A code of practice introduced by the Pensions Regulator in 2014 allows employers more

flexibility in paying down scheme deficits where this may affect the companies’ growth. BT,

which faces a £7bn deficit, said in January it had agreed with scheme trustees a plan to reduce

its annual payments.

However, Nick Griggs, head of corporate consulting at Barnett Waddingham, said: “The

increase in deficits seen towards the end of 2014 will almost certainly translate into pressure

from scheme trustees to reverse, or at very least address, this trend [of lower deficit

contributions] in 2015 and beyond.

“If you look at the levels of cash that a lot of companies are holding, there does seem to be

potential for increased deficit contributions.”

A small group of companies face the most severe pension deficit risks: 18 have deficits

exceeding 10 per cent of the company’s market capitalisation, while seven hold equities

within their pension schemes with more than 50 per cent of the company’s market

capitalisation.





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“This is a recurring problem but it has been acute in recent years. The regulator has to

balance the interests of members, employees and shareholders,” said Tom McPhail, head of

pensions research at Hargreaves Lansdown.

An interest rate rise may help by diminishing projected liabilities, he said. “But if those

falling liabilities are offset by falling asset values, that could mean they are just running to

stand still.”

Companies are shifting rapidly towards defined contribution pension schemes, in which

members buy annuities or enter income drawdown based on the total assets in their pension

pots, rather than on their final salaries or years worked. The average amount paid into such

schemes increased by a fifth in 2014.

However, about 170 FTSE 350 companies still have a defined benefit scheme; in total, these

are expected to pay out £970bn in the next 30 years.

“It is remarkable to consider the level of resources that UK businesses are having to

contribute towards legacy benefits,” Barnett Waddingham said.

Lower deficit payments contributed to a more positive picture for investors in companies

with defined benefit schemes: net dividend payouts have risen steadily as deficit payments

declined since Barnett Waddingham began its surveys in 2009.

Dividend payouts reached £56.9bn in 2014, up from £47.3bn in 2009, but in 2014 there were

still 24 companies that paid more in pension deficit contributions than they handed to

investors via dividends.

Funding Shortfall For Final Salary Pensions Worsens

Source: FT.com May 22, 2015 Josephine Cumbo; Pensions Correspondent

Funding shortfalls in many defined benefit pension schemes have worsened despite £44bn of

extra contributions, prompting the regulator to remind employers of the options they have to

deal with the deficits.

The aggregate deficit of more than 6,000 private sector defined benefit schemes covered by

the Pension Protection Fund soared to a record £375bn in January this year, compared with

£215bn the same time three years ago. Market movements had reduced this figure to an

estimated £242.3bn at the end of April but the deficits remain stubbornly high.

The Pensions Regulator said trustees and employers sponsoring some schemes could consider

taking longer to eliminate the deficits, or change their assumptions about future investment

returns to help mitigate the problem.

The regulator said in a statement on Friday that persistently low interest rates and falling gilt

yields had created a “very challenging environment” for schemes conducting their regular

statutory three-yearly check on financial health.





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“Despite all major asset classes having performed well and schemes having paid £44bn in

deficit repair contributions over the past three years, our analysis suggests that many schemes

with 2015 valuations will have larger funding deficits due to the impact of falling interest

rates and schemes not being fully hedged against this risk,” said the regulator.

“The extent of the impact of market conditions will depend on a scheme’s specific

circumstances such as the exact dates of valuations, asset allocations and interest rate and

inflation-hedging strategies.”

Towers Watson, the pension consultants, said the regulator‘s analysis showed that, for the

median scheme, deficit contributions would need to rise 66 per cent if the timetable for

eliminating the shortfall were not pushed back.

“For most schemes, the deficit recovery period would need to be extended by more than three

years if contributions stayed the same,” said Towers Watson.

“The regulator no longer says that deficits should be cleared as quickly as employers can

reasonably afford; companies who don’t want to put their hands in their pockets are very

conscious of that.”

During the scheme valuation process, trustees acting on behalf of members of final salary

schemes and the employer sponsoring the scheme agree on ways to plug any funding gap.

Last year, the regulator set a new objective allowing for business growth to be taken into

account when determining how much cash should be set aside for shortfalls.

On Friday the regulator suggested that schemes with “capacity to take additional risks” could

look to “modest extension to their recovery plans, a modest increase in deficit repair

contributions and/or changing their assumptions relating to investment returns.” Other

schemes with “less capacity to take risk” should seek higher contributions, it added.

The statement came as industry observers noted an increasing trend for employers to push out

their recovery plans.

A survey by PwC, the consultancy published in March found more than half of 200 company

pension funds had lengthened their recovery plans by three years or more.

“It’s concerning that while the economy is recovering, pensions deficits are still increasing

and employer deficit contributions are falling,” said Lincoln Pensions, which advises trustees.

