Sunday, 25 November 2012
Pension Fund Transfer Process From U.K to LIC’s JEEVAN AKSHAY- QROPS
Qualifying Recognised Overseas pension Scheme (QROPS).: LIC’s JEEVAN AKSHAY- QROPS Pension scheme: Lic’s Jeevan Akshay is the only “Qualifying recognized overseas pension Scheme”(QROPS) available in India as of now for transferring pensi...
Saturday, 24 November 2012
Pension Fund Transfer Process from UK to a QROPS in India- Step by Step Guide
The following are the common Steps to be followed in order to initiate transfer of UK-based pension scheme to a QROPS in India.
Step 1: Obtain a transfer value for your UK Pension (check with your Annual Pension statement)
Step 2: Identify the targeted Indian Pension Scheme,that it is registered with HMRC UK.
Step 3: Contact your UK Pension house to get the pension transfer documents i.e outside UK
Step 4: Complete the transfer paperwork.
Step 5: Contact the respective Life Insurance Company in India and send the pension transfer documents to them.
Step 6: Life Insurance Company shall send you the completed documents back to you in UK.
Step 7: Once you receive the documents, you would need to submit it with the UK Pension house, who shall do a check to ensure that all is rightly filled.
Step 8: Once all in place, your UK Pension shall be closed and funds shall be sent via Wire Transfer to your Life Insurance Company.
FAQ on QROPS Transfer
1) Who can do a QROPS transfer?
If you have left the UK or intend to leave you can transfer your pension using a QROPS. All pensions are transferrable, including public sector pensions (i.e. doctors, teachers and nurses). Both British and non-British citizens can transfer their pensions.
2) Who can move their pension into a QROPS?
Any NRI/PIO who has a UK registered pension scheme or any Indian, who has some accumulations into UK pension scheme.
3) How long does it take to transfer my UK pension fund to a QROPS?
The process will normally take between six weeks to two months. However, where the transfer is from an occupational pension scheme the process will take longer.
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4) What types of pension can be transferred to a QROPS?
Any UK registered pension schemes are acceptable, as long as the terms of the said schemes permit transfer and the receiving QROPS provider is willing to accept it.
5) Can I transfer more than one pension into a QROPS?
Yes, you are able to consolidate/transfer any number of pension holdings into one QROPS. This can reduce cost, administrative burden and create scope for improved investment management.
6) What is the minimum amount that can be transferred into a QROPS?
It appears that there is is no minimum amount as per pension regulations in the UK. However you are advised to check with your pension scheme administrator in the UK on the same and the tax implications if any.
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7) What about taxation of QROPS?
The one third amount from the corpus can be withdrawn as a tax free income and rest of the amount has to be used to purchase an annuity. Apart from choosing an annuity product with us, you also have the option to choose annuity product from other life insurers in India at the time of vesting age. Annuity will be added into your income and will be taxed accordingly. Please note that tax benefits are subject to change from time to time. You are advised to consult a tax practitioner to understand the tax implications at the time of transfer to the QROPS.
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8) What happens to your QROPS in event of death?
Because you are not required to buy an annuity, it means that should you die with remaining funds, all these remaining funds can be passed on to your beneficiaries, and not be subject to usual UK taxes.
9) Why to transfer your QROPS India (Or QROPS Benefits)?
For those intending to retire out of the UK, a QROPS can provide significant benefits.
A typical UK pension scheme (both private and public) will see the pension reduced by 50% on death of the pension holder. QROPS places the pension in trust – beneficiaries will have access to the whole pension pot, i.e. 100%.
A UK pension is liable to income tax, regardless of your residence. This could be as high as 50% of your annual pension entitlement. A QROPS transfer can reduce your income tax liability to ZERO. The pension is 100% YOURS.
In some circumstances your UK pension will be liable for a 35% inheritance tax. After age 75 this tax becomes 82%. A QROPS transfer will make your pension inheritance tax free. Your beneficiaries will enjoy 100% of the pension proceeds.
Other benefits include:
a) The ability to take a 25% tax free lump sum at retirement.
b) The removal of annuity purchase.
c) Investment and currency choice freedom.
10) What is the 5 year rule?
For the first 5 full tax years that the member is non UK resident the Trustees must report any payments made to the member of a QROPs, for this period the scheme must act in the same way as a UK pension scheme.
11) What happens if I return to the UK?
The QROPS scheme can stay as it is however the reporting requirement will start again and the scheme will become subject to UK taxes once more. It may be possible to transfer to a QNUPs to retain some of the benefits of a non UK pension scheme.
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12) If I have bought an insurance company annuity, can I still transfer to a QROPS?
