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QROPS is a "Qualifying Recognised Overseas Pension Scheme" that has met the criteria laid down by HMRC and is recognised and listed as such. In 2006 ("A" Day) the UK Government dramatically altered UK pension rules to enable you to transfer your UK Pension to an overseas plan without tax deduction and with no future tax liability (subject to 10 years of non-UK residency.)

How to plan a peaceful stress-free retirement abroad?

The QROPS landscape has evolved dramatically since "A" Day but pension legislation remains complicated and subject to change. New rule changes introduced in the UK Spring Budget of 2017 means that UK pension transfers are subject to a transfer tax of 25% unless the member is resident in the EEA or is resident in the same jurisdiction as the QROPS provider. Following Brexit, despite the UK no longer being part of the EEA, this exemption still applies so a UK pension can continue to be transferred to a QROPS based in the EEA or Gibraltar and the 25% transfer tax will not apply.  This rule may change though.  This means that if you are resident in the EEA it will pay to act swiftly to make sure that all options remain open to you.

“We have never underestimated the importance of managing your pension pot to help you achieve the retirement lifestyle of your choice.”

How Does UK Pensions Freedom Affect QROPS?

UK pension rules changed dramatically from April 6th 2015. If you are aged 55 or over and have a Money Purchase Pension Scheme (Defined Contribution) you will be able to access all or as much of your pension fund as you require at anytime. Flexibility usually comes at a price and any benefits that you access in the UK over and above a 25% tax free lump sum will be taxed at your highest marginal rate.

The tax you pay when you move your pension to QROPS will depend on where you pay your taxes. Our retirement planning experts will be able to guide you in respect of the tax due on your QROPS Pension income when they know where you are going to be resident.

In our experience we know that you will have accumulated your pension fund in order that it will provide for your income needs in later life. Careful planning is needed to ensure that your fund will survive as long as you do and hopefully there might be something left over for your dependents.

Can I Move a Final Salary Scheme Into a QROPS?

The answer is Yes you can, although whether that will be the best advice for you will depend on many factors. Of course, pensions freedom, mentioned earlier, will provide greater access to your pension fund than a final salary pension scheme (also referred to as a Defined Benefit Scheme - DBS) ever can, but whereas a final salary pension scheme will provide guaranteed benefits, the return from all other pensions which are not final salary pension schemes, depends on the performance of the underlying investments.

In many cases, but not all, the guarantees offered on your final salary pension scheme may outweigh the benefits provided from transferring your pension benefits out of your final salary scheme.  We are unable to advise you directly on the final salary pension scheme transfers as this is a highly specialist area of advice covered by specific permissions from the FCA.  We will require an independent assessment to be carried out by an FCA regulated pension transfer specialist who will conduct the assessment in accordance with FCA guidelines to determine whether or not a transfer away from your final salary scheme is appropriate in your particular case. 

Can I Consolidate a Number of UK Pensions?

Yes, it is possible to bring together all of your existing pension arrangements (except for state benefits) and hold them together in one QROPS.  This will simplify your pension arrangements and allow you to draw retirement income from just one source.  Any requests to transfer final salary pension schemes will be subject to an independent assessment by an FCA regulated pension transfer specialist who will conduct an assessment as outlined above.

Can I Consolidate UK Pensions Without The Need For QROPS?

Yes, if we agree that QROPS is not the most suitable vehicle for your pension funds then you may consolidate all of your existing UK pension funds into one scheme within the UK.  Any requests to transfer final salary pension schemes will be subject to an independent assessment by an FCA regulated pension transfer specialist who will conduct an assessment as outlined above.

Can I Avoid The New Death Tax Charge by Switching to QROPS?

New rules mean that if you die after the age of 75 your beneficiaries could pay tax of up to 45% before receiving the remainder of your fund. If you move your pension fund to a QROPS then after ten complete tax years outside of the UK this rule will no longer apply and your chosen beneficiaries can receive all of your remaining fund without suffering this UK tax liability.

Will The New Lifetime Allowance Apply if I Move to QROPS?

Successive UK governments have reduced the lifetime allowance which now stands at £1,073,100 (any fund amount over this figure is subject to a penalty tax). If you move your fund to a QROPS this penalty charge will no longer apply. This could be of major benefit to anyone whose fund is close to the £1,073,100 threshold.

The key benefits of establishing a QROPS as a UK Pension for you can be summarised as follows:

  • Your pension assets would grow within a tax-free environment.
  • Your heirs would avoid UK Inheritance after 10 complete and consecutive tax years of non-UK residency.
  • No lifetime allowance cap on the amount of pension you can accrue.
  • Removal from any adverse future UK pension legislation.
  • Depending on your country of residence the opportunity to pay considerably less tax on your pension income.
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Talk to Us

Speak to us if you require expatriate pension advice or QROPS advice.  Give us a call.

For further information please contact us on Tel: +44 207 998 0570 or email enquiries@fwm.gi