“Our experience is that sponsors regularly cite the regulator’s sustainable growth objective as

a reason to propose lower deficit contributions even when deficits increase. In doing so they

are increasing risk for both the company and for members.”

The National Association of Pension Funds, which represents workplace pension schemes,

welcomed the regulator’s statement saying it reiterated the need for scheme trustees to

“manage, rather than eliminate”, risk.





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UK’s Largest Companies Under Pressure Over Pension

Contributions

Source: FT.com May 5, 2015

Some of the UK’s largest companies will come under pressure to ramp up contributions to

their company pension schemes, advisers warn, as deficits continue to soar.

The alert comes as 30 FTSE 100 companies are due to begin triennial financial health checks

on their defined benefit pension schemes — with most facing ballooning deficits.

Advisers say that since the last round of valuations three years ago, deficits have worsened —

despite the improving economy — largely in response to falling gilt yields which are used to

calculate scheme liabilities.

The total deficit in FTSE 100 pension schemes was estimated to be £80bn at the end of 2014,

£26bn higher from the same time a year ago, and up from £73bn in March 2012, according to

JLT Employee Benefits, a pension and benefits consultancy.

“The lower gilt yields go the bigger scheme deficits tend to grow,” said Charles Cowling,

director with JLT.

“Three years ago we thought interest rates were low and it was a bad time for markets, but

it’s just got worse.”

Companies scheduled to have their actuarial valuations this year include Lloyds, Shell, BP,

International Airlines Group (British Airways), HSBC and Aviva.

During these valuations, employers agree a recovery plan with trustees, acting on behalf of

scheme members promised a pension, to plug any funding deficit.

“We expect to see some difficult negotiations between trustees and employers and inevitably

there are going to be demands for (potentially significant) increases in employers’ funding

contributions as pension scheme deficits continue to grow,” said Mr Cowling.

According to JLT, FTSE 100 companies ploughed £14.1bn into their pension schemes over

the last accounting year, down from £16.3bn in the previous year. However, only £6.9bn

actually went to cut deficits, as new pension benefits accrued, down from £9bn the previous

year.

The squeeze on contributions follows the Pensions Regulator’s move in 2012 to give

employers with scheme funding gaps greater flexibility to stretch out their deficit recovery

plans.

The Confederation of British Industry, which represents employers, said: “In all cases, due

regard must be given to the Pension Regulator’s new objective — to consider the company’s





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ability to contribute. The best security for any defined benefit scheme is a solvent, profitable

sponsoring employer.”

The aggregate deficit of the 6,057 schemes in the PPF 7800 index was estimated at £292bn at

the end of March 2015, up from £248bn the previous month. There were 4,995 schemes in

deficit and 1,062 schemes in surplus.

Final Salary Pension? Your retirement income is at risk

Source: Telegraph February 21, 2015

These 'gold-plated' schemes are supposed to be guaranteed – but savers are being

misled, a top pensions official has warned

Savers in their forties and fifties are being "misled" over the safety of their final salary

pensions and could suffer a 10 per cent cut to their retirement incomes, a senior official has

warned.

In a stark warning, the head of the government's pension’s lifeboat said five in six final

salary schemes had fallen into the red and faced a struggle to pay savers a full pension.

Alan Rubenstein, chief executive of the Pensions Protection Fund (PPF), said that many of

the 11 million people with a supposedly guaranteed, inflation-linked pension were being led

to believe their pension was safe, when "for many that isn't the case".

Savers who tried to cash in their final salary pots early, by using the new pension freedoms

due in April, face losing up to 40 per cent of the value of the pension they've built up, he

said.

The comments, in an interview with The Telegraph, represented the most overt warning from

a government-backed organization since the crisis in the early 2000s when thousands of

workers faced the loss of their pensions as companies collapsed with deficits in their

schemes.

Mr Rubenstein, whose organization was set up in the wake of that scandal to rescue final

salary plans when they fail, said: "It is misleading to allow people to expect promised

pensions when in fact there is only money enough to pay about 60 per cent of those

pensions [should they be cashed in today] and where nothing is being done about the

shortfall."

Final salary pensions are typically worth a maximum two-thirds of a worker's wages on

retirement depending on their years of service, with payouts rising with inflation and half

going to a spouse on death.

The pensions are more generous than schemes where the size of the pot is linked to the stock

market.





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George Osborne's pension freedoms will arrive as the health of final salary pensions is

deteriorating dramatically. Around 5,000 pension schemes face a funding shortfall of at

least £300 billion, the largest since 2012, figures show. Low interest rates and the fears over

Greece's exit from the Eurozone have conspired to increase funding costs for firms that offer

final salary pensions.

A customer seeking to transfer their entitlements out so they can cash in the pension would

typically get just £6 for every £10 in their name, Mr Rubenstein said, because schemes were

so far in deficit.

