The United Kingdom have voted in favour of leaving the EU. This undoubtedly brings a wave of uncertainty and numerous questions that will remain unanswered for up to 2 years. What we do know is that GBP will devalue (already at its lowest levels since 1985) and that markets all around the world will drop significantly (initially). We also know that the need to cater for medium to long term financial and retirement planning remains a constant regardless of where you live.
One of the most pertinent questions people will be asking today is: “What will happen to QROPS?”. There is no immediate answer to this. The UK and EU have many, many bigger issues to deal with than the future of QROPS. The UK will remain in the EU for the foreseeable future and it will likely take around 2 years to negotiate its exit. There is a very strong likelihood that the transfer of UK pensions (out of the UK) will remain after the UK leave. However, there is also a possibility they are banned, or more likely have a tax applied on transfer – we will have to wait and see.
What is clear, is that we now have the biggest reason in QROPS history for expats to move their UK pensions. Many of the prospects we speak to like the idea of QROPS, but have decided to “wait until they are nearer to retirement” to move it. Or, “wait to see if the deficit is recouped”. They now don’t have these luxuries; they have to make a decision now if they want to benefit for the many advantages of QROPS.
It isn’t just the uncertainty around the future legality of QROPS that makes transferring now such a key time. The way the markets will react will have a profound and (likely) detrimental effect on defined benefit deficits.
Carrick remains perfectly positioned to help and assist as many people as we can with their UK pension and the options of transferring it into a QROPS – we know this product better than anybody in the industry. In BREXIT, we probably have the biggest urgency creator the QROPS market has ever had.
Simultaneously, we have seen a shift towards lump sum business for some time now and have a very strong client base who trust us with their financial planning needs.
As with any disruption to the status quo, there will always be a degree of uncertainty, unease and nervousness, and in times such as these strong leadership and the ability to give direction and good advice will always allow you to rise above the chaos.
Group Managing Director