Wednesday, 6 July 2016

Another possible outcome of Brexit: for those with pension money in the UK

Many factors are going to be subjected to change due to the decision of the UK to leave the European Union, more specifically to leave the European Economic Area (EEA). However, the extent of the effect is yet to be fully understood. As one considers what may occur due to the result of the vote, many sectors of the economy move into speculation. The economic future for individuals is questioned and levels of uncertainty will only continue to increase.

Credit: Benito Muller
The individual questioning includes the future of people’s savings and pensions. An individual investor might question “how am I going to be affected by the leave vote?” Moreover, specific types of services such as Qualifying Recognised Overseas Pension Schemes (QROPS) are in the crosshairs of uncertainty. What exactly are Qrops According to Darren Jones, at Old Mutual International:

...Qrops were first introduced 10 years ago after EU legislation forced the UK to formalise its process of allowing people to transfer their pension to a different jurisdiction. Prior to this change, members had to gain HM Revenue & Customs approval on a case-by case basis, a process that was complex and potentially lengthy.

The logical process now is that once the UK formalises its separation from the EU, services such as Qrops will see themselves directly in peril since they originate from EU laws. In their 10 years of existence Qrops have definitely had an impact on the pension system. There are many benefits that stem from the existence of QROPS. As mentioned by Jones, some of those benefits include but are not limited to: 

….removing [future] growth from future lifetime allowance testing potentially reduced taxation on the death of the member no requirement to certify permanency of non-UK residency currency flexibility…

Jones also states: “…more likely some modifications to the existing rules will be made.” It is important to continue to look into the possible changes that will affect the state of Qrops. Individuals might see themselves lacking information so they will depend on their financial advisers for support. Unfortunately, it is not always easy for people to find advisers who will give objective advice and always put the client first. With regards to financial advisory, there must be a constant support of clients at all times, especially through times of change. Just Service HK is very different by providing support to its clients as its core business and only offering advice "upon request", including the providing of advice/guidance on changes affecting the state of Qrops.

Source: International Adviser, July 2016 

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  1. This content is written very well. Your use of formatting when making your points makes your observations very clear and easy to understand. Thank you.

  2. thanks for this usefull article, waiting for this article like this again. pension advice