Interview: The impact of Brexit on the QROPS industry.Joanne Rodriguez, business development manager for Abacus Financial Services interviewed by International Adviser Magazine
Rodriguez said clients thinking of using the QROPS tool should act sooner rather later given that HM Revenue & Customs could change its rules for overseas pension transfers when the UK leaves the EU.
She said it is likely that HMRC will honour Qrops which have already been put into place when the UK leaves the EU, and that prices are coming down at the present time.
Source: International Adviser Magazine
Brexit – what’s your best guess on its impact, especially on Gibraltar-based Qrops operation like yours?
International Adviser – Joanne Rodriguez (Business development manager. Abacus Financial Services):
I don’t think Brexit itself will have a direct impact. However, it will have potentially, a long-term indirect impact if HMRC decides to act and to make his own decisions. Because once the UK is no longer a part of the EU, then it’ll have the freedom to make his own decisions on and this is some of HMRC based on whether the Qrops will continue to exist in their present form or whether they will be applied in a more restrictive sense, where as an example, they could opt to go back to the regime before 2006.
Well as these transfers had to be individually approved, by HMRC or we may not have the different choice of the different jurisdictions as such but they could well restrict Qrops to the place of residency of the expatriate person and in terms of Gibraltar where that would see Gibraltar in pretty much the same light as any you know with the same restrictions as any other Qrops jurisdiction, whether it’s in the EU or outside; you know, outside of the EU. As well, I think the angle that Gibraltar does have to offer is that is linked to the UK.
We are seeing a lot of uncertainty amongst expatriates as in you know UK expats whether they’d like to leave the UK or whether they are not sure about moving into Europe if the UK is no longer part of the EU but in Gibraltar… Gibraltar does have those links with the UK seen as sort of Britain in the sun. So, now they can still offer at the moment, at least you know as far as we know the foreseeable future they still offer the advantages of being part of the UK, offering a Qrops and having a nice sun and climate.
If a financial adviser has a client considering a QROPS proposal, what advice would you give for the next year or two?
Joanne Rodriguez: I think it’s to take advantage of the current legislation. We know that at the moment Qrops are available. In the future we don’t know what is likely to happen so it’s about acting now. Why wait, you know? It’s the benefits of Qrops are available at the moment. It may not be the case in the future so make sure that they have the discussion and go through the benefits of all the clients’ pros and cons of transferring but at least know they have a window of opportunity where transferring is an option.
Is there likely to be any retrospectivity regardless of what happens?
Joanne Rodriguez: We don’t know for certain, but I would say most industry experts would pretty confidently say that it is likely that HMRC will honour Qrops that have already been put into place.
We’ve seen a price war in the QROPS market recently, how is that affecting you and what will happen there?
Joanne Rodriguez: Yes, it is true that prices have been coming down and since the Qrops were first introduced 10 years ago, and I think it is because it has moved on to a higher volume, more sort of, you know it’s a more commercial product at the moment and yes there is a price war but I think that’s because the providers are able to offer it at a decreased price now that I think the benefits are more widely know, and there’re more clients who are interested and like anything you know as soon as you engage more clients then it becomes profitable to reduce the cost some according to the real customer market so…
Do you see yourselves spreading further into the offshore world?
Joanne Rodriguez: Yes, we conduct a lot of research primarily from international IFA’s and before launching into our Gibraltar QROPs. And it’s very clear to us that the way forward is to have a multi-jurisdictional product. However, we started Gibraltar because obviously that’s on our doorstep. So we started with Gibraltar QROPS and shortly we should be having a Malta proposition as well and eventually we’re looking at the UK set as well.
Are you looking to buy a UK SIPP company?
Joanne Rodriguez: Not at this very present moment, but who knows in the future. We do realise that it’s very important to offer the full proposition and have a UK SIPP as well but there are other ways of entering that market place, but we will be exploring initially and working with one of our partners in the UK to provide this service and then further down the line, who knows?
What’s the advantage of having a UK SIPP company?
Joanne Rodriguez: I think it provides a piece of mind for clients and YFAs as well, but it’s a multi-jurisdictional office so we’ll be able to transfer back into UK SIPP free of charge if the client decided to move back to the UK and they wanted to have the pension closer to home and obviously pay the UK the tax on it if they became a UK tax resident, so it’s nice to offer the full proposition.