Study Results Predict QROPS Sales Rise
Friday, April 23, 2010

Overseas advisors predict that sales of Qualifying Registered Overseas Pension Scheme (QROPS) products will increase, according to a recent poll by Skandia International. The research shows that 74% of advisors expect to write more QROPS business over the next 12 months.

QROPS are one of the financial planning techniques available to UK expats who have already moved or are planning to move overseas to retire. QROPS can provide investment flexibility and currency options for clients who live abroad (or are planning to relocate prior to retirement). They are an effective way to consolidate UK pension assets gathered throughout someone’s working life in the UK and provide flexibility to allow retirement planning to accommodate their new lifestyle overseas.

Unsurprisingly, advisors cite the most common reason to recommend a QROPS as being that income drawn from the scheme is not subject to UK tax. The wider investment choice allowed within a QROPS is the second most common reason that advisors recommend a QROPS while the lack of compulsion to purchase an annuity if the client holds their pension monies in a QROPS falls third on the list. Advisors also recommend a QROPS due to the fund not being subject to UK inheritance tax on death, although this ranks as only the fourth reason to recommend the product to qualifying clients.

Of the advisors polled, 64% said that an offshore investment bond is the most popular underlying investment for a QROPS, followed by mutual funds (23%), stocks and shares (9%), and then cash (4%).

Rachael Griffin, head of product law and financial planning at Skandia International, said: “As expats continue to retire abroad, we’re seeing a growing awareness of QROPS and the benefits that this type of product offers those who are retiring outside of the UK, which may be why so many advisors are expecting to see an increase in the amount of QROPS business they write. A QROPS can be an appropriate investment for many expats living abroad and offers a level of flexibility, such as different currency options, not found within a UK pension scheme.