Many people on the cusp of retirement are going to be permanently locked into lower pensions as a direct result of the latest Quantitative Easing (QE) strategy, warns Nigel Green, CEO of the deVere Group, the world’s largest financial advisory firm.
“This is disastrous for pension funds as it can fuel inflation, meaning more bad news for savers who’ve already seen their funds diminish due to high living costs and low interest rates,” says Mr. Green.
“Someone who is about to retire could find that their future income will be adversely affected by QE as the value of annuities purchased at retirement is based on return from gilts. The demand for these gilts may soar as the Bank of England buys them in the easing process, which would push the price up but the yield will reduce.”
To combat the negative affects of QE, the deVere Group, which has 60,000 clients worldwide, is recommending that those who live permanently outside the UK should “now more than ever” consider transferring their private pension scheme into a HMRC-approved Qualifying Recognised Overseas Pension Scheme (QROPS).
“Expatriates are fortunate as they are able to benefit from QROPS, enabling them to eradicate the potentially devastating side affects of this latest plan.
“QROPS do not force you into buying an annuity. In addition, such a scheme is also significantly more efficient than a SIPP; on your death your funds will not be subject to UK taxes of up to 55 per cent; you can draw down 25 per cent as a tax-free cash sum; and there’s far greater investment and currency flexibility,” confirms Mr. Green.