No, you must transfer to a QROPS before you buy an annuity. If you are taking a pension “drawdown” from the fund, you can still transfer it.
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13) Can I transfer my state pension into a QROPS?
No, QROPS is for private pension schemes only.
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14) What lump sum can I take?
At least 25%, some will allow 30%, a few will allow more, in most jurisdictions at least 70% must be used to pay a pension.
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15) Can I invest in Residential Property?
No, UK tax relieved funds can never be used to invest in Residential Property.
FOR START UP OF THE TRANSFER PROCESS
DO CALL/MAIL ME:
Anusuya .R
Financial Advisor
SBI Life Insurance Company Ltd, # 23, Yamuna Complex,
1st Floor, 7th Cross, Malleswaram,
Bangalore: 560003.
Saturday, 17 November 2012
Benefits of Transferring UK Pension fund to a QROPS
Qualifying Recognised Overseas Pension Scheme (QROPS)
A QROPS is a medium of moving one’s UK pension corpus to a scheme administered outside the UK, that is more flexible and easily accessible for people who have retired abroad or are planning to do so.
All most all QROPS work in the same way as UK pensions –that is pension administrator (trustee) will manage the pension scheme on your behalf. For a QROPS the trustee must be based outside the UK.
A QROPS could be ideal if one:
Ø Is definitely intending to retire outside the UK and not return.
Ø Has a substantial amount invested in an existing UK pension scheme or has a smaller amount in his/her UK pension scheme but he/she is living and working abroad already and want to continue saving for their retirement.
Ø Has at least five years left before retirement
It could be better off with the QROPS for the following reasons:
Ø It adds extra flexibility and control on one’s pension corpus
Ø Increased flexibility over who can benefit from one’s pension fund following death of the pension account holder
Ø Reduce one’s exposure to sterling denominated funds and other pension restrictions
Benefits of a QROPS
In comparison to general UK pension rules, a QROPS could offer the following advantages, subject to local pension rules.
Ø It could avoid you needing to complete HMRC paperwork to get your pension paid without deduction of UK income tax.
Ø If you die whilst taking payments, the remaining funds are not lost. Your family will be able to inherit your pension benefits free of UK inheritance tax.
Ø A wider choice of investment opportunities- particularly useful if you want to invest in assets which reflect the currency and inflation factors where you plan to retire, rather than UK-baised choices.
Ø Only 70% of your transferred fund must be used to provide you with an income for life.
Ø No restrictions on fund size.
Choosing the right QROPS
You are free to choose any scheme that’s appropriate to your circumstances rather than restricting yourself to local schemes. For instance, if you are currently living in Singapore but planning to retire to Thailand, you could still choose a QROPS administered in the Isle of Man (the jurisdiction). However, you should choose your jurisdiction carefully, to ensure that their local rules fit in with your needs.
You will only avoid a UK tax bill if the overseas scheme is a QROPS. That means it meets HMRC rules in the UK. The rules are as follows.
Ø At least 70% of the funds transferred to your QROPS must be used to provide you with an income for life.
Ø The scheme administrator will inform HMRC if you take any money out of the scheme while you are still a UK tax resident, or within the first five tax years after you have moved permanently abroad.
Ø The scheme must be recognized in the jurisdiction as a pension scheme and be open to local resident there.
If you transfer your pension pot to an overseas pension scheme that is not a QROPS, certainly HMRC would consider it an unauthorized transfer, and you would have to pay HMRC up to 70% of the value of your pension. The QROPS will combine the local rules with the UK’s QROPS requirements. Typically, if these rules differ, the stricter ones will apply. One can also consolidate several UK pension schemes into a single QROPS. So it will make record keeping easier and also saves from paying multiple administration costs.
Comparison of benefits between QROPS and a UK based Pension scheme (QROPS vs UK based Pension scheme)
1) UK-based scheme: Designed for UK residents, so if you are based overseas it can be hard to access UK pension’s expertise.
QROPS: Whereas QROPS designed for a more transient population, and international advisers are more familiar with them.
2) UK-based scheme: Most investments are held in sterling, so payments are affected by exchange rate fluctuations and currency conversion charges.
QROPS: Whereas in QROPS, you can invest in most currencies, and choose to receive payments in your local currency.
3) UK-based scheme: You can choose to retire at any age from 55 onwards.
QROPS: Most schemes allow the same flexibility as the UK, but local rules may differ.
4) UK-based scheme: Most UK schemes allow you to withdraw a lump sum of up to 25% of the pension fund on retirement.
QROPS: You can withdraw the entire pension fund except for 70% of the value transferred from your UK pension, depending on local rules.
5) UK-based scheme: Following changes made from 6 April 2011 by the UK Government, you can now 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 the UK Government.
