Financial Advisor for Expats

Chances are you have been cold-called or approached by Financial Advisers advising a SIPP or QROP transfer. You may have taken them up on this advice.

The landscape of QROPs has changed dramatically since 2006. Most noticeably in 2017 when the Government introduced a 25% OTC on certain QROP transfers (The Financial Times, 2017). QROP jurisdictions including the US, Canada, France, Guernsey and Italy have also been delisted.

Is your QROP located in a delisted jurisdiction? How could a QROP transfer reduce your annual trustee charges?

LEARN MORE about QROP ADVICE or SIPP ADVICE

You may have heard about QROPs and SIPPs. People often make statements such as ‘all QROPS are bad’ or ‘I heard QROPS are a scam’. These assertions are uninformed. QROPS are a Recognised Overseas Pension Scheme that meets HMRC conditions (HMRC, 2019).

Some QROP transfers were not necessary though. Many just increased clients annual costs. Following the introduction of QROPS in 2006, the rule of thumb with Advisers was that people living outside of the UK should transfer to a QROP.

This is not true though. As such there are likely tens of thousands of Expats who would benefit financially from a QROP-to-QROP transfer or a QROP-to-SIPP transfer.

How much could you reduce your QROP costs by?

LEARN MORE about QROP ADVICE or SIPP ADVICE

As an Expat you have likely heard QROPs or SIPPs mentioned by friends. You may even have one from advice with another Adviser. This market is competitive. The annual cost of a QROP has reduced significantly since 2006.

Our Advisers have helped expats reduce their annual QROP fees by as much as £1,500 pa. When multiplied by the number of years remaining until they can access the capital (Age 55) this creates sizeable savings.

Could you reduce the annual costs of your SIPP or QROP?

LEARN MORE about QROP ADVICE or SIPP ADVICE

The reality of HMRC taxing any assets over £325,000 in the event of your death is a bitter pill to swallow after having paid tax all your life (HMRC, 2019).

Understanding how to reduce or avoid tax is an important discussion to have with your CJ Adviser. Please remember tax avoidance is the legal use of tax laws to reduce your tax burden. Tax evasion is the illegal evasion of taxes to reduce one’s tax liabilities.

Which assets would your loved ones need to sell to cover your IHT?

LEARN MORE about TRUSTS & INHERITANCE PLANNING

You may hold existing investments with SEB, Old Mutual, Lombard and Generali etc. These policies should be reviewed regularly. Our Advisers have seen portfolios not been updated for 10 years. With ETFs and risk-balanced funds, this is not such a problem now. However, 10 years ago portfolios were far less diversified.

While the long-term upward trend of equities may have provided growth, regular portfolio rebalancing could have yielded significantly better returns. An actively managed policy is like a car. It requires regular checks and an annual MOT to compare its performance against a benchmark.

When was your portfolio last updated or compared against the market?

LEARN MORE about EXISTING EXPAT POLICIES

The long-term upward trend of equities will have grown your pension during your life. With 20 years of life expectancy (World Bank, 2017) you are still able to capitalise on equity markets.

While aggressive equity portfolios (70-100%) may no longer be suitable, UK equity income funds typically top the best-selling lists in the UK (The Financial Times, 2018). For clients over the age of 75, we must complete additional due diligence.

How much extra annual retirement income could you generate from your surplus capital?

LEARN MORE about LUMP-SUM INVESTMENTS

You may see more of your grandchildren than your own children these days as daycare costs continue to rise for young parents.

This is a welcome interlude to your week. You attend plays, concerts and football tournaments as you watch your grandchildren turn into young adults. Providing a pot of capital for driving lessons or university funding is common practice.

How would you like to support your Grandchildren?

LEARN MORE about GRANDCHILDREN & EDUCATION

The value of your pensions may be the same as your home. As such, clear visibility and control over these assets are vital. Consolidating SIPPs, QROPS and DCs pensions into one solution should be a priority.

Log-in online to see all your pensions together in one place with a quarterly review with your CJ Adviser to understand portfolio performance and any recommended changes.

Would you prefer to see your different pensions within one valuation report?

LEARN MORE about DC PENSION TRANSFERS

If you are in this age range and do not have a Defined Benefit or Final Salary pension then you were either an entrepreneur or living in Hawai.

Seeking advice on your DB pension before crystalising your pension is crucial. The posh word for taking income. DB transfers are not suitable for all clients. Understanding your options before crystallisation is prudent by all accounts including the FCA and HMRC.

Did you know only 50% of your DB pension passes to your spouse compared to 100% in a SIPP or QROP?

