Comparison of QROPS in India vs UK Pension Schemes

India Based QROPS

UK Pension Scheme

1.     Emerging markets like India tend to offer better returns than those offered by developed economies & other emerging markets in the long term since the fundamentals are strong in India.               2.     The term ‘Guaranteed Interest Components’ can only be found in India based QROPS. Among many Indian QROPS schemes the investment portfolio is not linked to stock market & there will be no investment fluctuations & the entire fund both base transferred UK pensions & Bonus added are safe & Guaranteed.               3.     Regulatory protection- All the insurance companies operating in India are subjected to solvency regulations of IRDAI (Insurance Regulatory & Development Authority of India). The minimum solvency ratio is 1.5 times of the insurer’s liability towards the customers. So there will be a kind of Sovereign Guarantee against such risks like ‘Insolvency of Companies’. This kind of protection can be found almost only in India & nowhere else across Globe.   4.     Your pension scheme in India is not subjected to frequently Changed regulations of Government unlike in UK. New regulations will not be applied retrospectively on old pension schemes already purchased. Whatever promised in the beginning as policy features, the same will remain till the policy closes on retirement.                           5.     On attaining age 55, the member can take upto 30% of the total fund value by that time & on remaining 70% corpus the member will be paid pension income till death. On member’s demise, the entire 70% Corpus will be given to Nomionee as tax free lumpsum. It almost works like keeping money in a bank’s safe fixed deposit & taking interest on it in the form of pensions. The entire 70%  capital is safe, Guaranteed & tax free.                                 6.     With a QROPS, your fund won’t vanish when you die. Instead, you can pass the entire fund value to your loved ones completelty tax free. QROPS in India are not usually subject to inheritance tax,. This means you should be able to pass the entire pension fund on to your beneficiaries free from UK inheritance tax and also its free from any form of tax in India. Moving your pension plans to India can also support a claim that you are no longer considered subject to UK inheritance tax, which should mean your beneficiaries do not pay UK inheritance tax on anything they inherit from you. You can nominate beneficiaries/Nominees when you set up your QROPS in India, which will simplify and speed up the process of paying your loved ones.

1.     Developed Economies like UK will not produce better returns & most of the Private UK pension schemes invest in Emerging markets across globe. Identifying potential emerging markets & particularly potential stocks, mutual funds & other investment options is the most challenging one for Investment Managers & financial advisers since the investment market is geographically huge.   2.     There is almost no term ‘Guaranteed’ associated with the UK as well as other emerging OFF Shore investments. The entire investment portfolio is linked with the capital market. The investment portfolio fluctuates as the capital market fluctuates. The investment value can go up drastically as well as down anytime. The investment risk is borne by the policy holder. . Off course, there is UK FSCS- Financial Services Compensation Scheme. But, under this scheme the guaranteed part is not as high as IRDAI’s Solvency margin in India.   3.     There is no such concept of ‘Solvency Margin’ protection available with UK including any other OFF Shore schemes available across EU.  There is a UK FSCS scheme (Financial Services Compensation Scheme) In which UK Govt Guarantees only upto certain limit in case of Insolvency.               4.     Where as in UK, pension schemes are frequently subjected new Government regulations. New Government regulations will be applied retrospectively on old schemes like yours.  For example, UK Government suddenly stopped allowing all UK based public pensions transfer to QROPS w.e.f 5th April 2015, breaking earlier option of allowing transfer of pensions outside UK which was applied retrospectively to old scheme’s also.  And also W.e.f  9th March 2017, UK Govt came up with a new regulation that, UK expats are charged 25% tax if they  get their UK  private UK pensions transferred whilst they are UK residents. Earlier, you would be able to get your UK pensions transferred to QROPS overseas whilst you are in UK.   5.     UK scheme allow you to withdraw a lumpsum of upto 25% of the pension fund on retirement.  On attaining vesting age the Member will start getting pension income. Following changes made from 6 April 2011 by UK Govt, you can leave your asset invested as long as you want. However, the amount of income you receive for your pension fund is determined by set rates agreed by UK Govt. The pension rate is fixed based on  Member’s age & UK GAD table. Based on Member’s age & UK GAD table a percentage is fixed stating how much a member can start taking out every year from the accumulated pension Corpus. It’s called drawdown pensions. As member starts drawing pensions out of the corpus, the size of the corpus keeps reducing every year. So on member’s demise it is difficult to say, what corpus is left for family. If you purchase an annuity, it will almost certainly die, so you can’t use it to make provision for your family.   6.     On your demise, If any available lump sum death benefit is paid from your UK pension to your spouse (if your spouse is made as nominee) rather than income, a member payment charge of 55% will apply to the lumpsum paid.   UK annuities usually end when the recipient dies, and don’t leave any extra money for their family or beneficiaries since Member payment charge of 55% applies.. It is possible to arrange one that will continue paying after your death, but it would increase the cost and reduce your income.

To know in detail about the benefits or amount of pensionable service, the transfer value payment of UK pension pot will buy in the receiving pension scheme in India & also to know more about the options & comparisons of different QROPS schemes of different QROPS providers available in India , we wish to schedule a free, no obligation telephone or Email consultation to discuss ways we can help yourself and any of your colleagues who has accumulated pension fund in United Kingdom. You can reach us with the following contact details.

Mr Ravi Kumar. Financial Consultant (Code: 60272381, QROPS Consultancy),

A&B Law & Financial Associates, No-2720, 12th, Main, Jayanagar 4th Block, Bangalore-560 011

Cell: +91 9844519872

Email: ravi.sampige@gmail.com