DeVere has suspended an affiliated qualified recognised overseas pension website, after FTAdviser told the group that pension specialists were warning the site contained misleading information about overseas pension transfers.
Qrops.net described itself as “an association of the world’s leading Qrops advisers”. FTAdviser only found out the website was affiliated with DeVere when we went to the Holborn address listed on Qrops.net.
The website listed a number of bullet points on the benefits of Qrops, which two pension specialists told FTAdviser were factually incorrect. DeVere has now suspended the site, after admitting that some of the information was “out of date”.
According to Qrops.net, the list of advantages of using a Qrops, which HM Revenue and Customs recently started calling recognised overseas pension schemes, include having access to flexible income drawdown rules, avoiding the UK’s 55 per cent death tax, greater investment flexibility, transparent charges, a “retirement age” of 50 and “avoiding further changes” to UK pensions legislation.
David Trenner, technical director at Intelligent Pensions, said all the points above were incorrect.
“Most [Rops] don’t have flexible income drawdown and this would be taken to mean flexi-access drawdown. I would expect that [the website] would have been written in the past [before the pension freedoms came in].”
He also highlighted that the website’s assertion that a consumer would be able to avoid the 55 per cent death tax was “wrong”, and that the retirement age of 50 was “completely untrue”.
Last September, chancellor George Osborne announced that pension funds paid out before age 75 will no longer be subject to the 55 per cent tax charge when transferred as a lump sum within a pension. If withdrawals are made from the pension fund, beneficiaries will pay income tax at their marginal rate if the person dies after age 75.
Mr Trenner argued that any product should have transparent charges, adding that on the point about greater investment flexibility, “very few can invest in things that you can’t invest in a Sipp, excepting unregulated investments”.
He noted that a Rops structure would not avoid further changes to UK tax and pensions legislation. “It doesn’t avoid all changes because they do make changes - none of the recent changes have been negative, the only aspect which you do avoid is the lifetime allowance.”
The website stated that by using a Qrops, savers can use the currency of their choice, which Mr Trenner said is accurate, although most people tend to invest via sterling. “This highlights that there is currency risk - this is a genuine problem for people retiring abroad. It is not necessarily an advantage.”
Other ‘advantages’ of using a Qrops, according to the site, were that a 30 per cent tax-free lump sum is available as the “scheme only needs to keep 70 per cent of the original transfer pot for retirement income”. It added in the UK the cash lump sum is “always limited” to 25 per cent.
The website said: “This benefit alone is one of the most popular reasons expats transfer their UK pension into a Qrops.”
Andrew Tully, pensions technical director at Retirement Advantage, told FTAdviser that this is out-of-date and it would be easy to call it misleading.
“Some of the information such as ‘avoid the UK’s 55 per cent death tax’ was changed from April 2015, but these changes were announced in 2014 so there has been plenty of time to make changes to the website.
He added: “Other aspects are more fundamentally wrong, such as saying Qrops offer benefits no other type of pension scheme can, then including ‘consolidate all pensions into one’ and ‘no obligation to buy an annuity’ which have both been features of the UK system for many years.”
A spokesperson for DeVere told FTAdviser: “Many thanks for bringing this important matter to our attention. You quite rightly point out that some of the content on this site is, unfortunately, out-of-date.
“We will inform our affiliated partners to ensure this is rectified immediately. Whilst this is being updated, we will, of course, insist the site is temporarily suspended to avoid any potential confusion. We will work with our affiliates to ensure that the site is routinely updated in the future.”
ruth.gillbe@ft.com
