What is QROPS?
A QROPS (Qualifying Recognised Overseas Pension Scheme) is a pension transfer scheme that is recognised by HMRC and meets certain conditions and standards equivalent to a UK pension. Therefore, any UK pension can be readily transferred into an overseas scheme, provided that the overseas scheme is registered with HMRC as a QROPS. The rising profile of this scheme is a consequence of UK pension rules introduced by HMRC on 6th April 2006. The scheme must also meet the requirements of the jurisdiction in which it is domiciled.
What are the key benefits of a QROPS through Tower of London Worldwide?
- Annuity: A QROPS does not force you to buy an annuity.
- 101% of your funds passed to beneficiaries after death:
- Your pension will no longer be liable to UK income tax or death charges of up to 55% .
- Flexible currency choice: your assets within your QROPS can be paid to you in a currency other than sterling- therefore avoiding FX costs and exchange rate charges.
- 30% TAX FREE pension commencement lump sum.
- Your pension income can be paid to you gross (Tax Free) depending on chosen jurisdiction.
- Secure jurisdictions for your funds, offering British Government backed investor protection.
- Investment flexibility and freedom (Ability to use your funds to invest now with choice).
- Low transparent charges.
- Ability to take your pension at age 55 opposed to 65.
- Numerous pensions can be consolidated in to on.
- Free from UK 'lump sum' death benefit charge.
- Inheritance benefits.
- Greater investment freedom, offering the ability to calculate the pension fund you need.
- It must be recognised by HMRC for tax purposes - therefore, it must be open to residents of the country where it is based, where there are stable taxation laws in place.
- The initial 'lump sum' taken should not exceed 30% of the total pension fund (Malta) (25% Gibraltar).
- To draw your pension you must be at least 50 or more often 55, depending on your chosen jurisdiction and the period of non UK residency.
Is a QROPS suitable for me?
A pension transfer is suitable for you if you have a UK pension, have left the UK, are planning to leave the UK, or are a resident but not UK domiciled. Obtaining professional financial advice from on of our UK pension and QROPS specialists is vital to ensure that you comply with these rules.
Why should I choose a QROPS?
Qualifying Recognised Overseas Pension Scheme is an overseas pension scheme into which UK pension rights can be transferred. However, QROPS also provides control over where your pension fund is invested. The scheme also allows you to consolidate a number of pensions into one QROPS and does not require you to buy into an annuity.
More importantly, it allows you to leave 101% of the remaining fund to your beneficiaries without any deduction of UK inheritance tax upon death.
Which is the best jurisdiction?
Following the Finance Act 2012, the QROPS jurisdiction of choice is Malta, in terms of it being highly-regulated, having a sophisticated tax system and being an integral EU member.
What is a QROPS / UK frozen pension transfer?
QROPS stands for Qualifying Recognised Overseas Pension Scheme. It is available for those who hold an accrued frozen UK pension, who live outside the UK.
The HMRC-recognised QROPS pension transfer service enables individuals to transfer their UK pension into another jurisdiction that is more flexible and tax-efficient
QROPS was introduced in April 2006, when HMRC updated their regulations concerning pensions. UK pensions were previously traditionally frozen when the pension holder lived or retired overseas. This would mean very little, limited to no access to their money.
Since then, HMRC has established a list of countries where QROPS pension transfers are approved and can be accepted. In order for a QROPS to qualify it must be legally-recognised by HMRC and must meet the following criteria:
Pension specialists believe that the most beneficial QROPS jurisdiction for UK expatriates are Malta and Gibraltar QROPS, following Finance Act 2012 - holding valuable benefits for those who wish to transfer their frozen UK pension there.
By transferring your pension into a QROPS, not only will you receive direct access to a portion of your money when you retire, you will also be able to receive it in the currency of your choice to minimise exchange rate losses.
Moreover, depending on where you retire and the tax treaties available at the time of retirement, you can take an initial tax free lump sum of 30%. Your actual income will also be paid to you completely tax free from Malta.
Tower of London Worldwide aims to provide each perspective and existing client with the highest levels of service worldwide. Our Global QROPS advisers are experts in their field and will provide you with all the information and advice that you will need throughout the process.
A QROPS will inevitably allow you to enjoy a much larger sum of money in retirement.
Please contact us today and see how simplistic it is to unlock your UK pension in and transfer it to a much more favourable and tax efficient jurisdiction. Any individual of any nationality couldn't potentially have a UK pension they are able to have access to through a QROPS - if they have simply worked in the UK for 3 years or more.