Guru Speak

Unfortunately this debate of whether or not to consider a QROPS might become academic in a very short time, if the United Kingdom's Inland Revenue disal¬lows these schemes in the very near future.

You might think, "what is this all about and why should I care?" Well, let me cover the basic points for the benefit of those who qualify.

To qualify for a QROPS, you must be able to fulfill three requirements: you must have a frozen pension from having worked in the UK; you must have decided never to want to take your retirement in the UK; and the frozen pension must be worth more than £100,000 (Bt6.34 mil¬lion). If you qualify on all three points, please read on carefully, because time is running out!

There are rumours that the British government wants to reverse the flood and billion of pounds worth of frozen pensions being sent overseas every month.

Now if you look at the current fact that pension funds in the UK are four times underfunded (this means they only have a quarter of the capital which should pay you in retirement), I am sure you can see the dark clouds on the horizon. In the industry, we believe that pos¬sibly up to 40 per cent of pen¬sioners are not going to get any¬where near what they have been promised by pension schemes - usually run by their former employers. This is ominous! The point is whether your pension fund is one of the ones due to fail, leaving you with no income in your retirement?

Furthermore, with the recent bear market, recession and sti¬fling inflation all coming together - and with oil prices approaching US$150 (Bt5,129) per barrel - you have to look out for yourself, because no one else will, especially not the govern¬ment!

Let me give you a couple of insights into why a QROPS could be what you have been waiting for, so that you can bulletproof your financial future. First of all, UK law forces you to buy an annuity when you retire. Depending on the scheme, these usually average a 2-percent rate of return and because it is a closed scheme, you very sel¬dom have any say in how your money is invested. Often it is actually heavily subsidising the employer company's stock.

So if the stock goes down, which most have recently, you are even worse off than the government is telling you!

Most existing frozen pensions are available from between your 55th and 65th birthday. Also you may take a taxfree lump sum of 10 to 25 per cent depending on the bylaws of your scheme. Now the most important thing here is that any monies in such schemes are NEVER your asset. They only promise to pay you a monthly income upon your retirement until you die (annuity). Then the plan dies with you (some plans allow for 50percent benefits for a spouse, but this also dies when the spouse passes away).

So there is never talk that the hardearned money YOU have saved up is your asset at any time!

However, if you qualify for a QROPS as described above, this can then be completely reversed and you can, after five years and one day, take possession of your pension as your personal asset! I don't know about you, but I rather trust my money being under my control in my bank, not with the incompetent pension managers who can only grow your funds at a meagre 2 per cent per annum on average.