The Concept of Income Drawdown

Income drawdown is also called pension drawdown. It’s a kind of pension withdrawal in which you take out a portion of your pension amount and the remaining amount keep invested so that it could increase with time. Pension drawdown is a very good alternative to purchasing an annuity. With it you can withdraw an amount of up to 25% of your total pension amount; there is no tax imposed on this withdrawal.

Pension drawdown offers you a high degree of flexibility in the use of your pension amount. The remaining amount in your pension account could be transferred on to your children or dependents in case of your death.

Income drawdown is best suited for individuals who have larger funds or those having multiple retirement income sources. This is because there is a certain amount of risk involved in it; that is why it is sometimes called unsecured pension. Although there is an element of risk, but the reward of this risk taking is also great. The risk is that the income generated from this source tends to vary within fixed minimum and maximum limits. The minimum return could be naught while maximum could be as high as over hundred percent (this much high return is not possible with other schemes in the class). The income drawdown rates may at times differ between men and women.

Income drawdown facility is available until the age of 75 years. After 75 years the drawdown scheme is generally terminated and the remaining money is transferred to Alternative Secured Pension (ASP). The option of traditional annuity plan to receive regular income is open even after the termination of the pension drawdown facility.

You may get more information about the concept of income drawdown and other associated information like income drawdown rates, income drawdown death benefits, income drawdown calculator, etc., at: http://www.gerardassociates.co.uk/.

Making Safe and Secure Retirement Planning through Experts’ Help

Retirement is one of the crucial stages of one’s life when one’s income gets limited as one is unable to get regular monthly income. This may be due to critical illness, age or accidents. Therefore it is commonly suggested by the financial experts and planners to save and invest money wisely and plan for one’s retirement. Proper retirement planning will prevent the post-retirement period to get troublesome or difficult due to financial constraints. Investment in pension plans is one of the best options as this offers tax deductions and good interest benefits.

If you are an employee in UK and desire to consolidate your retirement funds in tax saving structure then you must avail the services of financial experts who will guide you to do so through hmrc QROPS. Qrops schemes facilitate the employees or any person contributing to a pension fund registered in UK qrops pensions scheme to transfer the fund overseas to a different country through proper method. There may be many different methods to plan one’s post retirement period. One may either like to go for pension income drawdown from one’s pension fund after retirement or purchase an annuity plan which may provide them different sets of advantages than the former.

Through proper overseas pension transfer schemes the employees or investors in UK can transfer one’s pension funds to one’s desired account in one’s preferred country. The Qrops transfer schemes facilitate the employees of UK to move freely to other countries and not get restrained due to the funds or debts liabilities. Thus with the help of certified financial advisors one can make safe, secure and profitable retirement planning which will help one to realize one’s financial goals and enable to pass one’s post-retirement period without much difficulties.

For other associated information, you may visit: http://www.gerardassociates.co.uk/.

The Major Benefits of QROPS Pension Transfer

QROPS stands for Qualifying Recognized Overseas Pension Scheme. It is an overseas pension scheme that fulfills certain requirements so that it can be recognized by Her Majesty’s Revenue and Customs (HMRC). QROPS can receive transfer of U.K. pension benefits without the need of any unauthorized payment and scheme sanction charges.

QROPS is applicable for the U.K. residents who emigrate from U.K. to some other country, having built up a pension fund within a scheme permitted by HMRC. It is also applicable in the case of persons born abroad who have build up benefits in an HMRC authorized U.K. pension scheme and who decide to return to their home country, i.e., U.K.

QROPS offers many important advantages for the natives of U.K. who are pension holders; following are some of its major benefits:

Tax Savings – You can withdraw a lump sum amount of up to 30% from your QROPS; this amount will be tax free. This amount could be more than 30% at times, depending upon the rules and regulations of certain jurisdictions. If you are leaving your QROPS pension amount to your heir(s) after your death, this amount would be exempted from inheritance tax.

Investment Flexibility – With a QROPS account you get the option of choosing from a wide range of investment options. You can also get advice regarding investment from your QROPS advisor.

Currency Exchange Benefit – QROPS also provides you currency exchange benefit. The benefit is in the form of savings you made on currency exchange. Suppose you are withdrawing your pension amount in the country where your QROPS was set up, in this case, you don’t have to transfer money from U.K. to your overseas account. This means that the amount you receive will not get reduced owing to the variation in exchange rates. Also, you will not be required to pay any service charge for currency exchange.

Transfer of Funds – In case of the pensioner’s death, all unused pension funds in his/her account would be transferred to the beneficiaries. There is no need to take an annuity or pay U.K. tax charge upon death of the pensioner.

Consolidating Pension Funds – QROPS allows you to consolidate multiple small pension funds into one. This option provides economies of scale by reducing administration costs.

