x Abu Dhabi, UAESaturday 22 July 2017

Advice on British pension scheme was all wrong

Keren Bobker is here to help a National reader with a query about a QROPS pension, while also issuing advice on rent and employment laws.

I have been considering moving my UK pension fund to a QROPS (Qualified Recognised Overseas Pension Scheme) on the advice of a company that contacted me, but I have concerns about what I am being told. The adviser said I will be able to take all the monies in the fund as a cash amount, without any tax being payable, once I reach my 55th birthday in seven years. I have heard different but have been assured this will be an option for me if I do not live in the United Kingdom at that time. Is this actually the case? D W, Abu Dhabi

What you have been told is incorrect. A QROPS is a recognised pension vehicle, designed for people who generally are not UK resident to use as a vehicle to transfer existing UK pensions funds into. Specific rules apply. The maximum available cash sum, from age 55, is 30 per cent of the fund value, together with an income that can be drawn on a flexible basis. If someone is permitted by an unscrupulous provider to take more than 30 per cent as a cash sum they will be in breach of the rules and will be subject to an unauthorised payment surcharge of up to 55 per cent of the amount taken. In addition, considering there is no need to buy an annuity and that after being UK non-resident for tax purposes for five years the fund is free of tax on death, it is questionable why anyone would want to withdraw 100 per cent of the pension fund from a tax-efficient environment. If you are being given false information I strongly recommend that you seek advice from a qualified professional adviser who will give you independent advice. QROPS are certainly suitable for some people, but are not for everyone and the proper rules must be followed.

Last March I signed a rental contract that unfortunately stated “this contract is non-renewable” as an observation. I know now I should not have signed it, but at the time I thought it was a fair 12 months’ notice. The landlord now says that his family is moving in and he wants me to move. I have offered to increase the rent, even though I believe I do not have to, and have offered a sum close to the market price. The landlord is saying I have to move, but obviously he won’t admit that he wants me to move so he can get a higher rent. What should I do and can I claim unfair eviction and ask for compensation? B L, Dubai

You are on firm ground, as a non-renewable contract is not enforceable according to Rera (Real Estate Regulatory Authority) even if you signed the contract. This means that the landlord is legally obliged to give you a full 12 months’ notice from your renewal date, in the prescribed format, if he wishes you to move, provided he is planning on moving in himself. The notice to vacate must be given in writing and delivered by public notary or registered post. It is actually very hard for landlords to evict tenants in Dubai and they certainly cannot do so to simply re-let at a higher price. Note that if you are given the proper 12 months’ notice, and then you move out and the landlord does not move in himself, you are entitled to claim compensation. I suggest you tell him that you have taken advice and that you explain to him how the law operates.

I was offered a job by a private company in Dubai that is not in a free zone with a salary of Dh2,500 per month including food, accommodation and transportation. I have been here for almost two months and I have a probation period of six months. I hold a master’s degree in finance and have two years’ experience. A visa has been arranged for me but shows a title very different from what I do and the company won’t change it. I have discovered that my salary is very low and I want to know if I can resign. My employer is asking me to pay for the visa cost and other costs that they have incurred. I only signed the contract as I felt under pressure. Do I have to pay them? I know I will get some kind of ban but is there a solution? J K, Dubai

You can resign by giving the appropriate notice, usually 30 days. According to authorities in the UAE, an employer cannot recover recruitment costs from an employee. Ministerial order 52 of 1989, Article 6, made it clear that an employer cannot ask an employee to cover visa and related expenses, even if the employee resigns sooner than expected. Likewise no employee should be asked to pay for their residency visa or labour card. If anyone leaves a job during the first two years they will automatically receive a ban of six months. This is generally fixed, but there are provisions for a ban to be lifted if someone moves jobs after a full year of service. In this case J K would need to move to a job with a minimum monthly salary of Dh12,000, as he holds at least a bachelor’s degree. Despite this, he would need to work for at least 12 months before resigning if he wished to avoid a ban.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at keren@holbornassets.com.