STM Fidecs said it understands its new product, which the company is calling its QROPS ‘lite’ to distinguish it from its existing QROPS range, is one of the first on the market to enable clients to transfer to a QROPS without having to pay an entry cost.
Although there is no entry charge, there will be a £300 per year administration fee.
(At least one other company, the Isle of Man-based MAC Group, also claims to have an entry-cost-free QROPS product that it says carries no set-up or annual charges, providing the client invests in a discretionary management service that is offered as part of the plan.)
“When coupled with STM’s commitment to no exit penalties, as is the case with most other STM QROPS schemes, this provides a truly special offering in what is fast becoming a crowded market place,” STM Fidecs said.
Because the STM Lite QROP scheme limits clients to Prudential products, it is best suited to clients “with smaller funds, or those transferring from an insurance company scheme in the UK”, STM Fidecs added.
The STM QROPS Lite product, utilising Prudential funds exclusively will sit alongside STM Fidecs’s existing STM QROPS product, which gives scheme members a choice of open architecture, and its “multi-jurisdictional” STM QROPS Wrap scheme. Unveiled earlier this year, this QROPS Wrap enables expatriate UK pensioners to move their pensions between countries as needed, without incurring additional fees.
Competition heats up
News of the new STM QROPS Lite product comes as competition between providers of Qualifying Recognised Overseas Pension Schemes has heated up in recent months, with such companies Skandia and Close cutting their prices to boost their market share.
The cost element occurs at the point when a pension scheme member moves his or her QROPS out of the UK and into an HM Revenue & Customs-recognised overseas scheme. Another fee is collected annually to cover administration costs.
As reported here in March, Guernsey QROPS provider Concept Group cut the fees on both its Aurora Libertai and Aurora Quantum schemes, to a £750 establishment charge and an annual administration fee of £995, in the case of the Libertai scheme, and £845/ £645 in the case of the Skandia scheme.
Both had been priced at £1,500 for both establishment and administration, which is currently around the industry norm.
“This will be a pivotal point for the QROPS industry,” said David Erhardt, pensions director of STM Fidecs’s AIM-listed parent STM Group.
“It happened first with Self Invested Personal Pensions, and now with QROPS,” Erhardt added, referring to the increasing affordability of the schemes.
“QROPS used to cost tens of thousands of pounds, and were only for wealthy people. With our product, QROPS will now be available to everyone. And with our range of products and our QROPS Wrap scheme we are able to cater for every client.”
Prudential International managing director Michael Leahy said that STM Fidecs’s clients would benefit from the deal between the two companies.
“Prudential’s track record in the multi-asset fund area is well recognised. Our leading with-profits offering will bring a unique dimension to the QROPS marketplace and is ideally suited to the STM client base.”
In April,STM Fidecs, which is part of the AIM-listed, Gibraltar-based STM Group plc, unveiled a specially-designed QROPS scheme that it managed to get approved by both Gibraltar’s Income Tax Commissioner and HM Revenue & Customs, paving the way for the resumption of UK pension transfers to the territory.
Until now, all UK pension transfers to Gibraltar have been suspended since September, 2009, following concerns that clients could face possible tax penalties as a result of HMRC’s alleged concern that Gibraltar’s 0% tax on the pension income of residents over age 60 was inconsistent with the UK’s QROPS regulations.