LEARN MORE about FINAL SALARY PENSION TRANSFERS

You typically have larger surplus capital at this age. Your children may not be independent yet and you enjoy personal purchases or holidays that require easy access to money.

The remainder of your capital can be put to work for improving your later years though. With a UK life expectancy of 81 (World Bank, 2017) there is more than sufficient time for a long-term lump-sum solution to supplement your retirement income or state pension.

A lump sum of £250k with a net average growth of 4% pa would provide an additional annual retirement income of £10k during your retirement. Leaving the original capital of £250k to pass on to your loved ones. Capital is at risk.

How much retirement income could your surplus capital generate you each year?

LEARN MORE about LUMP SUM INVESTMENTS

The reality of HMRC taxing any assets over £325,000 in the event of your death is a bitter pill to swallow after having paid tax all your life (HMRC, 2019).

Understanding how to reduce or avoid tax is an important discussion to have with your CJ Adviser. Please remember tax avoidance is the legal use of tax laws to reduce your tax burden. Tax evasion is the illegal evasion of taxes to reduce one’s tax liabilities.

How much tax would be owed on your estate if you passed away?

LEARN MORE about TRUSTS & INHERITANCE TAX

If you are moving abroad then analysing your UK pensions is a priority. Their net value could match the value of your home making them one of you largest but most overlooked assets. Consolidation of non-safeguarded DC Pensions is almost certainly the correct advice at this age.

With pension freedom from the age of 55 having your pension pots consolidated together brings a number of efficiencies in cost and administration.

What is the value of your UK pensions?

LEARN MORE about DC PENSION TRANSFERS

You are from an era when DB or Final Salary pensions were the norms. The baby boomers. It is likely that some or all of your UK pensions are Final Salary.

DB pension deficits and ageing populations are a problem. The Financial Times recently documented that in 2018 the top 100 FTSE companies repaid only £8.2bn towards repairing DB pension deficits while paying shareholders dividends of £84.4bn. While a transfer is not always appropriate, understanding your transfer options is prudent.

Do you hold a DB pension that is hugely underfunded?

LEARN MORE about FINAL SALARY PENSION TRANSFERS

With increased salary, your current accounts likely hold more than the recommended 3-6 months salary of emergency funds. Having easy access to capital is important, but the future purchasing power of money in the bank is being eroded by inflation each year.

Prices in 2019 are 66.93% higher than in 2000 (Office of National Statistics). This means £100,000 in 2000 would need to have grown at 66.93% or 2.96% pa for 19 years just to keep pace with the rising cost of living.

Do you have more than 3-6 months salary in your current accounts?

LEARN MORE about LUMP-SUM INVESTMENTS

You may be fortunate enough to have been enrolled in a Defined Benefit or ‘Final Salary’ scheme in your earlier work years.

With an ageing population though, many UK pension funds face deficits running into the billions (Financial Times). DB pensions are a valuable asset and a transfer is not suitable for all clients. For many clients though transferring provides them with a better financial outcome or protection for the beneficiaries.

Would prefer your beneficiaries to receive 100% of your pension if you die?

LEARN MORE about FINAL SALARY PENSION TRANSFERS

With a blossoming family, university and education funding (BSc) suddenly becomes a new priority. With education costs increasing almost 8 times faster than wages, this is an area that needs careful attention (Forbes, 2018).

Additionally, depending on how many years they have been resident outside of the UK your children’s UK tuition fees may be classified as International Students (up to £55,272 pa) instead of Home (UK) Students (£9,250 pa) (Cambridge University, 2019).

Have you considered your children’s education planning yet?

LEARN MORE about EDUCATION PLANNING

If you have been an expat for some years it is likely you already hold one or more existing investments. A full review of exactly what you have, how it is performing and what your charges are is essential. You can dramatically improve such policies.

Do you have an Old Mutual, Lombard, SEB, Generali, Friend Provident or Zurich etc?

LEARN MORE about EXISTING EXPAT POLICIES

If you have been an expat for up to 30 years you likely hold numerous international or offshore investments. A full review of what you have, what your charges are and how it is performing is essential.

Do you see the logo of your provider on our Existing Policy page?

LEARN MORE about EXISTING EXPAT POLICIES

A well-justified plan for an MSc, MBA or PhD may persuade you to dip into your reserves. Help with mortgage deposits and getting your children onto the housing market is another likely request to fall on the bank of Mum & Dad.

Does your portfolio have liquid assets that you could call on if needed?

LEARN MORE about MSc, MBA, PhD & HOUSE DEPOSITS