A QROPS (Qualifying Recognised Overseas Pension Scheme) is an overseas pension scheme which is recognised by HM Revenue & Customs as being eligible to be in receipt of transfers from a registered UK pension scheme. However, due to UK pension changes for expats, QROPS are now available in many overseas territories. QROPS share many similarities with Self-Invested Personal Pensions (SIPPs) but are only available to non-UK residents living overseas, mainly in the EU.
Benefits Of QROPS
A QROPS represents one of the best pension plans that allows pension holders to consolidate multiple pensions into one scheme. This type of pension does not require holders to purchase an annuity and it guarantees that you will be able to pass all held funds to your partner or beneficiaries. Transferring your pension to a QROPS means that you will have more flexibility in choosing where to invest your funds. There are tax benefits to your beneficiaries if you die after your 75th birthday. At present, any post-75 inheritance is subject to income tax in the UK which is avoided by using a QROPS. Finally, there are also benefits with QROPS, should you believe that the value of your pension may increase to more than £1.03m by the time you want to take income.
Issues With QROPS
Transferring your pension into a QROPS is the best way to legitimately receive a UK pension abroad. Up until recently, receiving your British pension in the USA was a complicated and time-consuming experience due to differences in tax laws. The other issue is that QROPS are notoriously expensive when comparing them to SIPPS with some costing as much as £1,000 per annum just for the pension trust element.
Overseas Transfer Charges
In 2017, HM Revenue & Customs announced new overseas transfers charges which affect British expats transferring their UK pension into a QROPS. People transferring their pension will now be liable to pay 25% of the value of the pension being transferred. This charge can be avoided in certain circumstances if you meet specific criteria set out by the UK government. For more information and advice, discuss your options with an independent financial advisor.
Discover Your QROPS & Pensions Options
If you are in any doubt about your pensions and QROPS options, discuss your circumstances with an independent financial advisor. A specialist financial advisor will be able to guide you through all of the options available to you so that you can make an informed decision. For more information about transferring UK pensions to QROPS or to find out more about UK pension regulations for expatriates, visit our handy pension guide or contact us for a free consultation.