If the company behind the pension was unable to meet its promises, it would have to be

taken over by the protection fund. In such cases, most members are given 90 per cent of

their predicted retirement payments each year. Wealthier savers stand to lose more as

annual payouts are capped at approximately £30,000.

Those already retired will be protected, leaving those in their forties and fifties, who will

claim benefits in future years, most at risk.

It is unclear how many schemes would fail, Mr Rubenstein said, because companies were

hiding the scale of the problem.

"We should be having this conversation now, rather than leaving people under the impression

they will have a pension as promised," he said.

Mr Rubenstein added that while pension schemes with large holes in their finances were

required to have "recovery plans", some were unlikely to work, having been stretched over a

nine-year period on average. Recovery plans are easily derailed if returns fall below

expectations. Many companies were "travelling in hope", he said.

Stephen Soper, chief executive of The Pensions Regulator, which oversees the funds, said:

"We are prepared to work with [struggling schemes] to try to deliver a solution that balances

the interests of the members, PPF and employer."

Many final salary schemes have closed as a result of long-term funding problems, with just 8

per cent open to new members, according to the National Association of Pension Funds.

The gap between the money held in such schemes and the pensions they have pledged to pay

is widening dramatically.

While such pensions hold £1,200bn of investments, the most conservative valuation of their

pension promises is closer to £1,500bn. This £300bn gulf has grown from almost nothing in

just 12 months (see graph, below). The shortfall highlighted in this data, however, is not the

real extent of the gap. The £300bn figure is based on the reduced pensions that workers

would be paid if their scheme collapsed and had to be taken over by the PPF.





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In broad terms, if your scheme fails – in most cases because you’re current or former

employer goes bust – the PPF will step in, paying 90pc of promised pensions up to an annual

cap of £30,000. For most workers the cap is high enough to mean they receive 90pc of their

promised income. But for higher earners, with big pension entitlements, the cap can inflict a

brutal loss of retirement income (see repot, below).

The gap between pension schemes’ investments and the value of actual promises made to

pensioners is therefore far higher than the £300bn that would deliver the PPF level of

payouts. One independent estimate, by Citigroup, put the real gap at £850bn.

Even figures from the Pensions Regulator, the body charged with monitoring schemes’

solvency, suggest that if schemes had to pay all their pensions as promised today, they

would be 45% short.

It is possible that shortfalls could shrink in time if investment returns grew and companies

contributed more. Mr Rubenstein said: “You shouldn’t be scared by one month’s numbers.

But companies need realistic recovery plans. Many are on life support at the moment, kept

alive by cheap loans.”

Actuary Henry Tapper, of consultant First Actuarial, said: “There is no silver bullet. There is

no obvious factor that will induce growth. The only guarantee is what the PPF would pay if it

had to take over your pension.”

The PPF expects to bail out twice the value of pensions in the coming year as in the previous

one. This increase is not due to a rise in insolvencies, but to the growth of the shortfalls in the

funds that fail.

Pilot’s pension cut from £47,000 to £26,500

The Pension Protection Fund, the lifeboat scheme for savers in stricken salary-linked pension

schemes, is able to guarantee most people 90pc of their promised pension.





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But for bigger pensions the scheme has a cap. The most you can receive is £36,000 per year –

less if you retire before you are 65.

The pension scheme of Monarch Airlines is currently being taken over by the PPF following

a restructuring of the company. There was not enough money in the fund to meet all the

pension promises made in earlier years. While most staff’s pension will fall below the cap,

meaning they will get 90pc of their entitlements, some high-earning pilots will see drastic

cuts.

One Monarch pilot, 51, who did not want to be named, planned to use his generous

promised pension of £47,000 per year to help his children and pay off his mortgage. But

he and his wife have been forced to rethink their plans because under the PPF they will

get a maximum of £26,500. “I’m still in a state of shock,” he said. “It’s like a grieving

process. There’s this sense of injustice. My pension is something I’ve paid into over the

years and it’s something I was promised. I was paying around £1,000 a month from my

salary, excluding the company contribution, and I’ve always regarded my pension as

deferred pay. It wouldn’t be so bad if I was in a position to do something about it, but

for me the time available is short.”

UK Pension Deficits Double To More Than £100bn

Source: FT January 6, 2015

Pension deficits at the UK’s largest companies nearly doubled over the past year to exceed

£100bn, as record low interest rates continued to take a toll.

The combined accounting deficits for FTSE 350 companies with final salary pension schemes

ballooned from £98bn to £107bn between November and December, compared with £56bn a

year ago, a survey published on Tuesday by pension consultants Mercer found.

Consequently, funding levels — or the ability of schemes to make payments as promised to

members of final salary plans — reduced from 86 per cent to 85 per cent over the same

period.

Mercer said the deterioration was “substantially” driven by a further fall in corporate bond

yields, which are used to measure the pension liabilities reported in company accounts.

