If you have a pension in a QROPS and you are wondering what all the talk about Jersey is about then read on….
Jersey enjoys its standing as one of the world’s leading International Finance Centres offering reliability, political and economic stability, with a sophisticated and comprehensive infrastructure of laws which have kept Jersey at the forefront of global finance for over 50 years. The Island has a AA+ credit rating with Standard & Poor’s (S&P).
The Island is a Crown Dependency which means constitutional rights of self-government for this jurisdiction, and judicial independence. This means both businesses and investors can enjoy the benefits of an independent international finance centre which is close to the United Kingdom and mainland Europe. Jersey is in the same time zone as London and daily flights are available along with regular flights to other European centres. Jersey remains one of the favourite regulated international finance centres, a position that has been regarded by independent assessments from some of the world’s leading bodies.
So why move your pension pot to Jersey?
QROPS Pension is written under a deed of trust subject to Jersey law and is available to both Jersey resident and non-resident members.
It has tax approval from the Jersey Income Tax regulatory body and is recognised by HMRC as a QROPS. Background With effect from 1st January 2015 amended legislation enables Jersey QROPS as an option to pension investors living off the island. For many years the Island has had many QROPS pension schemes recognised by HMRC however local law restricted these only to Jersey resident individuals. The revised Income Tax (Jersey) Law permits non-resident pension members to transfer their UK tax-relieved pension funds into the jurisdiction, offering a secure environment to protect your client’s pension assets.
One of the biggest draws of a Qualified Recognised Overseas Pension Scheme (QROPS) is the ability to withdraw money in a more flexible and convenient way. For example, from the age of 55, you have the right to withdraw a tax-free lump sum of up to 30% of your total pot. You are under no obligation to have the QROPS based in the same country in which you are resident, allowing you to find the combination that works best for you, wherever in the world you are.
However, before you sign on the dotted line, you need to be fully aware of the QROPS withdrawal rules.
What Are the QROPS Withdrawal Rules?
As we’ve mentioned, you can withdraw a 30% tax-free lump sum from your QROPS once you’ve turned 55. This initial lump sum is known as the Pension Commencement Lump Sum (PCLS). If you are a high earner and would normally expect to pay up to 45% in income tax, the QROPS removes that tax requirement after 5 years. Also known as the Five Years Rule.
When you come to withdraw money from your QROPS, whether it’s the lump sum or a smaller payment, you have greater control of the currency. Unlike a UK pension fund which can only dispense British Pound, a QROPS can be used to withdraw money in a wide range of currencies. This is ideal for making the most of any favourable exchange rate.
Long life V quality of life
There is a fine balance between living longer and living healthier. Sure, many say we are living longer now, however if that means stuck in your home or a care home for the last ten years of your life is that a life at all?
If you have many grandchildren who visit often then maybe, this is a consideration that many must make when it comes to cashing in some of your QROPS pension pot. It is a fine balance with length of life versus quality of life. If you are relying purely on your state pension heed this advice:
Fewer than one in three Brits is confident we will get a state pension from the Government when we retire.
You currently need 35 years of National Insurance contribution credits to collect the new state pension of £8,767.20 a year. This extra income would cost £300,000 to buy as an annuity.
But the state pension age not long ago shifted to 66 for both men and women and will rise again to 68 between 2044 and 2046. This comes after woman born in the 1950’s are now made to wait to collect their state pensions when the age at which they were eligible was changed from 60 to 65.
A think-tank the Centre for Social Justice has also controversially suggested the state pension age should eventually rise to 75 to take into consideration the nation’s improving health.
Experts have even predicted that the state pension could one day be means-tested.
Recent analysis from investment platform Hargreaves Lansdown has found most of us are not holding out any hope for retirement backed by government.
A poll found only 28 per cent of under-35s and 35 per cent of those aged 35 to 54 think the state pension will still be around when they retire.
Even 23 per cent of over-55s were not sure it would be around when they hit retirement.
If you are like me and many others it seems, you feel the UK Government is trying hard to give us all a big hint that we cannot afford to keep up state pension payments in the UK as more and more of us are living longer and not necessarily better.
The UK daytime TV is full of Television shows that are about how to make money from antiques, how to make money from property, how to invest in penny stocks and day trading, I think the hint is:
Find out now how to look after yourself cos we the government cannot!
Perhaps like me you feel you could probably do better with the cash right now, maybe you know of a property you could buy for buttons and refurbish and sell for a profit. many are doing this right now, perhaps you could use a lump sum towards a startup invention you know will corner the market, or perhaps you have found a place in the world to buy gems at an amazing price where people will pay a lot more for. Or perhaps you have found oil in your garden and you need some cash to get a pump and sell to shell!?
Cash is always king and liquidity rules, ask anyone in any kind of business how much liquidity plays a part in everything they do!
If you are in Thailand now and by switching the jurisdiction (Trustees) of your QROPS to Jersey you can enjoy much better tax options than other European jurisdictions.
**Please note the above table is for Thailand resident Expats as there are different QROPs rules through DTA’s (Double Tax Agreements) for Expats in other countries that have arrangements in place with QROPs based in the IOM and Malta**
Request a free introduction to a pension specialist
If you have funds invested into a QROPS or have some questions about QROPS which you don’t feel have been answered, or you have not seen your advisor for some time, you can request a free introduction to a trusted independent financial advisor through our website
Needless to say; you will not be pressured into making any decision, neither will you be under any obligation to proceed with any advice. Could be the best cup of coffee and free advice you ever had!