9 July 2013
According to research carried out by Skandia International, part of Old Mutual Wealth, nearly half (48%) of advisers who recommend the use of QROPS will increase their use of them over the next 12 months. A further 41% are looking to maintain their current use of QROPS over the next 12 months. This equates to a substantial 89% who say they will either maintain or increase usage, confirming the growth in this market looks set to continue.
Despite a backdrop of changing reporting requirements for QROPS providers, introduced as part of the Finance Bill 2013, advisers continue to recognise the significant advantages QROPS can have in terms of their flexibility and tax efficiency. As more and more baby boomers are hitting retirement age and are looking to move overseas and become non-resident for UK tax purposes, the benefits offered by QROPS for these clients can be significant.
The survey also showed which jurisdiction advisers preferred for writing QROPS, the top 3 are:
- Isle of Man (32%)
- Gibraltar (26%)
- Malta (22%)
The Isle of Man was the clear leader, and has been offering QROPS since April 2006. QROPS are known in the Isle of Man as ‘1989 tax approved schemes’, where potential income tax and a tax on death apply. The Isle of Man jurisdiction is well known by advisers and clients as an international financial centre which could explain its popularity. Arguably the three jurisdictions named above have benefited from the demise of Guernsey as a recognised jurisdiction for QROPS, as the tax benefits offered in Guernsey were previously more tax advantageous compared to most other jurisdictions.
Rachael Griffin, head of technical marketing, comments:
“Over the last three or four years the market has seen tremendous growth in the QROPS market, and it looks like this growth phase still has some way to go. The rise of the baby boomer and those looking to retire overseas could be fuelling this popularity, so too could an increased awareness amongst advisers for QROPS and the significant advantages they can offer their clients.”
Survey of international advisers, June 2013, results based on 141 advisers who use QROPS.