“The sharp fall in both corporate and government bond yields to historic lows during the

second half of the year has resulted in a sharp rise in pension scheme deficits,” said Ali

Tayyebi, a senior partner at Mercer.

“The accounting deficit is 90 per cent higher at the end of 2014 compared to the position at

the end of 2013.”

According to the Mercer estimates, pension assets held by the top 350 UK companies rose

£2bn to reach £608bn between November and December last year. But over the same period

liability values rose £11bn to £715bn.



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Mercer said a “huge variety” of financial and economic factors worldwide had affected yields

in 2014 but it expected continued volatility in 2015.

“Whilst the recent fall in yields may cause many pension schemes to review the hedging of

their interest rates, schemes should be open to the opportunities that volatility provides,”

added Mr Tayyebi. “Companies and trustees should be prepared.”

With UK pension scheme deficits continuing to soar, some commentators are calling for a

review of the Bank of England’s Quantitative Easing policy, or asset purchase program,

which is designed to revive economic growth but depresses bond yields.

Ros Altmann, an independent pension expert and investment adviser, said: “The impact of

Quantitative Easing on corporate pensions and annuities has not been properly appreciated

and is one of the dangerous unintended consequences of this policy experiment.

“The stronger economy and sharply falling unemployment would normally have heralded

rising interest rates and equity prices. Instead, interest rates remained low and gilts became

increasingly expensive as long yields fell to record lows towards the end of the year.”

In recent years pension funds have switched away from equity investment towards gilt and

bonds, making them much more sensitive to movements in bond yields.

In 2006, more than 60 per cent of pension fund assets were in equities, but this fell to 35 per

cent in 2014. In contrast, holdings of gilts and bonds have risen from 28 per cent to 44 per

cent over the same period.

Pensions Black Hole Rockets To £250 billion

FINAL salary pension scheme deficits have soared by two-thirds in just 12 months,

leaving a £249billion shortfall.

Source: Express January 3, 2015

The black hole of all UK private sector schemes – where assets are outstripped by liabilities –

rose from £150billion at the end of 2013 as a result of plummeting bond yields, new figures

revealed yesterday.

The funding level – the proportion of payouts covered by a scheme’s assets – dropped from

88 to 83 per cent.

Charles Cowling, director of pension advisers JLT Employee Benefits, blamed the sharp rise

on stalled UK equity markets and continuing low interest rates.

He said that the Bank of England’s suggestion that interest rates could normalize at an

eventual 3 per cent ruled out any respite in the short to medium term.



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Deficits of firms in the FTSE 350 rose by 59 per cent to £97billion while their funding level

fell from 90 to 86 per cent, according to JLT.

FTSE 100 schemes also suffered, with deficits rising to £85billion from £54billion, pushing

down their funding level to 87 from 90 per cent.

Last month it emerged Tesco has a £3billion hole in its scheme.

Other companies struggling in 2014 to fill the gap included Royal Bank of Scotland and BT.





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The Top 20 Most Important Benefits Of A

QROPS Pension Scheme Since their launch in 2006, the popularity of QROPS (Qualifying Recognised Overseas

Pension Schemes), an HMRC-recognised overseas pension, continues to grow amongst

expatriates and individuals considering a move overseas.

Demand for QROPS has experienced annual growth – which looks set to continue throughout

2015 as the market continues to mature, and more people become aware of their considerable

benefits.

The recent ‘Pension Flexibility 2015’ changes to UK pensions, have also had a limited but

important impact on the 20 benefits of QROPS set out below.

1. Up To 30% Lump Sums Compared With 25% In The UK When you start drawing benefits from a UK Pension scheme typically 25% can be taken

immediately as a lump sum. This is provided certain limits are not exceeded i.e. total

pensions are not larger than the lifetime allowance (LTA) currently £1,250,000 (falling to

£1,000,000 from April 6th 2016), unless you have secured one of the protection measures

available.

With a QROPS after five years of non UK residence the UK payment rules no longer apply

and you will be able to take up to 30% as a lump sum.

2. Testing Against The Falling Lifetime Allowance Now

The LTA has reduced in real terms ever since 2010/11 when Alistair Darling saw it as a

means of raising funds through this additional tax. The table below illustrates how it has

fallen from its high at £1,800,000 to the low of £1,000,000 set to come into force from April

2016.

If the LTA is exceeded the excess is taxed at 55% if taken as a lump sum or 25% if taken as

income although there is still income tax to also be applied.

This makes it painful and extremely tax inefficient for pension holders who may exceed the

LTA.

When a UK Pension Scheme is transferred to a QROPS its value is tested against the LTA at

that point. As the pension has been tested against the LTA at that stage any future growth is

then outside of the scope of the LTA. Recent experience suggests that It is difficult to predict

where the Chancellor will stop and therefore it may well make sense for someone to consider

a transfer to a QROPS now to test their pension against the LTA before it drops further.





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This is particularly relevant over the next 12 months whilst there is the opportunity to test

your pension benefits against the LTA of £1,250,000 rather than £1,000,000.

