Rex Cowley (pictured), Head of Marketing, at the International division of Close, comments on the renewed interest in Qualifying Recognised Overseas Pension Schemes (QROPS) from British expats and their advisors, following the recent collapse of the Robert Gaines -Cooper case:
For many expatriates the move to a different country is followed by the change of domicile in order to simplify their tax affairs. However, it would seem that many expats still have UK pension contracts, be these defined benefits or defined contribution schemes.
Certain sectors within the advisory community believe that the extent to which many clients have gone with regards to shaking off their UK domicile is not significant enough. Particularly if they still have pension assets in the UK. Whilst a QROPS may have been discounted in the past by the client or their advisor, the above ruling is causing expatriates to reconsider this decision.
QROPS provides an answer to this together with the additional benefits of not having to purchase a life annuity after the age of 75, or the high levels of taxation, which can be associated with alternatively secured pensions on the death of the member.
However, in order to achieve a change in domicile, expatriates with defined benefit schemes have some difficult choices to make when weighing up the issue of domicile versus a promised pension benefit.
Either way, the Gaines – Cooper case shows that financial planners advising expatriates who wish to or believe they have lost their domicile need to consider not only the situs of their clients’ assets and/or income, but also their clients’ behaviour patterns and the associations they hold with the UK in order to facilitate a true transition.
