Are you working abroad, looking at retiring abroad or already retired abroad? Do you have pension funds including Income Drawdown funds in the UK? Then a QROPS COULD BE THE RIGHT THING FOR YOU.

 

So What is QROPS?

 

QROPS are overseas pensions that can provide excellent retirement planning, providing the scheme does not break any of the UK taxman’s strict rules.

 

QROPS is the short name for a “Qualifying Recognised Overseas Pension Scheme’.

 

QROPS were launched on April 6, 2006, as part of new legislation aimed at simplifying pensions.

 

The jargon means:

 

Qualifying – that the scheme meets HM Revenue and Customs QROPS rules

 

Recognised – the scheme is regulated by the tax authorities in the country where the QROPS is opened

 

Overseas – the QROPS is a scheme based outside the UK

 

Pension Scheme – A scheme giving benefits to someone in the event of his/her:

• Retirement
• Death
• Reaching a particular age
• Suffering serious illness or incapacity

A pension scheme does not have to give benefits in all these situations, for instance, if the scheme gave death benefits in service only, it would still meet the definition.

 

Below are some explanations about QROPS

 

Who can start a QROPS?

 

Anyone with UK pension rights that intends to retire permanently overseas, like:

• UK taxpayers who intend to or have already moved outside the UK
• International workers returning to their home or another country

Why would someone transfer a UK pension to a QROPS?

 

Anyone who passes the pension rights and residency tests can take advantage of tax effective and flexible investment options that allow a pension fund a broad scope of currencies, commodities and markets that are not open to a UK pension investor.

These include managed and self-invested QROPS.    

       

Where can a QROPS member live and where does a QROPS have to be set up?

 

A QROPS can be based in any country outside the UK, providing the scheme follows the rules stipulated by HM Revenue and Customs.

 

One advantage is a QROPS can be set up in one country while the member can live somewhere else. This allows the pension to grow in a low tax jurisdiction while the benefits can be paid out in any major currency in another country with low income tax rates.

 

When can you transfer to a QROPS

 

UK pensions can transfer in to a QROPS at any time, as long as the UK pension fund has not been used to buy an annuity.

There are many benefits associated with QROPS for non residents

 

Non-UK resident for less than 5 complete tax years

 

1.     Ability to manage investments

2.     Consolidation of multiple pension funds

3.     Income paid gross

4.     Remove pension pot from the UK control and ever changing rules

 

Non-UK resident for more than 5 complete tax years

 

1.     Leave residue of pension funds to loved ones

2.     No tax deducted on death in UK or Guernsey

3.     Flexible income options. Possible to drawdown funds at higher and lower level than in the UK

4.     Loan facility available up to 30%, prior to taking benefits

5.     Up to 30% pension commencement lump sum

6.     Ability to manage investments

7.     Consolidation of multiple pension funds

8.     Income paid gross

9.     Remove pension pot from the UK control and ever changing rules

 

No 55% death tax to pay when drawing benefits and potential for 30% pension commencement lump sum instead of 25%