Just to note any transfer to a QROPS which exceeds the LTA triggers a tax charge of 25%

irrespective of how the benefits are later taken i.e. as a lump sum or income.

The recent trend has been quite markedly for the LTA to fall which makes this a reason to

consider a transfer to a QROPS.

Tax Year Lifetime Allowance

2006/07 £1,500,000

2007/08 £1,600,000

2008/09 £1,650,000

2009/10 £1,750,000

2010/11 £1,800,000

2011/12 £1,800,000

2012/13 £1,500,000

2013/14 £1,500,000

2014/15 £1,250,000

2015/16 £1,250,000

2016/17 £1,000,000

3. Income Taxed In Country Of Residence

UK pensions are generally paid out net of basic-rate tax. PAYE applies to all pensions from

registered pension schemes. However, non-UK tax resident members can elect for payment to

be paid out gross by completing the relevant HMRC form. With a QROPS, clients can

transfer to a jurisdiction which pays out gross income automatically and charges little or no

income tax on their pension benefits so they only pay the tax, if any, applicable in their

country of residence.

The new ‘Flexi-access’ rules, subject to the jurisdiction adopting them and the QROPS rules

being amended, will enable individuals to access their pensions in their entirety or through

phased lump sums if they wish. It is of course important to understand what the tax situation

would be and any penalties the QROPS provider may apply, as well as the performance and

penalties of the underlying investment before any withdrawal decision is made.

4. Final Salary Schemes

A defined benefit, better known as a final salary scheme, is the most generous and secure

type of pension arrangement you could ever expect to receive. The generosity of these

schemes have meant most have been forced to close, restrict access or reduce benefits

because they are so expensive for the employer to provide and operate.





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There are a number of circumstances which may warrant at least the consideration and review

from a highly qualified professional holding the necessary UK Pension Transfer

Qualifications.

The main reasons to consider a possible transfer to a QROPS could include:

The expense to the scheme means the future ability to provide benefits has been

jeopardised. If the pension scheme collapses and the employer becomes insolvent the

UK Pension Protection Fund (PPF) may honour the benefits so long as the PPF can

itself take on the burden. The PPF is not Government backed though but by a levy on

other similar UK pension schemes.

Even if the PPF steps in you must be aware that only 90% of your benefit will be protected

with a cap of £32,761 per annum. Therefore people with larger pensions are more likely to be

impacted by this.

You have a large pension and passing on as much wealth to your beneficiaries is a

priority for you. The death benefits available are dependent on whether you are a

deferred or active member of a final salary scheme. If you are a deferred member and

don’t have a spouse or dependant (child under 23) then your pension income will die

with you. Transferring to a QROPS will allow you to pass on a lump sum death

benefit to a beneficiary of your choosing.

5. No Income Tax Charge On Death - Outside The Scope Of

The 45% Tax Charge

For non-final salary UK pensions, so long as an individual is aged below 75 and pensions do

not exceed the LTA their pension on death can be passed on to a nominated beneficiary as a

tax free lump sum.

However, after the age of 75 pension benefits are subject to a 55% tax charge if paid as a

lump sum to a beneficiary. This has fallen to 45% from April 6th 2015 with this likely to be

amended again to the marginal rate of tax payable by the beneficiary from April 6th 2016.

If paid as a dependant’s pension the benefits are also free from tax other than any income tax

due from the beneficiary. With a QROPS regardless of whether the member has started taking benefits (on or after age

55) or not, dependent on how the pension is structured there ‘may’ be no income tax charge

imposed on the payment of a lump sum to the member’s dependants on death providing they

have been non-resident for at least 5 complete tax years.

The new rules, which apply to death benefits paid out after April 6th 2015 irrespective of the

date of death, greatly alter the death benefits on UK pensions.





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In summary the rules have altered as follows:

Benefit type Payment made before 6

April 2015

Payment made on

or after 6 April

2015 Uncrystallised, member dies

before age 75

A lump sum up to the limit of

the deceased remaining lifetime

allowance can be paid tax free.

The beneficiary can:

Take a lump sum up to

the limit of the

deceased remaining

lifetime allowance,

paid tax free, or Take

tax free income from

flexi-access

drawdown, or Buy an

annuity with payments

paid tax-free.

Uncrystallised, member dies on

or after age 75

A lump sum death benefit taxed

at 55% is payable.


Take income from

flexi-access drawdown

taxed at their marginal

rate, or Buy an annuity


rate, or Take a lump

sum taxed at 45%

Crystallised (drawdown),

member dies before age 75

The dependant can: Continue in

drawdown, or take an annuity

which will be taxed at their

marginal rate, or Take a lump

sum death benefit which will be

taxed at 55%


Take income from


tax free, or Buy an

annuity, which will be

paid tax free, or Take a

tax-free lump sum.

