Back in 2014, the Chancellor of the Exchequer, George Osborne’s announcement that UK pension holders will no longer be forced to a purchase an annuity with their savings upon retirement.  The difference between QROPS and annuities is that Annuities have always been unpopular with pensioners, the rates of return are often minimal, and the charges related to the purchase average at around £3,000 regardless of the amount of savings.

Whereas, Qualifying Recognised Overseas Pension Schemes (QROPS), are approved Her Majesty’s Revenue Service (HMRC) foreign pension funds and can offer huge benefits to UK pension holders living abroad.  Along with being able to take retirement income in a currency of their choice, individuals are no longer under any obligation to purchase annuities with the proceeds of their pensions.

What is an Annuity?

Holders of personal or private pensions in the UK have in the past been required to purchase an annuity upon retirement.  An annuity is a contract which pays a fixed and guaranteed lifetime income, and is not subject to stock market fluctuations.  That said it is possible to choose an annuity that is linked to inflation, to ensure that your money keeps up with the cost of living over time.

However, once your annuity is purchased, the income for the remainder of your life is set.  You cannot transfer providers for a better deal at a future date.  The other major drawback to annuities is you cannot leave anything behind for your loved ones.  This means that if you die before you have received your full pension the rest of the pension fund will go to the annuity provider.

QROPS and Annuities

Many expats with a UK pension are now looking for alternative wealth preservation.  Annuities can serve as excellent financial instruments under the right circumstances; however they are often inflexible and have significant drawbacks (as stated above) relative to other options, such as QROPS transfers.

Once a person have purchased an annuity they lose control of their pension funds, thereby making it more difficult to adapt retirement strategies to suit their unique needs, wants and risk tolerance. QROPS on the other hand offer an incredibly wide range of investment choices and allow you the flexibility of managing your own portfolio.

QROPS can provide a better solution than leaving accrued funds in a UK scheme. Typically there will be no requirement to purchase an annuity and possibly more flexibility in the form and timing of benefits as well as in the ways of dealing with residual funds on death.

QROPS and Annuities Advice

If you would like information about QROPS and annuites, call us on +34 698 243 745 or Contact Us Today

GC QROPS has been successfully assisting UK expats in Spain with UK pension transfers for 9 years since 2006.

We are completely independent, and can advise on a wide variety of QROPS pension schemes – we are not tied to any single provider, which means that we will recommend the scheme which meets your exact requirements and needs.