QROPS is regulated by HMRC and stands for Qualifying Recognised Overseas Pension Schemes. All QROPS have been approved by HMRC and so meet certain regulations. Most private pension schemes can be transferred abroad without incurring extra charges such as scheme sanctions or unauthorised payment fines.
Two Options – Which is best for you?
While there are certainly some variants, ex-pats generally have two options.
- Transfer your UK pension pot to a QROPS
- Keep your private pension in the UK
The main advantage of moving to QROPS is being able to unlock benefits that can reduce taxes significantly and in some cases, even avoid them completely. It is a good option for most and plenty of benefits. However, if you have a defined benefit pension scheme you may not be a suitable candidate for QROPS.
Are you entitled to a QROPS?
UK residents who’ve paid into a UK private pension scheme then moved abroad to retire are generally entitled to a QROPS. These pensions provide a tax shelter for most. If you have an annuity it is not possible to invest in QROPS. However, if you are not eligible there are alternative investment options – Shares, gold, and silver, mutual funds, etc
Charges & Currencies
All QROPS requests after March 9th, 2017 are subject to a transfer charge to HMRC. All income from a UK pension is taxed, regardless of whether that person is resident in the UK or not. QROPS are paid in the currency of the country. This can provide excellent benefits and a certain amount of safeguard during retirement.
QROPS are not governed by UK laws. This means UK inheritance tax will not be payable. However, your beneficiaries will still be subject to local inheritance tax laws. Pension pots held abroad generally in a QROPS tend to reach their beneficiaries faster than in the UK simply because it is less complicated.
Accessing & Shielding your Investments
It depends on which QROPS you opt for but transferring abroad can also add some extra shelter from creditors. If you have been resident abroad five years it is possible to get a thirty percent lump sum at the age of 55 (UK 25%). Usually, it is also possible to withdraw more each month.
QROPS Qualifying Run down – What You Need
- You have a UK Private Pension
- You Intend to live abroad for at least five years
- You do not have an annuity
- If you have a ‘Final Salary Scheme’ it must not be in drawdown
- Investment Allocation
Get Free Advice from a Specialist
Pensions can be complicated. A QROPS specialist can help you make the right choices by providing independent, expert advice. Marc Downs of the UK QROPS Help Centre advises anyone thinking about QROPS to get some free initial advice – “We can help you avoid the pitfalls seen every day. We can clarify costs, options and above all, give independent advice without any obligation”.
Avoid the Pitfalls – Contact A QROPS Advisor