QROPS: You can leave your assets invested as long as you want, and have greater flexibility when choosing the amount of income you take.
6) UK-based scheme: Your pension income will be paid via the pay as you earn (PAYE) system. To have payments made to you without deduction of UK income tax, you must complete an HMRC form to declare non-UK residence.
QROPS: You can choose a QROPS jurisdiction where income is paid without deduction of local taxes, so you are only liable for any taxes applying where you are resident.
7) UK-based scheme: Usually offers UK-based investments so may be less suitable for your new country of residence.
QROPS: Can offer a wide choice of investments, including shares, mutual funds and packaged investment products.
8) UK-based scheme: UK pension schemes often have complex charging structures, so it’s hard to tell whether you are getting value for money.
QROPS: More modern and streamlined, QROPS are also a good way to consolidate your pension arrangements.
9) UK-based scheme: If you purchase an annuity, it will almost certainly end when you die, so you can’t use it to make provision for your family.
QROPS: You can leave the assets & investments in your pension fund to your family by making an expression of wishes to the QROPS provider.
10) UK-based scheme: If a lump sum death benefit is paid from your pension to your spouse rather than income, a member payment charge of 55% will apply to the lump sum.
QROPS: Provided you are not UK resident when you die, then no member payment charge will be payable on any lump sum paid.
QROPS offer a wide range of benefits if you are living, or planning to spend your retirement, abroad. However, QROPS are not for everyone. It’s better to check properly, whether a QROPS could be right for you, before going for the same.
It is good to consider a QROPS if:
a) You are no longer resident in the UK, but have an existing UK pension.
b) You are certain that you will continue to live outside the UK for at least five tax years.
c) And you have no plans to return except for short visits.
On the other hand it is good to keep the existing UK pension plans if:
a) You expect to return to the UK for long periods, or permanently, in the future.
b) Or you plan to stay in the UK
A QROPS may also be suitable if you are still living in the UK, but plan to retire permanently abroad and are sure that you will then be able to retire abroad. Before transferring pension to a QROPS, it is good to be aware of all the benefits offered by your current arrangements. It is advisable to consider a QROPS if:
a) You have a substantial personal and/or occupational pension plan or you have a smaller amount in your UK pension scheme but you are living and working abroad already and want to continue saving for your retirement.
b) You have not yet purchased annuity.
c) Your existing pension arrangement is not particularly attractive for one of these reasons:
Ø You are in a “final salary” scheme, but mergers, acquisitions or poor investment returns mean there may not be enough funds to meet all the liabilities and you are not entitled to compensation from the UK pension protection fund(if you are entitled to compensation, moving to a QROPS would deprive you of that right)
Ø You have a “defined contribution” or “money purchase” scheme with no guarantee, or you are concerned about high charges.
It could be better to keep your existing UK pension plan if:
a) Your only pension is the basic state pension.
b) Or your pension plan is relatively small.
c) Or you have already bought a pension annuity.
d) Or your pension is in a valuable ‘final salary’ or ‘defined benefit” scheme, with enough funds to meet all its liabilities.
e) Or it includes benefits such as a guarantee, spouse’s pension, life cover or higher tax-free lump sums.
f) Or your employer bears the costs of the scheme.
g) Or you have a ‘defined contribution’ or ‘money purchase’ scheme with a guarantee, or with very competitive charges.
QROPS can benefit your family
UK annuities usually end when when the recipient dies, and don’t leave any extra money for their family or beneficiaries. It is possible to arrange one that will continue paying after your death, but it would increase the cost and reduce your income.
With a QROPS, on the other hand, since you don’t need to buy an annuity, your fund won’t vanish when you die. Instead, you can pass it on to your loved ones. QROPS are not usually subject to inheritance tax, although some jurisdictions may apply a form of tax. This means you should be able to pass the entire pension fund on to your beneficiaries free from UK inheritance tax. Moving your pension plans abroad 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 when you set up your QROPS, which will simplify and speed up the process of paying your loved ones.
Disclaimer: The information given above are the result of personal readings of related genuine documents and personal understanding of the subject matter. This is written to make the beneficiaries understand, how importance to transfer pension fund to a QROPS . However, this blog is not responsible for any error or inaccuracy in the same.
For More details & assistance in transferring Pension fund from UK to India,
Anusuya .R
Financial Advisor
SBI Life Insurance Company Ltd, # 23, Yamuna Complex,
1st Floor, 7th Cross, Malleswaram,
Bangalore: 560003.
Thursday, 1 November 2012
Health Insurance
Click on the link below, to know complete details of Pension
fund transfer from UK to LIC’s Jeevan Akshay V1.
