Many financial advisors are starting to report that they are seeing a significant uptick in the number of QROPS enquiries from holders of SIPPs.
A SIPP stands for a Self Invested Personal Pension Plan and it allows individuals a level of control over the investments in their pension.
From next year such pensions will have to hold a minimum of £20 000 in reserve. This is a result of the Financial Conduct Authority’s new capital adequacy policy which aims to makes these types of pensions more stable.
Unfortunately this will have the unintended affect of making them more expensive as the firms which run them raise their fees to compensate.
All of this means that SIPPs are becoming less and less attractive for overseas holders of UK pensions. Instead, increasingly they are looking to take advantage of the many benefits inherent in moving their pensions offshore into a Qualifying Recognised Overseas Pension Scheme (QROPS).
While boasting many of the same flexibility benefits that originally made SIPPs so attractive, QROPS can also have the added benefit of a significant tax advantage.
Adam Wrench, head of product and business development at pension and SIPP provider London and Colonial, said, “We expect providers to put SIPP fees up… We expect to see more non-regulated assets in non-regulated vehicles.”
Claire Trott, head of technical support at Talbot and Muir, said, “It is safe to say that a SIPP would need to increase their fees significantly for a single member Small Self Administered Scheme (SSAS) to be competitively priced against it. We have very few single member SSAS and do not expect this to change.”
If you are living away from the UK and have left a pension in a SIPP in Britain then it might be a good idea to explore whether this is still the best option for you.
With fees due to rise it is best to at least explore whether moving the pension to a QROPS could be the correct decision.
If you would like to be put in touch with a pension transfer specialist financial planner then please let us know.