Qrops pension minefield

Qrops pension minefield

Qrops pension minefield

The mad, hopeful dash is for those who want to make a quick buck and flirt with the rules.

These QROPS investors are looking to trouser the best cash return as quickly as they can without worrying too much about the penalties.

It's likely their advisers are unregulated and that the QROPS pension lives in some exotic offshore jurisdiction.

The slow movers are looking for a robust, long-term home for their retirement savings and would rather end with a sizeable lump sum than run the risk of trouble with the taxman.

It's likely their advisers are regulated and that their QROPS resides in an English-speaking offshore financial centre with a reputation for stability and low-risk, like Guernsey or the Isle of Man.

That's not to say all QROPS outside of Guernsey or the Isle of Man are risky prospects, but the regulatory bodies and providers in both these places are working hard to make sure they offer a reliable and secure place to keep money.

This is reflected in musings in a blog from Nick Hannah of Marlborough Trust, the trustees behind Guernsey's Shearwater QROPS.

Shearwater QROPS is one of the longest-lived schemes and is based on building a robust product within the rules that govern offshore pensions laid down by HM Revenue and Customs.

Hannah notes that a worry is that other providers on Guernsey share his views as the rules let HMRC pull the plug on a jurisdiction as a QROPS centre as well as single providers.

That's why, he suggests, providers on Guernsey QROPS are developing a code of conduct that will self-police their QROPS trade and avoid outlandish claims trumpeted from some other financial centres about lump-sum drawdowns and investment options that seem to flout the spirit of the rules.

The downside is that too-good-to-be-true schemes may offer the world and then some, but may end up costing the earth - or at least 55% of the value of the transfer fund when tax penalties are levied.

While a more robust QROPS operating under a more conservative and tighter controlled regime still delivers superior returns when compared with just about any other retirement option.

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