Understanding a QROPS Transfer – QROPS Pension Planning from Harrison Brook
If you’re looking for inclusive expat pension advice on a QROPS transfer, we at Harrison Brook offer exceptional financial information from expat pension transfers to a QROPS transfer. A QROPS (Qualifying Overseas Pension Scheme) is an overseas pension scheme that meets the requirements set by HM Revenue and Customs (HMRC) to transfer and consolidate UK pensions, including frozen pensions. If you’re considering retiring abroad, and have savings in a UK pension fund, a QROPS allows you to transfer the vast majority of privately administered personal or corporate UK pension abroad, without incurring any unauthorised charges. If you want to find out more, read on for further information and to find out more about your QROPS transfer or speak to an adviser.
Qualifying for an Expat Pension Transfer
If you have accrued UK pensions anybody can apply for a QROPS transfer. Once abroad, if you decide to return to the UK, the QROPS will become subject to UK pension regulations or you can switch your QROPS back into a SIPP. If you haven’t been a resident of the UK for the past five tax years, the QROPS will be subject to the laws in which country it’s based. You can, however, take income with no limits and no deduction of tax at source (although taxation will apply in accordance with your current country of residence).
Who Is Eligible for a QROPS Transfer?
Those who are eligible for a QROPS transfer are UK residents who wish to emigrate or to retire abroad and who have built up a pension fund within a privately administered scheme. In addition, a person can qualify if they were born abroad but have spent some time working in the UK and built up benefits in a UK Pension Scheme. A QROPS provides great flexibility and stability as it doesn’t have to be established in the new country of residence.
However, in order to qualify, you must fit the following criteria:
- You have UK pensions (excluding state pensions) with a total fund value of at least £50k.
- You currently or are planning to live overseas.
- You will be not be returning to the UK within the next five years.
- You haven’t already purchased an annuity.
- If yours is a final salary scheme, then the scheme should not be already in drawdown.
- UK Budget 2017 Changes – there was also an array of changes for QROPS particularly for expats who are resident outside of the EEA where an International SIPP would be the most prudent option.
Transfers to QROPS requested on or after the 9th March 2017 are subject to a 25% tax charge, unless;
- The QROPS is in the EEA and the Member is also resident in a EEA country.
- The QROPS and Member are in the same country or territory. This is a limited if negligible part of the market.
- The QROPS is an employer-sponsored occupational scheme, overseas public service pension scheme or a pension scheme established by an international organisation.
If you are not sure if you are eligible for a QROPS transfer, or confused by the options available speak to an HB financial adviser for a free pension review.
What are the Benefits of a QROPS Transfer?
Retirement and pension planning are highly important and if carried out properly, British expats can get significant benefits from their pension:
- By transferring a pension to a QROPS, you can avoid significant tax in the UK. Income can be paid out gross of UK income tax.
- There’s no maximum lifetime allowance. Any growth in value of the QROPS above the value of the UK Lifetime Allowance (£1m since April 2016) paid as a pension, will escape the 25% lifetime allowance excess tax charge. If you hold pensions approaching the £1m mark, a transfer to a QROPS would be a very prudent move.
- Because QROPS is not under UK jurisdiction or tax laws, transferring your funds to a QROPS provides you with protection from UK inheritance tax.
- Overseas and expat pension schemes will ensure that residual pension funds are passed to the intended beneficiaries more easily and quicker than if you held a UK based pension.
- Avoid any negative consequences of Brexit on pensions
What Happens to My Pension at Death?
A QROPS transfer is outside of the pension holder’s estate for the purposes of UK inheritance tax (IHT). Therefore, this provides the beneficiaries with any unused funds that are not taxed in Britain. IHT rules may apply in the country where they are a tax resident of course.
Accessing My Funds
QROPS and other overseas pension schemes allow for the payment of pensions in currencies other than Sterling, providing a valuable safeguard for expats against currency risk. You will be able to access your QROPS pension at 55 and will receive an increased lump sum of 30% rather than 25% if you have been offshore for 5 years. You can have all your pensions transferred to the same place, where you can access them online whenever you want. Similar to a UK SIPP, full flexi-access drawdown can also be available.
Get Clarity on Your Pensions Options – Why Harrison Brook?
- Transparent ‘fee’ based advice
- Low-Cost Platform Solutions
- Advice available globally
- Regulated throughout Europe – Level 4 qualified financial advisers
To speak to a professional and gain further QROPS advice or information on expat pensions, please request a free pension consultation. Find out if a QROPS is right for you.