According to figures, around £500 million worth of expat pension funds have been transferred into QROPS since A-Day, the moniker given to a supposedly simpler pension regime, in April 2006.
The figures were disclosed by AJ Bell during the Freedom of Information act. They showed that more than 7,300 QROPS transfers have been initiated since A-Day, which is more than 3x the number of individuals who opted for alternatively secured pensions (ASP).
Andy Bell, chief executive at AJ Bell, said: “These figures support our campaign for a change in the 82 per cent tax penalty applied on death in ASP. The introduction of this tax penalty in April 2007 resulted in a 154 percent increase in the amount transferred to QROPS compared with the previous year. This is proof that penal tax charges only serve to encourage distortive behaviour at a significant cost to the Exchequer”.
Bell added that “This is only one of the steps being taken to escape this tax charge by the few who can afford to simply move offshore or pay the fees associated with the available onshore structures".
His claims were supported by the director of Global QROPS, Paul Davies. Whilst Davies didn’t put the blame solely on ASP death tax, he conceded that it must play a big part: “I do not think that people are transferring to QROPS solely to get around the tax on ASP but, in terms of long-term planning for beneficiaries in retirement, it does make sense”.
To find out more about QROPS, expat pensions and alternative retirement options, visit our pensions and retirement planning section.