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QROPS (Qualifying Overseas Pension Scheme) advice from Harrison Brook

Pension Planning from Harrison Brook

If you’re looking for inclusive expat pension advice, we at Harrison Brook offer exceptional financial information from expat pension transfers to QROPS transfers. 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 savings fund, a QROPS allows you to transfer the vast majority of privately administered personal or corporate UK pension, without incurring any unauthorised charges. If you want to find out more, read on for further information and to find out more about overseas pension planning.

Qualifying for an Expat Pension Transfer

You can only apply for a QROPS if you have been UK resident for the previous five tax years. Once abroad, if you decide to return to the UK, the QROPS will become subject to UK pension regulations. If you, the investor, 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.

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. Find out more below.

  • By transferring a pension to a QROPS, you can avoid significant tax in the UK.
  • There’s no maximum lifetime allowance. Any growth in value of the QROPS above the value of the UK Lifetime Allowance (£1.5m 2012/2013) paid as a pension, will escape the 25% lifetime allowance excess tax charge.
  • 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.

What Happens to My Pension at Death?

A QROPS 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. 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.

Get Clarity on Your Pensions Options

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.

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