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QROPS market 'an opportunity'

The first mainstream provider is dipping its toes back into the QROPS market this month, with a product that will likely be cheaper than most of the other options currently available to British migrants.

Monday, July 11th 2016, 6:00AM 2 Comments

by Susan Edmunds

Therese Singleton, AMP’s general manager of insurance and investments, said there was strong demand in the market for a top-tier, mainstream provider of a QROPS product, and that had prompted it to move.

It, and all the major banks, lost its KiwiSaver scheme's QROPS status last year when Britain changed its rules and all KiwiSaver schemes no longer qualified.

A QROPS scheme is one that allows a pension to be transferred from Britain without incurring a tax penalty.

Since the KiwiSaver schemes were cut, the QROPS market has been populated by niche, smaller providers.

Singleton said it was evident that there was a big opportunity for AMP.

Singleton said she thought the QROPS products available were expensive and AMP wanted to be able to price its offering sharply, “for a safe and more solid and robust platform.”

Existing QROPS charge up to 2% per year, plus other fixed annual and monthly fees.

New Financial Markets Conduct Act rules that are due to come into force at the end of this year will make operating a QROPS scheme difficult in their current form, because withdrawals will be heavily restricted until the person who owns the pension turns 65.

But Singleton said the Ministry of Business, Innovation and Employment had provided an undertaking that those problems would be addressed.

Everyone who offers a QROPS would have to be licensed under the FMCA by the end of the year – something Singleton said could be harder for the smaller providers.

AMP is already equipped to handle the licensing process.

“For some that exist at the moment, it will be challenge to get a license,” she said.

“QROPS is one of the [products] where there is still a level of misunderstanding in the market around what’s going to be required to keep things open.”

People who transferred to a KiwiSaver scheme while it was a QROPS still have their money stuck there.
 

Tags: KiwiSaver QROPS

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Comments from our readers

On 12 July 2016 at 1:51 pm Richard Harden said:
I've just seen the AMP communication and I read "AMP has put together a fee structure that is very competitive. There are no contribution or withdrawal fees; just a simple trustee and administration fee of 0.80%, an investment management fee (differing depending on which NZRT fund(s) the money is invested in), plus any adviser fees as agreed." I'm not sure how 0.8% plus adviser fee say 0.5-1.0% plus MER fund costs is lower cost option. Lets hope advisers only take a small trail as I'm not sure how much value they will provide for a balanced fund. Presumably also just NZD denominated and I'm not sure how many will be keen to switch GBP at $0.555 but who knows could be going to 0.60. More importantly lets hope the advisers who use the product can give the appropriate advice re the transfer.
On 13 July 2016 at 8:33 am rosconz said:
Well said!

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