QROPS v’s SIPPs – Is it time to change?
If your pension assets are tied up in a SIPP and you live permanently outside then UK, then you should seriously consider reviewing this for the more efficient QROPS.
SIPPS were the hottest pension product on the financial catwalk until QROPS burst on to the scene offering tax incentives and benefits that that a SIPP can’t offer.
First point to make clear is that if you have UK pension rights and are resident in the UK, you must stick with your SIPP because a QROPS is not for you.
If you are an international worker or expat with UK pension rights tied up in a SIPP, then contact Guardian to find out how you can improve your wealth prospects by transferring the fund outside the UK.
Compare the Benefits:
As a UK pension product, regardless of where you live, a SIPP can only deal with investments in Sterling.
A QROPS gives investors a whole new world of investment choice – in any currency, in any country and in any tradable asset
Personal fund management
Any options a SIPP gives for personal investment control are also available through a QROPS.
Likewise, you can hand your investment to a professional fund manager.
A QROPS has two tax advantages a SIPP does not have – the fund can be based in a low tax jurisdiction to maximise growth while the investor can live in another tax jurisdiction with a low income tax regime.
Tax free lump sum
Most QROPS and SIPP products allow a 25% tax-free lump sum drawdown.
Buying an annuity
A SIPP investor has to buy a SIPP by the age of 75 years regardless of the annuity market.
A QROPS has no requirement for an investor buy an annuity.
Passing your pension wealth on to your family and loved ones
Dependent on the type of annuity purchased at outset when the SIPP investor dies, the pension fund may die with him or her.
For a QROPS investor, because no annuity purchase is necessary, the pension fund remains as part of the investor’s estate for passing on.
This stresses the need for competent estate planning as cross-border inheritance rules are complex, but the result is the investor’s family and loved ones are more likely to retain a large share of the pension fund.
How safe is my money in a QROPS?
Many investors would benefit with a QROPS.
Two main reasons affect the decision making of these investors:
- Many general financial advisors who only operate in the UK market have a poor understanding of a QROPS, the benefits the schemes offer and how they work.
- Many SIPP investors who have a fund value of £100,000 or more suffer ‘pension neglect’ – this is where investors set up their pension and then fail to review how the fund is performing.
A QROPS is a specialist financial product aimed at a select market of investors with UK pension rights.
To ensure your pension is not underperforming and that you could not benefit by transferring your fund offshore, discuss your pension with one of our advisors.
The advisor will benchmark your pension fund performance and then offer comparisons with QROPS products.
Why was I advised to take out a SIPP if a QROPS is better?
This could be for a number of reasons which our advisors can answer…
What is more important is that you address the issue and make sure you are maximising your pension wealth.
A QROPS is designed specifically for non-UK residents whilst a SIPP is for a UK resident. If you are a non-UK resident a SIPP may be the wrong tool for the job and you should consider a QROPS.