We hope you find our guide informative and that it highlights some of the vast financial planning opportunities available to you in transferring your UK pension rights to a QROPS! The guide is intentionally generic and therefore individual questions may arise that you would like answers to. If at anytime you would like more detailed information please e-mail us.
We provide you with all the answers and help that you have been looking for in deciding if a QROPS may be right for you! Not only can you study the information contained in this site, but if at anytime you need more detailed information, analysis or friendly advice in plain English then we are here to help.
Anyone with a UK pension scheme who now lives overseas as an expatriate, or is planning to leave the UK can now transfer their existing pension provisions into a QROPS (Qualifying Recognised Overseas Pensions Scheme). And the financial benefits can be huge if planned correctly, improving the investment growth, flexibility and future financial security of your pension.
Compiled by industry experts with over 20 years experience, our aim is to maximise your expatriate status and help you achieve your financial goals by getting more out of YOUR Pension. We will only ever help you transfer to QROPS providers that are 100% approved by HM Revenue & Customs. And we will advise you as to the best jurisdiction you should use.
If at anytime you need to speak to one of our specialist advisers then we are here to help. You can contact us without obligation or charge and in total confidence you will receive impartial, expert advice.
UK Pensions have traditionally been tied up in many layers of restriction & regulation; in part to protect the tax revenues of the UK by taxing income from annuities and then taking any residual value on death, and in part to stop pensioners spending all their money in the first 5-10 years of retirement and then relying on the state. The good news is that for those of us living overseas or about to move to a new life abroad, some of the restrictions have now been lifted. In April 2006 it was announced that British expatriates could move their pension benefits to a QROPS with the UK revenues approval.
A QROPS is a pension scheme set up outside the UK that: –
- Is regulated as a pensions scheme in the country in which it was established.
- Must be recognised for tax purposes in the country that the QROPS is established.
A QROPS scheme may however, while complying with the above, be established in a country that taxes pensions but at a minimal rate.
The real benefits come into play when you have been away from the UK for at least 5 years and do not intend to return for at least the foreseeable future. Once your pension schemes have been transferred into a QROPS, and you have been non-resident in the UK for at least 5 years, then the overseas QROPS provider no longer has to report any withdrawals or payments to the HMRC. If the QROPS provider is in a country where payments from such schemes are more tax efficient then payments can be made to you at minimal rates of tax (although you may be liable to tax on the income dependent on your country of residence at the time of receipt).
After you have been overseas for at least 5 tax years, the QROPS pension fund becomes subject only to the laws of the relevant overseas jurisdiction, and the requirement to purchase an annuity by age 75 (or be faced with a possible 82% tax charge) is no longer applicable. The normal UK minimum pension age will still normally apply of 50 / 55 before benefits can be taken. QROPS arrangements can offer considerably more flexibility, greater income potential and more investment freedom than a UK pension. And with the right advice the tax benefits can be immense.
In order to be an eligible scheme, the QROPS must be fully approved by HMRC, and a list of such schemes can be found at http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops-list.htm
But where do you turn to next for the best advice? Best advice means not just telling you about the benefits, but also any potential pitfalls you should consider. That’s where our free evaluation service becomes invaluable in helping you source expert advice and guidance. After you have read through the rest of our site, we suggest you contact us for a discussion relating to all the points you should consider depending on your personal circumstances.
The QROPS Procedure
- Enquiry submitted to Expat Money Guide.
- Recommended Advisor contacts clients & sends Letter of Authority.
- Client sends LOA by email or fax with original to follow.
- Advisor contacts existing UK pension provider to confirm pension can be transferred to QROPS and ascertain transfer value.
- Recommendations process by adviser for reinvestment of pension.
- Discharge form sent to existing provider. Application form sent to QROPS provider & investment solutions.
- Pension now based offshore Greater flexibility; Greater range for investment (better growth); no need to purchase annuity.
Benefits of a QROPS
- No need to EVER purchase an annuity or pay UK tax charge upon death.
- Leave ALL unused pension funds to your beneficiaries.
- Much greater investment freedom.
- Tax free lump sum of up to 30%.
- Onshore / offshore funds, highest fixed deposit rates, total diversification.
- Take income from your pension in a much more tax efficient way.
- Take income and benefits in currency of your choice.
- Protection against possible future creditors. (depending on QROPS jurisdiction).
- Greater confidentiality.
The benefits of being in control of your pension fund are immense for those living abroad. You can benefit from being able to invest into a more diversified range of asset classes. There are also huge gains to be made in Inheritance Tax Planning (IHT). On an individual’s death, the value can be passed onto your loved ones and not straight into the Chancellor’s pockets.
Furthermore, you are no longer under any obligation to buy an annuity. If you don’t have to buy an annuity, then it means that when you die, or when your spouse dies, then your pension fund doesn’t die with you. It means that you’re hard worked for pension can be passed onto beneficiaries in line with your wishes. QROPS pension arrangements will usually pass to the intended beneficiaries much easily and more quickly than would be the case in the UK.
In terms of costs as a percentage, the larger your fund the lower the charges will be. Typically your pension fund needs to be worth at least £200,000 to qualify for one of the better QROPS, although if you have other investable assets or cash deposits then we may be able to help with transfer values upwards of £50,000. One of our preferred QROPS schemes can be established for you, depending on your circumstances from around 1% of your pension fund value. On-going annual management charges are from £1,000 p.a. levied each year depending on the fund value and structure.
QROPS transfers are not right for everybody. You cannot transfer a state pension into a QROPS, nor can you transfer if you have already taken an annuity with your pension. However, in more cases than not a QROPS can be significantly beneficial, especially if constructed with careful and expert guidance.
Each of the expatriates or people leaving the UK that we and our providers have helped take control of their pensions has a unique financial situation. There may be other financial assets, liabilities and IHT issues to take into consideration.
How long before the Chancellor realises how many billions are leaking from UK pensions PLC and back tracks, who knows? Will the availability of QROPS encourage even more affluent people to leave the UK and move abroad? Probably!
Can a transfer be made into a QROPS right now? YES! Our advice is that if you don’t intend to return to the UK in the foreseeable future, contact us now while this opportunity is available.
How to Get Started?
Your next step should be to contact one of our advisers by requesting a call back for a confidential discussion. Full information on the QROPS scheme and most importantly the jurisdiction of the QROPS most appropriate to your personal situation will then be provided to you. You do not need to know the exact value of your pension today but the more information you have available the better. After speaking with one of our experts, you will need to download and complete one of our letters of authority. This allows a valuation of your current pension to be sent to us, without cost or obligation.