Crystallised (drawdown),

member dies on or after age 75

The dependant can: Continue in

drawdown, or take an annuity

which will be taxed at their

marginal rate, or Take a lump

sum death benefit which will be

taxed at 55%


Take income from



rate, or Buy an annuity


rate, or Take a lump

sum taxed at 45%





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6. Exchange Rate Risk

Below we have taken the graph of Sterling versus the Euro. For those people based in the

Eurozone, holding a UK pension scheme they will have witnessed a roller coaster of a ride

over the past 10 years. The graph highlights this fact, which has been caused by the

appreciation of the Euro, when it almost achieved parity in late 2008 followed by a lot of

volatility and then rebounding to almost 2005 levels in March 2015.

The rule of thumb for any financial advice is to have retirement income paid out in the

currency expenditure is expected to be paid in. The majority of an individual’s expenditure

will be in the currency of their country of residence. This means receiving an income in

Sterling which then has to be converted to the Euro for example, provides a huge risk with

currency fluctuations making it very hard to plan from month to month.

Using simple figures of a person receiving a scheme pension of £10,000 and its conversion to

Euro’s can illustrate this point when using an example (assuming no inflationary increase in

the scheme pension).

June 20th 2005 £10,000 x 1.50 = €15,000

December 29th 2008 £10,000 x 1.02 = €10,200

July 24th 2012 £10,000 x 1.29 = £12,900

March 11th 2013 £10,000 x 1.15 = £11,500

March 11th 2015 £10,000 x 1.42 = £14,200

Using a QROPS to transfer Sterling denominated pensions then utilizing Euro denominated

assets to pay out an income in Euro’s could help prevent such large fluctuations in income.

This can also protect against a permanent depreciation of a currencies value.

7. Benefit From Worldwide Investment Options

A QROPS can access a huge range of investment funds across a multitude of differing

currencies using fund platforms or offshore bonds. These will provide diversity and the

opportunity to tailor an investment portfolio to an individual’s specific needs.

A QROPS can potentially be used to hold commercial property as well although caution and

advice is paramount in this area because of the withholding tax applicable to UK property

when held in this way.

8. Only 90% Of The Pension Income From A QROPS Is

Taxable (on a return to the UK)

Pension income paid under a QROPS to a UK resident is classed as a Foreign Pension which

is taxable in the UK on 90% of the amount arising, or, as relevant foreign income if the

remittance basis is being claimed.





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9. Portability And Flexibility

UK pensions are understandably structured around UK residents so for an expat who has no

intention of returning to the UK they should always consider the benefits that a QROPS may

bring.

QROPS are a great way to manage pension assets that have been built up throughout your life.

With all the other points in mind considering the additional benefit of the administrative

efficiency a QROPS can bring it really does make a QROPS option compelling.

QROPS have been designed and built in the 21st century for the expat community

specifically in mind. This means they are portable and can be used to provide retirement

benefits wherever you reside. The correct QROPS can offer similar flexibility to a UK SIPP

when it comes to drawing down your income which is great for tax efficiency of income if

you match up tax free cash and income.

10. Consolidation

Bringing all of your historic pensions under one roof makes the administration and

investment management much more straight forward. This means it is much easier to monitor

and make strategic alterations to your pension fund in order to benefit from opportunities but

and respond to any potential market downturn.

If you would prefer to take a more balanced approach splitting your pension assets between a

QROPS and a UK based pension always offers the benefit of a hedge between strategies.

11. Maximizing A Spouses Pension

Pension provision for a spouse on the death of a member is often on the forefront of a

members mind. With a final salary scheme after a member begins receiving their pension on

death it is the norm for a spouse to continue to receive an income but at a reduced level,

ordinarily 50% or less if your spouse is more than 10 years younger.

With a QROPS it is possible to use up to 100% of the fund to provide a spouses pension. This

may be through an annuity or income drawdown arrangement. Many people may wish to

consider transferring to a QROPS to ensure the pension asset is able to provide a more

substantial retirement income for their spouse.

12. Early Retirement

Since the 5th April 2010 members of UK pension schemes have been restricted to being able

to draw benefits from age 55 although most UK final salary schemes will have a default of 65.

It is possible for a pension member to transfer their UK Pension assets to a QROPS, which

resides in another jurisdiction in order to benefit from an earlier retirement age of 55.





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13. Pension Income Tax Planning

The income payable from a pension is fully taxable as income and is therefore taxable at a

member’s highest marginal rate of between 0 - 45%.

This means that the tax payable can be quite severe. A QROPS has the ability to turn the

income withdrawn on and off between limits of 0 – 150% of GAD each year. For an

Internationally mobile individual a QROPS can provide the flexibility to draw income

whenever they choose which can enable them to be shrewd and protect their pension against

the tax man by maximizing what they draw when in preferable tax jurisdictions.

