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06/05

Regulation and financial stability paramount when it comes to QROPS

Advisers say regulation and financial stability of a jurisdiction are key factors to consider when selecting a QROPs provider, according to new research by Skandia International.

06 May 2010

Advisers say regulation and financial stability of a jurisdiction are key factors to consider when selecting a QROPs provider, according to new research by Skandia International.

Following events of the past couple of years, including the collapse of banks, the recession and the offshore review, regulation and financial stability top the list of things that advisers consider when selection a QROPS jurisdiction for their clients.

Investor protection was ranked third on the list of important criteria to consider and advisers should consider the protection available not only from the jurisdiction of the QROPS provider but also from the jurisdiction of the underlying investment – whether an offshore bond, bank account or local market product.

The availability of low or no inheritance tax ranked fourth, while the potential to receive a 30% tax-free cash sum allowance came in fifth. The requirement that the QROPS jurisdiction be English speaking and the perceived privacy of the jurisdiction ranked low on the list of essential criteria.

73% of advisers prefer to use Isle of Man or Guernsey as the jurisdiction for a QROPS with Hong Kong coming in as the third most popular.

Rachael GriffinRachael Griffin, head of product law and financial planning at Skandia International, said:

“Pensions and therefore a QROPS are a long term investment and it is for this reason that it’s so important to look at the jurisdiction that the investment is held in. When making a decision on jurisdiction, a number of factors need to be considered such as financial security and of course the jurisdiction tax rules. For example it may be that the QROPS provider insists on a member being a local resident, or the particular pension rules of a jurisdiction insist on certain restrictions on investments.

“Like with any financial planning QROPS are not for everyone and each client should be assessed individually. Circumstances specific to each client such as age, current residency and future plans will all need to be considered before making the decisions to move into a QROPS.”

This press release is for journalists only and should not be relied upon by financial advisers or customers.