Qualifying Recognised Overseas Pension Schemes (QROPS) is an overseas pension scheme that meets certain requirements established by Her Majesty’s Revenue and Customs (HMRC) in 2006.  QROPS can receive transfers-in from UK pension schemes held by UK nationals and other UK pension holders who live outside the UK.  QROPS are becoming increasingly popular year-on-year with expatriates and those who are considering moving or have moved abroad, thus seeking QROPS benefits information.

Transferring your UK pension scheme to a QROPS will mean that it leaves the UK and comes under local rules after 5 years of your non-UK residency.  More importantly, your pension will be subject to the tax rate in the country in which you reside.  Removing the pension scheme from the UK tax net is one of the biggest benefits of a QROPS.

Summary of QROPS benefits information to qualifying expats.

QROPS Benefits Information – Transfer your pension to a country other than your country of residence

Transferring your UK pension into a QROPS can give you the choice of whether you base it in the jurisdiction where you live, or choose a different jurisdiction which pays out gross income (if a tax treaty is in place with the new country of residence) or has flexible income tax provisions.

QROPS Benefits Information – A tax-free lump sum of up to 30%
 
If you area UK resident, you are able to take a maximum pension commencement tax free lump sum of 25%.  However, with a QROPS after 5 years of non-UK residency you may be able to take up to 30% as a pension commencement tax free lump sum.

QROPS Benefits Information – Benefits taken at age 55

QROPS benefits information provide knowledge of the huge amount of flexibility QROPS has to offer.  It is possible to transfer your UK pension scheme to a QROPS, which resides in another jurisdiction in order to benefit from an earlier retirement age of 55.

QROPS Benefits Information – Avoid inheritance taxes of up to 55%

With a QROPS your pension scheme is not subject to UK inheritance tax or a Lump Sum Death Benefit Tax, which in the UK is up to 55%.  Effectively, allowing the full transfer of funds to your loved ones tax-free providing you have been living outside the UK for at least five complete tax years.

QROPS Benefits Information – Pass on your wealth

When you transfer your UK pension fund into a QROPS you can choose who your beneficiaries will be.  This is not always the case with some UK pensions, where there may be restrictions, such as if you are a deferred member and don’t have a spouse or dependant (child under 23) then your pension income will die with you.

QROPS Benefits Information – Avoid currency exchange rate fluctuations

If you have a UK pension you will receive payments in sterling.  If you live abroad, these are subject to exchange rate fluctuations which can affect the amount you receive in your local currency from one month to the next.  QROPS benefits information gives you knowledge of being able to choose the currency of the pension scheme to fit in with the currency, in which you spend.

QROPS Benefits Information – No Lifetime Allowance charge

UK tax legislation sets a limit on the amount of tax relief on pensions you can benefit from before additional taxes apply.  Currently, for the year 2014/15, this limit is set at £1.25 million but it could be reduced in the future.  This means that if your total pension savings exceed this Lifetime Allowance (LTA) they could be taxed at up to 55% on the excess.  This makes it extremely tax inefficient for a pension holder who may exceed the LTA.  A QROPS is also not affected by the LTA, thus enabling you to safeguard your pension fund against this tax, and allowing it to keep on growing.  There is no cap on either the value of transfers or subsequent contributions to a QROPS.
 
QROPS Benefits Information – Consolidation of multiple pensions

If you have two or more different UK pension schemes, these can be consolidated into one QROPS, making the administration and investment management much more straight forward.  This means it is much easier to monitor and make strategic alterations to your pension fund in order to benefit from opportunities.

QROPS Benefits Information – Greater investment Choice

Access to QROPS benefits information provides you with a huge range of investment funds across a multitude of differing currencies through the use of fund platforms or international life bonds.  It is advisable to consult a professional financial advisor to help you invest wisely in a diversified portfolio which will secure your financial future.

QROPS Benefits Information – No compulsion to buy an annuity

Traditionally three quarters of UK retirees have invested their pension funds in an annuity, guaranteeing them a lifetime income.  However there are some major drawbacks to annuities.  They offer no protection against inflation and depending on the type of annuity purchased, if you die before you have received your full pension the rest of the pension fund will go to the annuity provider.

A QROPS can provide a better solution than leaving accrued funds in a UK scheme.  It can offer an incredibly wide range of investment choices and allow you the flexibility of managing your own portfolio.  Most importantly there is the additional benefit that your loved-ones can receive any remaining funds after your death.  In the 2014 budget the requirement to buy an annuity was removed from UK based pensions.

QROPS Benefits Information – Charges are transparent
 
When you transfer to a QROPS your financial advisor will clearly explain any charges that apply so you are clear where your money is going.  In addition, while most UK pensions have percentage-based fees, most QROPS operate on a fixed fee basis.

QROPS Benefits Information Advice

If you would like to know more about QROPS benefits information, call us on +34 698 243 745 or Contact Us Today

GC QROPS has been successfully assisting UK expats in Spain with UK pension transfers for 9 years since 2006.

We are completely independent, and can advise on a wide variety of QROPS pension schemes – we are not tied to any single provider, which means that we will recommend the scheme which meets your exact requirements and needs.