Gerard Associated Pvt. Ltd. is a Financial Services Authority authorized and regulated firm. The firm deals in financial matters related to Pensions, Investments, Asset Protection, and Tax Solutions, but their specialization is in QROPS. To see the HMRC QROPS list and to get other associated information, you may visit: http://www.gerardassociates.co.uk/.

Capped Pension Drawdown and QROPS pensioners - falling income

Many pension companies and QROPS providers are warning pensioners in capped pension drawdown of potential drops in retirement income. The reasons are:
•Recent investment losses for those holding asset backed investments such as equities.
•Falling gilt yields are affecting the amount that can be drawn from a fund,
•Capped pension drawdown rules post April 2011 reducing maximum drawdown from 120% of the Government Actuary's Department (GAD) rate to 100%.

For those with QROPS and still not non UK resident for more than five complete UK tax years will still see the influence of UK pension legislative changes.

April 2006 saw the yields used in calculating maximum income as high as 5.25% and only once fell below 3.5% to 3.25% in April 2009. Recent sentiment and global economics have led investors to flock to safe havens as the equity markets plummeted. Yields on 15-year-gilts fell to 3.25% in September.

An example for a 70-year-old male, a reduction of just 1% in gilt yield reduces income by 10%. Gilt yields are currently 2.75% so people with reviews in the autumn or those taking benefits for the first time will bring down the maximum retirement income that the member can take from their pension funds each year.

Those needing advice will be pensioners in pension drawdown or QROPS for some time and taking maximum income. Changes to GAD rates, gilt yields, together with poor investment returns mean that those who started taking income five years ago have already seen incomes reduced substantially.

Factors affecting currency exchange and need for sensible investment

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

Sterling climbed to a near three week high against a broadly weaker dollar which was still being hurt by Ben Bernanke’s comments in the recent press conferences. Sterling hit a three week high of $1.6195 early in the day as investors continued to sell the dollar after Moody’s warned it could cut U.S ratings as Federal Reserve Ben Bernanke hinted at further policy easing.

Gains for sterling are expected to be limited, with many not ruling out the prospect of further quantitative easing in the UK. “After getting hit hard earlier this week, sterling seems to be very resilient and coming back bid” said a London based stock trader. “I must say this has surprised me more than a little. But think it will trade in a range and would expect to see sellers in earnest on any flirt with the 1.62 area”.

Sterling’s increase against the dollar has primarily been off the back of a bearish outlook for the U.S dollar and has had little do with any signs of improvement in the UK economy. Data on Wednesday showed a sharp rise in the number of Britons claiming unemployment benefit, adding to concerns that stale growth prospects may prompt more Bank of England policymakers to call for additional policy easing. The Italian bond auctions did little to reassure the Euro, despite the bid/cover ratio going reasonably well. The EUR/USD had been supported in Asia gaining to $1.4280, the main cause for this rise was as a result of Bernanke’s comments. The Italian Senate passed through a tough austerity budget, including cuts of 48bn euros. Italy has one of the largest debt mountains in the Eurozone and wants to avoid any need for a bail out. Italy raised 2.97bn euros through the sale of 15 year government bonds on Thursday, but had to offer a 5.9% rate return an all-time high for such bonds.

Across the pond an unexpected rise in auto buying helped US retail sales edge up in June, but consumers remained cautious amid high unemployment, rising inflation and economic uncertainty. Retail sales were up 0.1% in June beating the expectations of a 0.1 percent fall and beating revised a revised 0.1% decline in May.

IN THE UK

• GBP/USD hits a near three week high to 1.6194, but fails to break the $1.62 level
• Sterling gains are still being limited as analyst still speculate whether UK will need further Quantitative Easing
• The pound remains around its 100 day moving average 1.1372 against the euro, despite the recent Eurozone woes many analysts believe GBPEUR will remain low based solely on interest rate differential between the two central banks.

ELSEWHERE

• EUR CPI year on year meets expectation posting a 2.7% year on year.
• More news this morning about US credit ratings, S&P have said they have put US on negative credit watch, suggesting a 50/50 chance of losing their AAA rating. This could happen as soon as in the next month if the debt talks don’t produce an adequate result soon.
• In contrast alternative agency Fitch leaves US as stable outlook.
• UK press have reported this morning that the Eurozone has only 48hrs to agree settlement on ongoing debt issue or could result in two tier euro, I would however take that comment with a pinch of salt given the background work involved in such a plan could take years.
• Italy prepare for a confidence vote on austerity measures ahead of stress tests this afternoon.
• US Retail sales month on month beats expectation posting a 0.1% against a forecast -0.1%
• Ben Bernanke testified to congress for the second day yesterday saying that QE3 is a card he will only play when he needs to, there are other tools available to spur growth and the Fed wants to see if the economy can rebound on its own.
• US core Retail Sales misses expectations posting a figure of flat (0%) against a forecast 0.1%

DATA TO LOOK OUT FOR

• Eurozone trade balance is released this morning, little change is expected and subsequently should not affect the markets too much.
• US CPI is released at 1.30pm and expected to remain at 3.6% for the year.
• US Empire State Manufacturing Index is published at 4.20, a substantial rise on last month’s -7.79
• Headline data today is the Eurozone bank stress test results, they are expected at around 5pm and have been organised to give reassurance to investors that EZ banks are performing adequately and some of the recent debt rumours of Spain and Italy in particular are unfounded. Expect volatility if the results show that too many banks have been hiding skeletons in their closets.

