QROPS Australia is the problem, what's the solution?

SYDNEY - May 24, 2016 - PRLog -- Australia has been one of the most popular destinations for Britons moving abroad for decades, with tens of thousands emigrating Down Under each year.

But it's no secret that Australian QROPS has had its ups and downs of late.

Qualifying Recognised Overseas Pension Schemes (QROPS), since their birth in 2006, soon became popular with expats as they offered features and benefits not generally available with an onshore UK pension. Many QROPS financial jurisdictions offered lower tax rates, improved investment opportunities and other benefits attractive to investors.

Unfortunately many are still misinformed on the past and current situation regarding QROPS in Australia.

In 2015, Australia was the largest QROPS jurisdiction, hosting 1,655 QROPS schemes.

In April 2015, the UK Government introduced the pension age test. This rule ensures that a QROPS does not pay benefits to anyone under 55 years old. This rule change meant that if any QROPS offered retirees access to their retirement funds before the age of 55 years, then it would no longer qualify.

This resulted in the biggest delisting in QROPS history, leaving only one local government scheme available in Australia. Other jurisdictions popular with expats were also hit, including Ireland, Germany, the Isle of Man and Guernsey.

Since then, the number of Australian QROPS has grown steadily, with pension providers creating Trusts which only allow applications from people who have turned 55. Australia now has 226 QROPS.

Expats, however, need to be aware, the 'devil is in the detail' and it is even more important now for people to take specialist advice on this subject.

Even though the numbers look to be going in the right direction, it is important to look beneath the surface. While it may look to many that the Australian QROPS market is making a good recovery, this is far from the reality.

At present Australia looks to be steaming ahead in terms of the number of QROPS schemes available, however upon closer inspection these are all SMSFs Self-managed super funds.

What are SMSFs?

SMSFs are often called "do it yourself funds."

SMSFs are a legal tax structure with the sole purpose of providing for retirement. SMSFs are regulated by the Australian Taxation Office (ATO).

These funds, as you may have already guessed, are managed by the client. Some like the idea of the control that comes with managing their own fund, but taking control means being responsible for managing your retirement funds, which involves significant time and effort.

SMSFs are suited to people with extensive skills in financial and legal matters. You must be able and willing to understand your legal responsibilities and the investments you make. Even if you employ professionals to help you, at the end of the day you are still the one who is ultimately responsible.

Running your own fund is complex. When you run your own SMSF you must:

§  Carry out the role of trustee or director of your fund.

§  Set and follow an investment strategy that ensures the fund is likely to meet your retirement needs.

§  Use the money only to provide retirement benefits.

§  Keep comprehensive records and arrange an annual audit by an approved SMSF auditor.

SMSFs can turn into a costly choice very quickly. Many expats are not fully informed of the set up and yearly costs involved. Many fail to budget for ongoing expenses such as professional accounting, tax, and audit, legal and financial advice.

Although not an ideal choice for may expats, SMSFs are available and can work and perform for the select few who are sufficiently informed in financial and legal matters.

Although it may seem that Australia is the front runner, as you can see, this sort of fund is not suited to many.

Even as the dust is settling, other problems have surfaced too, with the recent announcement by the Australian government to cap pension funds, with a lifetime allowance of £250,000, effective immediately.

This will have a costly impact on expats who wish to transfer to Australia as the lifetime allowance is now much less than the £1 million limit set in the UK.

However, it is still possible to transfer your UK pension up to £1million; this will, though, breach the $500,000 Australian limit. Pensions over the lifetime allowance will attract tax penalties of up to 45% of the value of the excess. Savers will also have to withdraw the excess amount.

Since the uncertainty began, Waterstone Investment Associates have been tirelessly working towards a solution.

Many British expats in Australia will have frozen pensions in the UK or will have simply left their pensions under UK rules, but this has tax implications. Out of all the destinations, for British expats considering retiring abroad, retirement in Australia throws up the most complex rules. It is highly advised that you contact a QROPS Specialist to let them know of your circumstances for them to give you detailed, tailored advice.

What is the solution?

Waterstone Investment Associates are proud to announce that after liaising with experts both in the legal field and QROPS market, we have successfully gained access to QROPS Trusts in jurisdictions outside of Australia that comply with Australian "foreign superannuation" rules.

These are recognised and comply with the Australian Tax Office (ATO) and the schemes qualify as foreign superannuation schemes, offering significant tax benefits, including no lifetime allowance limit.

If you would like further assistance in this matter, please contact us for free impartial advice given by one of our G60 qualified advisors.

Offering the lowest cost QROPS in the market.

We are also able to provide UK FCA regulated advice if your UK pension is a Final Salary (DB) scheme.

Read more here:

QROPS Australia here is the answer

Email us: jrhughes@waterstone-qrops.com