14. Continuing Advice On Your Pension Assets

A Pension is often an individual’s largest asset which means that if an expatriate leaves it

unattended in a UK Pension arrangement the likelihood is it may receive no ongoing adviser

oversight. This can be detrimental when you consider the following:

Ongoing alterations to UK Pensions legislation which may impact on your retirement

funds; reducing lifetime allowance and the increasing retirement age.

If you hold a UK SIPP, Personal or Group Pension Plan where is the money invested?

This is crucial to whether the pension grows, keeps pace with inflation or at worst

falls in value.

Is the money invested in the correct areas, and with the best Fund Managers or have

highly regarded managers left the company as with Neil Woodfords decision to leave

Invesco Perpetual.

Transferring your pensions to a QROPS will bring your assets under an umbrella from where

an overseas adviser can help to advise and monitor the pension.

15. Clean Break For UK Inheritance Tax (IHT)

Those people with large estates may often wish to lose their Domicile of Origin and gain a

Domicile of Choice. This may enable them to avoid paying UK IHT on their non UK assets.

It is however very difficult to lose a Domicile of Origin.

Where this is the case a person will almost invariably be advised to cut all ties with the UK,

moving everything to the country which they wish to be their Domicile of Choice. This will

mean moving everything including business assets, home, will, family and even their place of

rest.

Holding a UK Pension is yet another UK based asset, which means by transferring to a

QROPS you are able to break another tie adding more weight to the argument.





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16. Early Retirement From A Final Salary Scheme

A Final Salary Scheme will often have quite punitive early retirement penalties for those who

wish to draw their pension prior to the ‘Normal Retirement Age’ set under the scheme.

Typically a scheme may impose a penalty, known as an actuarial reduction, of 0.5% per

month. This means if you retire 12 months early the penalty is a 6% reduction in your annual

pension income.

If you retire 5 years early the penalty increases to 30% of your annual pension.

This may mean that should a scheme member wish to retire early it may be beneficial to

review and compare what retirement income could be achieved by transferring the cash

equivalent to a QROPS and drawing an income from there.

17. Breaking Away From UK Pension Legislation

In recent years the UK Government have been introducing restrictions on an individual’s

ability to shelter tax through the use of pensions. This has been through the reduction in the

annual amount that can be contributed to pensions obtaining significant tax reliefs.

The annual allowance has seen a fall from £255,000 per annum in 2010/11 to £40,000 in

2014/15.

Tax Year Lifetime Allowance

2006/07 £215,000

2007/08 £225,000

2008/09 £235,000

2009/10 £255,000

2011/12 £50,000

2012/13 £50,000

2013/14 £50,000

2014/15 £40,000

We have also been introduced to a new term for Tax Free Cash (TFC), now termed a Pension

Commencement Lump Sum (PCLS). This may lead the way in the future for ‘PCLS’ being

taxable, although it already has become taxable in part in the event that a pension member

exceeds the LTA.

The LTA is another allowance which is has seen a fall in recent years as illustrated in point 2

above.

All these factors are clear indicators that the UK Government is trying to limit the tax

efficiency of pensions in its bid to deal with the UK deficit. This makes for an additional

reason to move away from the UK Pension regime by transferring to a QROPS.





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18. Protection Against Creditors In The Event Of Bankruptcy

If you legitimately made pension contributions to an individual pension arrangement and later

became bankrupt then the Courts will find it difficult to retrospectively reverse the

contribution made to pay creditors.

When benefits finally commence from the pension arrangement you may be ordered to pay

these to creditors. In transferring UK pension assets to a QROPS it makes it far more difficult

for UK courts to take action.

A Home For Divorce Settlements

If a Court puts in place a pension sharing order in respect to pension assets held through a

final salary scheme it is down to the scheme trustees to decide whether or not to allow the ex-

spouse to become a member of the scheme. If the scheme trustees deny the ex-spouse entry

or should they prefer to get a clean break they will have the option to transfer the cash

equivalent to a QROPS. This would also be possible with a Personal Pension.

QROPS are outside of the earmarking or pension sharing jurisdiction of the UK courts. In

reality if the Courts (and the divorcing client) realise their lack of jurisdictional power they

will always have the fall back of reverting to offsetting. This will only be of use to the Courts

should the couple’s other assets outweigh that of the overseas pension rights. And of course if

the asset is declared.

Transferring UK Pension assets to a QROPS may be seen by some as a step in protecting

assets from a spouse on divorce. Quite apart from both the moral and ethical grounds for even

considering this, it is potentially fraud. As the law does not forbid a transfer, advisers should

ensure that they are not seen to be promoting this or even supporting the activity.

This could be seen as a bi-product of the QROPS market which otherwise offers non-

residents an excellent method of continuing to save toward retirement in an efficient manner.

20. Final Salary Funding Levels And The Strength Of The PPF

The promise to pay a future income is only as strong as the pension scheme and the company

who ultimately underpin that promise. There is of course the Pension Protection Fund (PPF)

which will step in should the scheme and company fail to meet its obligation to pay the

pension income.

