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Lifestyle Financial Planning
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It’s called QROPS!
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a pension scheme which meets certain requirements set by Her Majesty’s Revenue & Customs (HMRC), and which may receive the transfer of UK pension benefits without incurring tax charges. You have the potential to benefit from substantial tax advantages as well as local qualified investment advice. A QROPS also has significant investment advantages for individuals with UK pension rights, as you would normally have a larger range of investment options available.
Pension benefits left in the UK remain subject to UK law and specifically the requirement to purchase an annuity subject to UK taxation.
State pensions or lifetime annuities can’t be transferred.
Yes. The UK pension can be transferred to pension trustees in Gibraltar and Malta, subject to product minimums. The amount would have to be at least £50 000. Once your UK pension fund has been transferred to a QROPS, your pension fund may be invested via an investment platform such as Old Mutual International’s Investment Portfolio +.
Yes. But only if it is transferred to a South African QROPS approved by HMRC., subject to product minimums (at least £10 000). However, there might be additional portability restrictions with this option and income would be taxed as per South African tax tables when you retire from the retirement annuity. If it is transferred to a scheme other than a QROPS, it will be an unauthorised payment subject to tax.
One of the main benefits of transferring your funds to a QROPS structure is a potential tax savings on death (up to 55%). You can also get local advice from a trusted source, likely save on income tax at retirement, have currency options, investment flexibility and possible lump sum flexibility on retirement.
For individuals who have been non-resident in the UK for the past five tax years the key advantages of a QROPS are:
A QROPS pension is free from all tax for non-EU residents. That means:
You can access a range of different exchange-traded funds (ETFs), mutual funds, Collective investments and even direct shares and bonds within the investment platform. Advisory, discretionary and self-investment options are available as well as multiple currency options. You can also have a bespoke discretionary portfolio (min £100 000).
Within the South Africa RA, you can only invest in Unit Trusts, and the investments would need to be what is known as Regulation 28 compliant, meaning that a maximum of 75% can be invested in equities and a max of 25% with offshore exposure.
Loans are not possible and you can’t access any capital prior to the age of 55.
You can start taking benefits from age 55, but not later than 75. You can access up to 30% as a lump sum, with the remainder providing an income (similar to a living annuity).
All cases should be examined on an individual basis. Your PWM financial planner will be able to assess whether a QROPS would be suitable for your unique circumstances, taking your lifestyle financial planning needs into account.
Old Mutual International has partnered with Sovereign Trust and make use of their QROPS named the Calpe Retirement Benefit Scheme.
Because of the first-class service adviser support, financial strength and 20-year history of working with the South African investment and adviser community. Also, let’s not forget the competitive fees as well as the investment and currency flexibility.
Speak to us – that’s what we’re here for. For general enquiries or to talk with someone from the specialist technical team, please contact: Rory Shea on 021 555 9351 or email Rory.
Whether you agree or disagree, we'd like to hear you thoughts. Tell us what you think.
The information contained in this newsletter has been compiled in good faith, however no representations or warranties, express or implied, are made to the accuracy and no responsibility or liability is accepted by the authors
or Old Mutual for any damages or losses which may flow, directly or indirectly, from the use or reliance on the any formation herein contained.