Following our introduction to QNUPS, we examine the critical considerations you need to keep in mind when assessing whether a Qualifying Non-UK Pension Scheme is the right offshore and expatiate pension solution Lee Byers.
As discussed in our earlier report Lee Byers’s Independent Guide to QNUPS, Qualifying Non-UK Pension Schemes are potentially highly tax efficient schemes suitable for expatriates and high net worth individuals. However, the legislation defining them has been open to loose and perhaps misleading interpretation to date, which is why we feel we need to impart some critical information about these schemes to you, should you be considering them as an offshore pension solution.
QNUPS’s benefits should be looked at in light of QROPS (Qualifying Recognised Overseas Pension Schemes) benefits. What’s more, because the legislation that introduced QNUPS has shown itself to be open to broader and perhaps more favourable interpretation that HM Revenue and Customs intended, it’s highly likely that amendments and alterations to the rules will come. This means that one needs to tread carefully when assessing whether QNUPS are the right solution.
In this report we will explain why qualified and approved advice must be sought before you take any QNUPS-type action with your ‘frozen’ onshore UK pension or your already transferred or established QROPS solution.
Why You Must Seek Advice
In many cases, expatriates and people soon leaving the UK as well as those planning a retirement abroad find that QROPS can be significantly beneficial to them, especially when chosen with careful and expert guidance. Therefore, it follows that the same individuals would be wise to seek further advice about QNUPS too.
However, any advice given needs to take into account the fact that each individual has a unique financial situation requiring personalised guidance – with some individuals also seeking and needing appropriate advice relating to their other financial assets and liabilities in order for the QNUPS advice given to be totally appropriate to them.
Advice should only be taken from advisers who are qualified, professional, independent and approved for the provision of QNUPS information – and one should be prepared to question and test advice given that appears to follow the most favourable line of interpretation of these new schemes. This is because it is unlikely HMRC introduced the legislation to allow for anyone to transfer all assets – onshore and offshore – into a QNUPS and escape all forms of inheritance or death taxation – yet this is how some advisories are choosing to interpret HM Revenue and Customs guidelines!
Critical Information About QNUPS
Neither QROPS nor QNUPS are the right approach for everyone, and taking a wrong turning when planning your retirement and deciding on your pension options can be disastrous. What’s more, it is critical that you proceed with complete clarification of the rules having been released, so that you do not inadvertently open your transfers up to unauthorised payment charges or later inheritance tax charges.
Remember also the following: –
- QNUPS may not be right for you if you have purchased an annuity already
- Nor if you are already drawing down your company/occupational pension
- Nor if you only have a state pension • Consideration has to be given to your plans for retirement
- You will need to consider whether you have beneficiaries and whether you would like to leave them assets upon your death
- Your risk profile needs to be considered
- Investment options within any recommend QNUPS should be examined closely for their suitability for you
- The exchange rate on transfer is important to bear in mind
- The tax regime in the country in which you live and/or in which you will receive your pension needs to be taken into consideration – this includes considering local IHT laws
- Tax rules in the country that the QNUPS is based are also a factor
- And finally your adviser must consider whether there are any transfer options from a chosen QNUPS in case you ever want to transfer funds out
This is a non-exhaustive list of information that needs to be covered by your adviser and by you. As you can see, it is critical you are professionally guided.
Now that you have as solid an overview of QNUPS as is possible to give at this point in time, as well as an overview of their potential benefits and you know who is potentially eligible to benefit from these schemes, you may perhaps be seeking a way forward towards getting the personalised and individual advice you need to determine whether you would be right to transfer in or commit to a QNUPS, and which scheme could be ideal for you based on your circumstances.
In that case, the way forward is to have your own individual situation assessed. If you would like to be put in contact with an advisory to advise you, please complete our offshore advice form and please do get in touch, or contact within.
About the Author
Having more than 19 years experience in analyzing equities and investment instruments, Justin Lee has spoken at numerous industry events in Hong Kong, as well as the US, Middle East and Australia. Mr Lee has often contributed to print media publications including Business Week and Fortune Magazine, and has appeared on television programs such as Bloomberg and The Nightly Business Report. Currently Managing Partner & Investment Analyst at Lee Byers.
Photo credit: markus spiske via Visualhunt / CC BY
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