This summer’s Brexit vote — with Britain leaving the EU — continues to produce waves of speculation, as investors and financial experts try and determine what comes next. The truth is that no one knows for sure. Qualifying Recognized Overseas Pension Schemes (QROPS), therefore, become a logical solution for expats in the U.S. looking to safeguard their hard-earned retirement funds.
And those speculating a retirement move from Britain to another EU country — before things get too complex — are likely to speed up the timeline and investigate QROPS as well.
Factors at play
Pension deficits already exists; and now, with Brexit a reality, they aren’t likely to improve. It seems British employers may be forced to make some harsh changes to stay afloat.
A drop in the pound means a higher cost of living for British residents, a drop in liquidity for pension schemes with reduced gilt yields, and reduced value in invested sectors — and more expats transferring pensions out of the UK as a result.
QROPS investors are simply better equipped to weather this volatility by taking control of their pensions.
As we’ve previously stated, QROPS operates under agreements with individual jurisdictions, such as Malta. So they will be upheld after the UK’s formal exit in about two years. This alone is a comfort for those with retirement accounts in the UK.
Other reasons QROPS provide a safe exit, financially:
- Investors can leave 100 percent of their QROPS funds to their heirs after they have lived outside of the UK for five years.
- QROPS savers can sidestep UK income tax or death charges, which can be close to 50 percent.
- Exchange-rate curveballs are avoided, as QROPS investors can choose how they want to be paid, and aren’t locked into one particular form of currency.
If you and your financial advisor decide that a QROPS transfer is the best investment tool for you, don’t be tempted to wait and see if the UK pension deficit improves, even if retirement is a long way off. Take control of your future retirement now.
The likelihood of UK pension funding is getting dimmer; investigate the advantages of a QROPS transfer with a registered financial advisor today.
Alconbury Trust LLC is a Registered Investment Advisor in the State of Florida and Texas – USA.