Pension advice sought!

[Onetrackmind]

Hi all,

I have a meeting with a financial advisor tomorrow (who I'm not sure I trust) and I'm looking for some advice before I decide to proceed with any changes to my pension.

My wife and I both have approx ten years accumulated in the UK Teacher Pension Scheme. We now both work overseas in Dubai and can no longer contribute to the UK teacher pension scheme. We do not intend on returning to the UK to work as teachers as my wife is Irish and we will probably return there once we've had enough of Dubai. Therefore, we have been considering transferring our pension pot out of the UK TPS and into an offshore (QROPS) fund. We will then be able to continue to make contributions. We cannot "cash out" the UK teacher pension, hence the "transfer" idea. I suppose what I'd like to know is if I'm better off leaving our current UK teacher pension (which I believe is frozen) to tick along and start contributing to a new pension in addition or to transfer it into an offshore QROPS pension and continue to contribute?

I believe the UK gov are stopping the transfer of all UK TPS funds to offshore pensions soon so there is some urgency to what I decide to do.

Many thanks to anyone who can advise.

Matt

[Onetrackmind]

Thanks all,

Most of what you've said is as I expected. If I leave my TPS sitting it will be worth X amount when I come to retire. If I transfer it out it still needs to pay me the same amount to make it worth it! It's the ability to add to it once transferred out that is what I need to find out about.

[Onetrackmind]

I spoke to the advisor today. They were obviously quite persuasive, as to be expected. They focused on the deficit of the UK TPS and proposed changes of pensionable age from 69 to 65. There were other arguments in favour of transfer to QROPS such as being able to receive the pension when I am much younger and avoiding inheritance tax should I pop my clogs. I can also transfer the full amount accumulated in the TPS to the QROPS.

In terms of returns, they stated that the current funds I have in the TPS are being invested by the TPS in quite low risk gov bonds etc that have had quite poor returns over the past ten years. Comparative returns from the QROPS fund have been much higher. However, there are some fees that depreciate the actual % return figures. They didn't advise to top up the QROPS and actually advised I take a seperate off shore pension! not quite sure why if the returns on the QROPS are so good! Maybe due to her getting a better fee off the new pension.

I'm meeting again in a month to compare actual figures for both the TPS and QROPS.

Still quite unsure about what to do. The returns off the QROPS look like they'll be better and there are many benefits such as the inheritance tax dodge.

[Onetrackmind]

Pickled Piper said:

OP, did the advisor advise you how much they would charge you to make the transfer? Their charges should be very clear based on the latest guidelines. However, in my experience getting them to state or write down their fees is like pulling teeth. They make you feel like you are being petty for asking.

No, they did not. However, they did state the transfer was fee free. There are fees for the new QROPS pension though. I assume the pension advisor, whom I believe was more a salesperson rather than independent advisor, receives their fee from the new pension provider. I'm quite sceptical of the advisor/salesperson but they have come recommended by many of my colleagues, most of whom, have a brain between their ears and are certainly no fools.

The advisor/salesperson claimed the TPS had yielded minimal returns over the past ten years due to the funds having to be invested into gov bonds etc as a result of the poor perfmance of the UK economy. The QROPS had returned 11% PA over the past ten years,which was because the investment portfolio of the fund was not only limited to UK gov based investments. Therefore, the QROPS looks to have much better returns based upon the past ten years. This is what confuses me! Everyone I speak to seems to consider the TPS to be an excellent pension, but the QROPS has out performed it according to the advisor/salesperson!

Thanks again,

Matt

[Onetrackmind]

OP here. Finally had our TPS valuations back. I've looked into the TPS vs QROPS in detail and based upon our situation, the only reason for us to transfer from our deferred TPS into QROPS is for the forecasted returns I've been presented with. As you know, our TPS growth is based upon CPI inflation. The QROPS growth forecasts presented to me quote rates of 3%, 5% and 7%. In recent year, growth if the TPS has been very small due to such low inflation.

Are these QROPS growth forecasts realistic?