QROPS – Are they a Tax Saver?

A QROPS is a Qualifying Recognised Overseas Pension Scheme which is eligible in the eyes of HMRC: And to become qualified it must reach certain standards set out by them. Of course, as the name suggests, these were created to deal with the ongoing trend to retire and/or reside abroad permanently.

What Pensions are Viable for QROPS?

Most private and corporate schemes that have been invested into UK pensions for at least five years can be transferred into a QROPS without a sanction charge. If you return to the UK within five years most QROPS will become subject to UK pension policies.

Non UK Residents for more than 5 Years

If you have been permanently resident abroad for more than five years your QROPS will be subject to the laws and requirements of that country. This means although tax will probably be due in your country of residence it will not be subject to UK rules. This means that the income limits of the UK will also be null and void.

EX-Pat Choices

Realistically there are just two primary choices for ex-pats. 1) Keep your UK pension exactly where it is 2) Move it to a QROPS. There are other variables but these are the main two options that just about everything else ‘floats around’.

Transfer Charges

Until March 2017 there were no charges for transferring your pension to a QROPS.  Now, you can expect transfer charges but they depend a lot on how much, where etc  you intend to transfer. A specialist QROPS pension advisor will be able to give you the full information on this.

Taxes

If you move abroad permanently after five years the UK tax rules no longer apply. This is allowing people to unlock major benefits and one of them is UK tax. Another nice edge to QROPS is that you are not obliged to move it to your new country of residence. For example, if you retire to Spain you can actually transfer your pension to a French QROPS – Giving amazing flexibility and choices. The only absolute is that the pension must be “qualified” by HMRC. Additionally, there is no maximum lifetime allowance with QROPS which saves another 25% if the value should go above 1.5million.

Death & Taxes

As they say, two things in life you never avoid are death and taxes. If you transfer your pension to a QROPS the UK inheritance tax will be avoided. However, there may be local inheritance tax payable to the country where your QROPS was transferred. Another benefit for your beneficiaries is that they will usually receive their inheritance faster in comparison to the UK.

If you are considering transferring your UK pension to QROPS contact a professional experienced to deal with it. Pensions are not the most straight-forward of things and a small mistake could end up losing you a small fortune in taxes, transfer fees, exchange rates etc

Don’t get caught! Contact a Professional QROPS advisor and get the right advice for YOU!