Offshore insurance contracts are not low cost

Usually offered as ‘free advice’ the commissions paid are eye watering and not disclosed by offshore advisers. New EU rules for 2019 require such disclosure but we are finding that advisers are still avoiding talking about commissions and fees.


QROPS have decimated many a retirement fund

Always use a transparent fee based adviser firm, take advice if you have been sold a QROPS in a bond with our forensic report.

SIPP & QROPS Fees / Commissions Explained

We list below the key QROPS fees and SIPP fees you can expect to pay, and how you can avoid being charged too much.
Background information

Many people fail to ask questions about fees, charges and commissions, nor compare QROPS fees against SIPP fees; even when they do they fail to conduct any due diligence on what they are being told.

Reports we have seen simply detail “trustee charges” and a 1% custodian service charge. Sometimes, to entice the consumer then an element of the intial commission is mentioned as rebated but this has no impact on the charges at all; the charges apply as they are linked to commission paid out, not rebates to clients.

It is important to understand that what you get back from your investments is not purely down to performance, but also the QROPS fees, charges and commissions which will start to eat into your return on investment. This could significantly reduce or eliminate any earnings on your pension funds.

Our aim is to be transparent, fair and offer worry-free advice in a consistent manner. Criticise us if you want, but we want to put the consumer first.

Transparent SIPP and QROPS fees

Ultimately, when it comes to QROPS fees, transparency is key. The more details held within the report the better. When reviewing your report, look for the following information. If it is not in the report, then do not assume you are not being charged the fees, but simply you are not being told about them!

The information below is designed to help you ask the right questions of any advice or adviser.

QROPS fees
Our SIPP fees
Trustee QROPS Fees – Between £400 – £2,500 up front and then per annumSIPP Fees – Between £0(zero) – £650 up front and then per annum
Basic Platform Fee or Bond charge including annual fee, admin fee, dealing costs – Typically 1% of your invested fund per annumBasic Platform Fee including annual fee, admin fee, dealing costs – Typically 0.3% to 0.4% of your invested fund per annum
Bond Commission charges – Typically 1 – 1.5% of your invested fund per annum over a typical period of 5-8 yearsSIPP should never use a bond – No charge More ›
Fund Fees – Initial cost which should also take into account exit fees – up to 3% initial bid/offer spreadFund Fees – On UK or US held platform there is no initial cost or exit fees More ›
Ongoing Fund Fees – Underlying Esoteric or Mutual Funds, etc – up to 1.8% per annumOngoing Fund Fees – Underlying ETF or Mutual Funds, etc – between 0.25 – 0.8% per annum More ›
Ongoing adviser charges – Normally 1% per annum but you should always ask what pro-active service will be providedOngoing adviser charges – Normally 0.75% per annum but you should always ask what pro-active service will be provided More ›
TOTAL QROPS Fees – For £150,000 pension fund from an offshore adviser taking a commission – No Fee taken, but actual costs are £5,500 up front and then £7,950 per annumTOTAL SIPP Fees – For £150,000 pension fund through a reputable adviser – There would be a fee, but then total costs would be £200 up front and then £3,000 per annum

If a transfer is managed correctly, the QROPS fees or SIPP fees you experience should not be dissimilar to your current pension. In the case of QROPS fees you should anticipate them to be probably higher through a commission based offshore adviser. You should not be scared to ask and investigate.

Often you will find much of the fees listed in the QROPS column above are hidden “implicit” commissions that you are not aware even exist. We discount all these QROPS fees of course in a transparent and agreed manner.

Comparative Example

We go into detail with real life case studies at Tailormade Pensions which allows you to compare and contrast how we work and how an offshore commission salesman operates. Tailormade Pensions ›

Below we give a typical example in writing. We assume you are living outside the UK and USA, and you wish to consider a pension transfer but you are unsure. The value of your pension fund is £350,000.

We will charge you £1,000 if you want our OPTIONAL STRATEGIC PENSION PLAN. We will do the TVAS report and CASH FLOW forecasting within this charge.

If we think it is best you transfer (and only if we think this and you agree) then we will provide TRANSFER IMPLEMENTATION at a charge of 2% (discounted from 3% because you paid for the Plan). This is £7,000.

Because you paid for the TRANSFER IMPLEMENTATION then you will not have to pay for the STRATEGIC INVESTMENT PLAN (none USA residents). £0

The total cost for receiving a plan with good advice from a UK regulated broker will be £8,000.

The offshore commission salesman will not charge a fee usually, but he will earn around £21,000 – £31,500 commission for convincing you to transfer, irrespective of whether it is best advice. We therefore will save you between £13,000 and £23,500 in commission charge alone, and around another £20,000 in other hidden fund charges over 5 years.

We are regulated to give advice in the UK by the Financial Conduct Authority (FCA), and to give advice in the USA by the Securities and Exchange Commission (SEC) but this example is for outside both of those territories. Contact us if you live in the UK or the USA for advice by one of our regulated and authorised advisers in that country.

Typical concerns about QROPS fees

Some of the more common issues and concerns we assist clients with include:

  • One or more of my investments have become worthless
  • The adviser, who I trusted, has disappeared
  • My investments are going up theoretically but the overall investment isn’t, why?
  • I do not understand why the charges are much higher than expected
  • The pension doesn’t appear to be performing as expected
  • I don’t think I’m being told the whole story about QROPS fees
  • My pension income is being reduced, or I have been told my fund will run out

If any of these apply to you, why not review your QROPS to see if you have been incorrectly advised, or if your QROPS fees are too high. It may be possible to:

  • Reduce ongoing charges
  • Remove the Life bond
  • Review the portfolio in line with your risk
  • Review if a QROPS is still appropriate for you by comparing it to a SIPP
Avoid making the wrong decision

The right advice comes with total transparency and recommendations from regulated specialists.

Contact us now ›

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How we can help you

Would you prefer UK qualified experts to provide competent advice, rather than an offshore salesman seeking commission?

Are you no longer resident in the UK or considering moving abroad?

Do you have more than £50k in your UK pensions?

Would you like to pay less tax and have greater investment freedom?

If you answered YES to these questions, Pensions for Expats could greatly improve your financial and tax situation.
Contact us now ›

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