It can be concerning to note that your QROPS isn’t growing. Although it’s a common query, a simple fact usually explains things – you are likely to be paying too much for your QROPS plan. The result is that your fee is mitigating any return your investments are making. Alternatively, your QROPS might not be making enough of a return to cover the costs, even if these are reasonable.
Naturally, the ideal situation to achieving QROPS growth is to have access to an efficient investment at a low cost allowing you to enjoy the difference as net growth.
Why do these situations occur?
- Your adviser needs to generate commission, which limits their potential options and increases your total cost.
- Your adviser isn’t aware of better options. Not all offshore financial advisers are qualified or experienced enough to understand the complex solutions available to those living or working overseas and their recommendations might not be suitable for you.
What are the recent Malta QROPS rule changes and what do they mean?
Malta is a very popular jurisdiction for a QROPS, as it offers significant levels of flexibility similar to those available for UK pensions through the pension freedoms introduced in 2015.
The Malta Financial Services Authority, the local financial regulator, has introduced new pension rules to better protect members. These came into effect on 1 July 2019, and mean that advisers must be regulated to provide investment advice to clients or appoint a separate investment manager who is. Advisers must also be subject to a suitable level of regulatory supervision in the jurisdiction where its operations take place. This has impacted a huge number of firms worldwide who operate under a licence which does not allow them to provide full advice to their clients. The additional pension rules bring additional member protections by ensuring that members receive regulated advice on their investment strategy within the pension.
Why do I no longer have an adviser?
You may be informed by your QROPS provider that your adviser is no longer able to work with you as they do not meet these rules. Worryingly, some members have been receiving recommendations to move their QROPS to a jurisdiction that does not have these rules, often without a full explanation of the impact of such a switch.
If you have been impacted by the changes it is prudent to seek a second opinion before making investment or geographical changes to your QROPS.
What steps can I take?
If you are caught in a stagnant QROPS or have concerns that you may have made a mistake on any transfer, you do have options. Whilst costs are likely to be a major factor and you may be reluctant to incur additional fees, seeking expert advice can often help. A fee-based adviser may be able to reduce your overall costs while providing you with access to a better investment solution and better overall advice. This can address two of the most two common concerns with QROPS; high costs and low performance.
The Fry Group has been working with QROPS since their inception. There are a number of ways in which we can help including:
- Moving your QROPS to a lower-cost UK pension
- Changing the underlying investment platform to a more cost-efficient approach
- Aligning your portfolio to your own goals and objectives
- Switching your investments to a low-cost investment approach
- Making you aware of the total cost of your QROPS
- Providing a second opinion on your overall planning
To discuss your own QROPS or pension requirements in more detail please contact your nearest office.