Below are some of the most frequently asked questions on QROPS pension transfers.
What is the minimum value I can transfer to a QROPS?
In our experience the better schemes require funding of around 200,000 GBP to keep the charges to a minimum. However, there are similar schemes available from 50,000 GBP if you have other investable assets such as cash deposits or other investments. Whatever your situation and UK pension transfer value, contact us anyway as there is usually a solution to be found.
Will payments from my QROPS pension fund be reported to HMRC in the UK?
QROPS providers are required to notify HRMC of any payments from transferred pensions in respect of a relevant member. However this does not apply UNLESS the member is:
- Resident in the UK when the payment is made, or
- Although not resident in the UK at that time, has been resident in the UK earlier in the tax year in which the payment is made or in any of the five tax years immediately preceding that tax year.
If I transfer my UK pension into a QROPS will I have to buy an annuity?
No, although you may if you wish. Without the need to purchase an annuity it means you can invest into better returning assets and gain the advantage of passing any remaining funds upon death to your loved ones.
Who may apply to transfer their pension into a QROPS?
Most of the schemes are not available to US citizens and there can be problems with US residents; however any other nationality may apply.
What investment choice and freedom will I have with a QROPS?
The investment choice will normally be very wide indeed. Under certain circumstances you can manage the assets yourself with total freedom, or work with an investment manager / financial adviser. You may also appoint an investment manager to make the decisions for you or with you. It really depends what you are looking to achieve and how involved you would like to be with the investment decisions. We can arrange for an investment adviser to work with you by reviewing your QROPS fund assets and make recommendations to you on a quarterly basis. There is no limit to the size of funds that may be accumulated within a QROPS.
How & when can I take benefits from my QROPS?
There is generally considerable flexibility in the timing of taking benefits from a QROPS. Usually benefits will be taken between the ages of 50 and 75, but it can be possible to access funds before or after these ages. Please contact us for further information dependent on your circumstances.
Once I have transferred my UK pension to a QROPS can I access my fund as a 100% lumpsum?
The answer to this is ‘no’. This is because retirement funds that you have built up may need to provide an income for you and your dependents for the rest of your life and perhaps beyond. After the 5 years of non UK residency there are less restrictions and access is something that you will need to discuss with your adviser. There may be serious tax implications depending on your country of residence, although we do have specialist solutions available and you should contact us for further details. Full pension fund access may require a second transfer to take place into an international pension scheme.
How will any benefits or withdrawals be taxed?
Most of the schemes we recommend are at a minimum rate of tax. The tax treatment of any income you receive will depend upon where you are tax resident at the time.
What will happen to my QROPS pension fund upon my death?
With the better QROPS schemes, any funds remaining upon death of the individual will be paid to those nominated by you as beneficiaries. Dependent on your personal circumstances, significant tax planning opportunities may be possible.
I have a UK SIPP and I have drawn an income, can I benefit?
A QROPS can be used to receive transfer values from any UK registered pension scheme (other than annuities and with some UK occupational pensions) even where benefits have been taken. It may still be beneficial to transfer to a QROPS if you are non-UK resident and intend to remain so for the long-term.
How long will a transfer to a QROPS take?
Most transfers can take 2-3 months. The process is initiated by you completing a letter of authority enabling your adviser to get information from your pension provider of current benefits and a transfer value. This is not binding in any way and will only allow the adviser to receive details of the pension scheme you have.
Can I transfer the funds and assets in my UK scheme or do I have to liquidate them into cash?
This will depend on the pension provider you have and the assets that you hold. Generally a transfer will be quicker if converted into cash. Speak to one of our recommended advisers with a list of your holdings for further advice.
What are the key facts to look for in a good QROPS?
Strong investor protection from a well established jurisdiction similar to the UK, investor protection, transparency of charges and tax efficiency.
My pension fund is substantial, what tax implications may there be?
A transfer to a QROPS will be a benefit crystallisation and therefore will give rise to a tax charge if the amount exceeds the lifetime allowance (currently £1.6 million in 2007/2008 tax year). If your fund is in excess of this amount then please contact us for specialist advice.
Are there any circumstances in which I shouldn’t transfer to a QROPS?
Yes there are, although in most situations we have come across so far, as long as you are non UK resident and intend to remain so for a total of at least 5 years the benefits to you can be immense. If you have guaranteed annuity rates set many years ago when interest rates were much higher, this would be one such situation that would need careful consideration and advice.
Can I organise a QROPS myself?
No. QROPS providers will only take pension transfers through their appointed intermediaries.