QROPS Can Ease Workplace Pension Worries

Millions of savers are worried that their workplace pensions are spinning out of their control and that they do not know what to do about it, according to financial experts.

More than 2 million workers have concerns about what may happen to their pensions that deter them from saving more, research by financial firm Portus Consulting revealed.

Although the take up rate for auto-enrolled pensions at work is 90%, many retirement savers expected more guidance about their investments.

Only one in four have a regular input from their employer, but 27% complain that they want more information – and a third of them would be willing to pay from professional advice.

“The missing link is that employees are being left to their own devices and significant numbers are disappointed with pension savings while others are being deterred from even starting to save,” said the firm’s commercial director Steve Watson.

Taking control with a QROPS

The report is one of many suggesting that many retirement savers find pensions too complicated and would like more personal financial advice.

Choosing the right pension also helps.

Going for a group scheme is likely to see a retirement saver herded in with other workers and having less choice.

Expats who are concerned their workplace pensions could provide better investment performance can look at switching their savings offshore to a Qualifying Recognised Overseas Pension Scheme (QROPS).

QROPS can give more financial control to retirement savers in the same way as a self-invested personal pension (SIPP) does in the UK.

Golden goodbyes

For workers offered a golden goodbye of cash to leave their company pension scheme, a QROPS is a preferred option because the offshore plan is outside of the lifetime allowance cap of £1 million once the fund is moved overseas.

Once in a QROPS, the fund is under personal control and unaffected by the financial woes of the former company scheme.

QROPS are available to expats who have yet to draw on their pensions and British taxpayers who intend to leave the country permanently within a few months.

The pensions offer many features unavailable to UK retirement savers – such as up to a 30% tax-free lump sum compared to the 25% through an onshore scheme and direct payment with no income tax deduction in many local currencies.