We often get asked “What are QROPS?” If you are looking to move abroad and hold a UK pension then you can transfer it into a Qualifying Registered Overseas Pension Scheme (QROPS). This will give you greater control over your assets and minimise your tax exposure.
The main benefits of QROPS
- Manage your pension in a more tax effective way
- Lower management charges
- Wider Investment Allocation - There is a much wider choice of investment options under QROPS
- No currency risk when receiving your pension
The main drawbacks of QROPS
- A QROPS can be de-registered by HMRC if they feel the scheme is not being run appropriately
- As a consequence the tax benefits of the QROPS could be lost and the individual could be liable for any penalties regarding the transfer of your pension funds outside the agreement
How QROPS work
QROPS are approved by HMRC for people who wish to retire overseas release their pension funds from UK tax and regulation.
The firm running the QROPS fund must be regulated and taxed in the country that it’s registered.
10 years after the establishment of your QROPS and you can prove that you’ve been a UK non-resident your Scheme no longer has to inform HMRC of withdrawals or payments, or be constrained by particular UK pension regulations.
Your only commitment will then be to the taxation and regulatory controls of the country you live in and where your QROPS is held.
The QROPS Transfer Process
Moving your pension fund into a QROPS can take up to 2-3 months. To help speed up the process it is best to liquidate your UK fund into cash first.
Due to the large number of QROPS schemes available there should be a plan suited to you based on your existing pension fund and investment objectives.
What happens to your QROPS on death?
With a QROPS you are not required to by an annuity, thus, if you die with remaining funds, all can be passed on to your beneficiaries, and not be subject to UK inheritance taxes.
It is vital that you take independent advice when choosing a QROPS. Make sure it’s suitable for your circumstances, that it is established and not at risk of being de-registered.
For more information on What are QROPS? and your specific position, contact us for independent advice.