London & Colonial QROP Annuity

The London & Colonial QROP Annuity is a form of investment-linked annuity aimed at UK expatriates who have already transferred to a QROPS and offers the potential to maximise the tax-efficiency in the country of residence of pension income taken whilst mitigating possible UK Inheritance Tax on UK-domiciled individuals.

QROP annuities aim to achieve the following objectives:-

Better returns: by investing the purchase capital in an underlying fund that is not restricted to gilts, the prospect of having to lock into a poor annuity rate is avoided.

Flexibility: by creating a notional fund which is allocated to the individual annuity, the value of which can be derived from its investment profile (after deducting income and expense payments), and by linking income payments under the fund to the fluctuating value of that fund, the annuitant can take advantage of any increase in value resulting from good performance, while at the same time the fund is protected from the risk of premature depletion.

Value protection: the concept of a notional fund also allows the annuitant to protect the value of his investment, either by the traditional method of insurance, or in some other means (such as investment in a cell structure - see Technical Briefing for full details).

QROP annuities in their fully-developed form are a sophisticated concept that is unlikely to have mass appeal. They are best suited to non-UK resident individuals with significant pension funds (perhaps in excess of £250,000), for whom an element of professional financial management is normal.

They may also offer a member of a defined benefit scheme intending to retire abroad the opportunity to structure pension benefits in a tax-efficient way, as long as this is done before benefits commence.

Anyone wishing to purchase a QROP Annuity should take advice from a suitably qualified financial advisor and it is clearly essential to ensure that the Annuity is acceptable in the country of residence and that it represents the most tax-efficient vehicle for drawing income, as compared, for example with income drawdown.

Please note that intermediaries must complete an intermediary application even if they are already registered with London & Colonial for UK annuity business.

For further details please contact Marc on 0161 975 6056 or