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

QROPS

Market Report- Few Glimpses of the Investment market volatility

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).

Pair High Low

GBP/EUR 1.1959 1.1611

GBP/USD 1.6257 1.5963

EUR/USD 1.3859 1.3428

GBP

The pound has performed relatively well over the last month staying above the key $1.60 mark against the dollar for most of that time and just falling short of the psychological barrier of €1.20 against the euro. Sterling started the month on the up as both PMI Manufacturing and Construction showed an improvement in January but the highs were hit mid-month after the UK Consumer Price Index showed inflation stood at 4%, double the Bank of England’s target. This brought on a frenzy of sterling buying as investors felt an interest rate hike was definitely on the cards in the near term future.

In typical style Mervyn King, Bank of England Governor, at a press conference played down the speculation of rate rises and in a particularly dovish speech suggested that although rates would be going up it would not be any time soon. However, only a few days later The Office National Statistics showed Retail Sales for January had gone through the roof. The sharp rise to 1.9% from -1.4% the previous month was blamed on December’s poor weather but prompted investors to buy sterling again and erased all of the losses after King’s comments, hitting 3 week highs against the dollar and euro.

Next up on the list was the minutes of the Bank of England’s monetary policy meeting held earlier in the month. Speculation was rife that Andrew Sentance and Martin Weale would be joined by at least one more member in voting for a rise in rates. Sentance himself had said that the minutes would be “more interesting than usual”.

The minutes eventually confirmed that a third member Spencer Dale had voted for a rise. I think perhaps the markets were expecting more of shock and despite moving further towards a rate rise the pound fell.

The second printing of the fourth quarter GDP figures was expected to give the pound a slight boost. December’s harsh weather was to blame for poor construction and manufacturing figures pulling the first estimate down to -0.5%. However despite having factored in the bad weather, GDP contracted further posting a figure of -0.6. This for the time being has put to bed the ideas of a rate rise in the next few months as the economy seems far too weak.

The pound’s near term strength will be largely governed by how the Bank of England manages to balance rising inflation with a weak economy.

EUR

Against the dollar the euro has had a strong finish; it seemed at mid-way through February the euro would remain range bound around the $1.35 mark as risk on and off sentiment moved the rate slightly in each direction.

Towards the end of the month the euro broke through the $1.38 mark around the same time in managed to push back below $1.17 against the pound as hawkish comments from the ECB suggested it was not only the British who were talking about interest rate hikes.

Periphery debt problems still plague the euro zone and will undoubtedly trouble the policy makers over the coming months. Like the UK, inflation is running higher than is ideal and rate hikes have been spoken about, but aside from France and Germany many of the weaker nations in the euro zone will really struggle to keep their heads above water with tighter monetary policy.

It appears that after the weekend‘s voting Ireland will be governed by a coalition government who will be keen to renegotiate the bailout package given to them last year as their finances collapsed.

After a successful bond auction a few weeks back, Portugal was thought to be out of the woods but many believe a bailout is imminent. Ireland’s renegotiation could make harmonising a bailout if called upon difficult to agree on.

The markets generally like the euro and we will probably see gains in the euro especially against the US dollar if the talk of nations seeking bailout remains quiet.

USD

Of the three nations I have spoken about the US seems to be the one lacking any real direction at the moment. Data releases seem to be more difficult to predict than in other countries and a result there have been surprises causing the US dollar to rise and fall over the last 4 weeks.

Risk aversion has helped the dollar to some extent. Investors have become increasingly concerned about the Middle East and headed towards the safe haven currencies such as the dollar bit it is the Swiss franc that has been the biggest winner hitting an all-time against the dollar last week.

An interview yesterday suggested that the US would be the last increase their interest rates and when they do it could be a long as 12-13 months away. The policy makers that make up the Fed are in two camps, those that agree with the second phase of quantitative easing and those that want the programme ended early. Whilst this dispute continues, rates will remain on hold and the euro and pound will both make gains.

Consumer confidence is high in the US, but unemployment still is causing concerns. If in the next month retail sales meet expectations and the labour market improve the dollar might not see further losses. However many feel that it is only a matter of time before cable breaks the $1.63 mark.

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

QROPS