A British firm called Cartwright that specializes in pension fund consultancy has guided the first UK pension fund to invest in Bitcoin. It has also called on other UK institutional investors to invest in Bitcoin. To quote their director of investment consulting Sam Roberts, “This bitcoin allocation is a strategic move that not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile.” He was also quoted stating “Integrating bitcoin into a pension scheme’s investment strategy is a bold step that reflects the forward-thinking nature of the trustees involved.” He then goes on to add that he hopes this step will start a trend among British institutional investors who have a lot of catching up to do when compared to those in other countries who have already begun investing in crypto currencies.
While investing in Bitcoin is without a doubt, a bold step, some feel that given the typical pension scheme trustee’s aversion to risk, it is doubtful whether it will turn into a trend. The UK Pension Fund that Cartwright has refrained from naming yet, has apparently invested a whopping 3% of its £50 million assets in Bitcoin. What’s also interesting is the fact that the investment was done directly into the crypto currency and not through any proxy or platform. Additionally, though 3% may sound like a small amount, when you compare it with investments that other foreign pension funds have made, it is quite significant. For example, just a few months ago, an American pension scheme, The State Pension of Wisconsin, made headlines by investing just 0.1% of its assets in crypto currency.
Cartwright has mentioned further plans to create a Bitcoin Employee Benefit Scheme where employers can pay workers directly with Bitcoin. While getting paid in Bitcoin may sound great to a lot of working age people, folks who have worked their whole lives and are about to retire may be a bit skeptical, especially since it’s their retirement at risk. A lot of those skeptics seem to think investing in something as volatile as Bitcoin is not the right move for a pension scheme. In fact, according to the FCA (Financial Conduct Authority), which is the financial regulatory authority in the UK, investing in Bitcoin should be done with money you are ready to lose (in its entirety).
In conclusion, while a lot of people feel Bitcoin is a great addition to diversify a portfolio, others believe you can achieve perfectly enough diversification without having to go anywhere near Bitcoin. Only time will tell whether Bitcoin heads for the moon or the proverbial “digital scrap pile.”
QROPS FAQs
I have already tried doing it myself online but my application was rejected, can you still help?
While the official website features a number of schemes that appear to be QROPS approved, HMRC doesn’t take responsibility in ensuring that they are, it’s only after you actually apply does HMRC look into the matter. What this means is only a fraction of the so-called approved schemes meet all the requirements, contact us if your online application was rejected and have your pension transferred in 30 days.
Will I be able to invest my pension plan in the stock market in India?
In terms of investment opportunities, there are two basic categories for QROPS investors in India. The first one is fixed-income instruments where interest rates go up to 10.5% and returns are guaranteed. The other option is investing in equity where returns aren’t guaranteed but the sky is literally the limit. Investors looking to invest through a QROPS can invest in equity through ULIPS, which are basically equity funds or mutual funds issued by insurance companies.
What will happen to my QROPS if I decide to return to the UK?
If you return to the UK for a holiday or a short visit, your QROPS in India will remain unchanged. If you decide to move back to the UK permanently, however, your QROPS will be subject to UK laws, taxes, and regulations.
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