An insurance survey states that only 3% of the total Indian population had health insurance coverage. Only 2 percent of total health expenditure is funded by public/social health insurance and 18 per cent is funded by government budget. India spends about 4.9% of GDP on health. The per capita total expenditure on health in India is US$ 23, of which per capita Government expenditure on health is only US$ 4. So private expenditure on health is more that is from personal savings of the individual.
As the cost of medical treatment is rising like anything and at the same time due to increase in middle class families, it is estimated that the demand for health insurance policies are rising at the rate of 25 per cent in India. Before going to the health insurance plan, one should determine the health care needs that may vary on several factors like, age, family needs, financial conditions etc. it is important to consider the following points before going to the health insurance policy.
Individual health insurance v/s Family floater
Health insurance is a hospitalization cover and reimburse the medical expenses of the covered disease or surgery when the insured is admitted in the hospital .There are various types of medical insurance available in the market like, individual medical insurance, group medical insurance and overseas medical insurance. Family floater and individual health insurance are the two options available for customers while seeking personal health coverage. Family floater is more beneficial as the same is less expensive and family members are less likely to fall sick together. At the same time, there is a higher coverage for family member who may need it in any eventuality.
Critical illness insurance
Critical illness plan insures against the risk of serious illness. If the insured is diagnosed with any critical illness, he/she receives a lump sum assured amount within a specified period of time of a illness being diagnosed. The illness may be like, cancer, coronary artery bypass surgery, first time heart attack stroke, paralysis e.t.c. The above mentioned illness is not exhaustive list and the same is vary from insurance plan to plan. It is always suggested to include critical illness cover for better health care planning.
Importance of health insurance
The following benefits makes one understand how importance to go for health insurance plan at the present scenario:
a) Health insurance protect from the risk of uncertain bills for health care which is usually huge, that arises all of a sudden.
b) Apart from hospitalization and medical bills, it also covers disability and custodial bills.
c) Health insurance provides financial security and peace of mind at all the times.
d) Proper health coverage can help the insured to go for quality care as he/she is a member of coordinated health plan.
Features of health insurance
It is important to know some of the main features of health insurance plan.
Ø Hospitalization cash benefit entitles the client to cash benefits for every completed day of hospitalization.
Ø There are network hospitals tied up with insurance companies. Those network hospitals accept medical cards issued by insurance companies to the insured and provide cashless facility at the time of emergency.
Ø Some insurance policies also cover ambulance charges.
Ø Most of the insurance policies cover upto 60 to 90 days pre and post hospitalization expenses.
Ø There is also a facility of free health check-up under some health insurance policies for the well being of the individual if there is no claim made for certain number of years.
Ø Most of the health insurance policies provide no-claim bonus if there was no claim in the previous year.
Tax benefits
There are various tax benefits available for the one who goes for health insurance policies.
a) Deduction under section 80D for health insurance premiums: All Individuals and HUFs are eligible for deduction under section 80D up to Rs 15000 for self, spouse and the dependent children for the premiums paid in respect of health insurance policies . For the senior citizen, an additional exemption of Rs 5000 is available.
b) Deduction under section 80DD for medical treatment of handicapped: This deduction is applicable for expenditure incurred in respect of assessee himself or his dependent spouse,children,parents,brothers/sisters. This deduction available upto Rs 50,000 or actual expenditure incurred, whichever is less. Deduction of RS 100,000 is allowed in case where the dependent has the disability of more than 80 per cent.
c) Deduction under section 80DDB for treatment of specified diseases: The insured can avail tax benefit if they have incurred costs for treatment of special diseases. It is applicable for treatment of self, spouse, children, siblings and parents wholly dependent. For individual assessee less than 65 years of age, a deduction is actual amount paid or Rs 40000, whichever is lesser. In case the amount is incurred is in respect of a person who is a senior citizen then actual amount or Rs 60000, whichever is lesser.
Some of the precautions to be taken before going to the health insurance policies:
Ø Check whether cashless facility is available in health insurance policy. Cashless facility means, at the time of emergency one doesn’t have to rush for arranging cash to deposit at the hospital. This facility is available only in specific list of hospitals.
Ø Most of the health insurance policies do not cover many diseases for specific period like, for the first two years.
Ø Most of the insurance policies have some limit up to which they will cover specific expenses.
Ø Many insurance companies do not renew policy beyond a particular age. So it is good to go for a policy that provides for renewal even at older age as at that time one will need it the most.
Disclaimer: The information given above are the result of personal readings of related geniuine magazines and personal understanding of the subject matter. This is written to make the readers understand, how importance to plan for health care at present scenario in india. However, this blog is not responsible for any error or inaccuracy in the same.
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