There are limits to compensation the PPF will pay and this is dependent upon whether the

member had retired at the scheme normal retirement age (NRA), retired prior to the schemes

retirement age or not yet retired.





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Member has retired

The Pension Protection Fund will pay 100%

Payments relating to pensionable service from 5 April 1997 will then rise in line with

inflation each year, subject to a maximum of 2.5 per cent a year. Payments relating to

service before that date will not increase.

This information may also apply if you retired through ill-health or if you are

receiving a pension in relation to someone who has died.

Member retired early

If the member had retired early and had not reached the scheme’s normal pension age

when the employer went bust, then they will generally receive 90 per cent level of

compensation based on what the pension was worth at the time. The annual

compensation received would be capped.

The cap at age 65 is, from 1 April 2014, £36,401.19 (this equates to £32,761.07 when

the 90 per cent level is applied) per year. The earlier the date of retirement, the lower

the annual cap is set, to compensate for the longer time the payment has been received

for.

Once in payment the payments relating to pensionable service from 5 April 1997 will

rise in line with inflation each year, subject to a maximum of 2.5%. Payments relating

to service before that date will not increase. Member has yet to retire.

When the member reaches the scheme’s normal retirement age, we will pay you

compensation based on the 90 per cent level subject to a cap, as described above.

Until normal retirement age is reached and the compensation is put in payment, the

compensation entitlement will rise in line with inflation each year, subject to a cap 5% for

compensation linked to pensionable service prior to 6 April 2009, and a cap of 2.5% in

respect of compensation linked to pensionable service on or after 6 April 2009.

Once compensation is being paid, then payments relating to pensionable service from

5 April 1997 will rise in line with inflation each year, subject to a maximum of 2.5 per

cent. Payments relating to service before that date will not increase.

These limiting factors harshly impact on a member with a large pension income. To put this

in to monetary terms a 65 year old male would need a pension fund of circa £1,000,000 to

purchase an annuity of £32,761.07 increasing in line with RPI and providing a 50% spouses

pension.

This means if the same male had a pension income of £62,760.68 and their pension fund fell

into the PPF then they would lose millions because the PPF would only protect up to a

maximum of £32,761.07.

This is all assuming that the PPF was able to meet the obligation which when given that the

PPF is funded by a levy on pension schemes (which many are in trouble themselves) and the

scheme is not guaranteed by the UK Government, its ability to make pension payments could

be seriously troubled.





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By taking a cash equivalent transfer to a QROPS a member takes control of their own

pension funds and removes it from the risk of the pension scheme going bust.

Individual circumstances, income, objectives, experience and attitude to investment risk must

be taken into account when considering the above mentioned points.

It is crucial before making any decisions that you get professional advice from a professional,

suitably skilled and experienced financial adviser.

Our Services

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Client Notes





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PRIVATE & CONFIDENTIAL (pension company name and address)

Dear Pension Team,

QROPS Pensions Information Request

Pension Company:

Pension Company Address:

Members Name:

Pension Reference Number:

Date of Birth:

N.I. Number:

Your Former UK Address:

Your Current Address:

Please take this as my written authority for you to provide ICC Private Wealth Management with any

and all documents; and relevant information on my pension, in order to facilitate a QROPS transfer,

including the Pension Scheme Booklet. This is not an authority to effect any change. ICC Private

Wealth Management contact details:

Address: ICC Private Wealth Management 1605 Bonham Strand Trade Centre 135 Bonham

Strand Hong Kong

Email: [email protected]

Tel: (+852) 5307 3732 Fax: (+852) 2581 4212

Please post all documents directly to me, if they cannot be released to ICC Private Wealth

Management by firstly emailing them to [email protected] secondly to their

postal address. If you require further clarification please contact Gary Williams at ICC Private Wealth

Management by his email, postal address, or telephone number.

Yours Sincerely,

Signature: __________________________ Date: ______/______/___________

Please scan the completed forms and send by email to [email protected] or mail the

original form directly to us at ICC Private Wealth Management 1605 Bonham Strand Trade Centre, 135

Bonham Strand, Hong Kong Tel: +852 5307 3732 | Fax: +852 2581 4845 | Company’s licenses: SFC ACA028 |

PIBA 0085 | MPFA IC000230

N.B. This letter simply authorizes ICC Private Wealth Management to request information on

the stated pension scheme and does not constitute an authority to make changes to the scheme.








T: +852 5307 3732


ICC Private Wealth Management 1605 Bonham Strand Trade Centre, 135 Bonham Strand, Hong Kong Tel: +852 5307 3732 |

Fax: +852 2581 4845 | [email protected] | Company’s licenses: SFC ACA028 | PIBA 0085 | MPFA IC000230




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QROPS Expert Pension Guide 2017

Lifestyle