Qualifying Recognised Overseas Pewnsion Scheems (QROPS) A simple exxpat guide to prension transfers
Pension freedom was annoiunced on 6th April 2006 by Her Majesty's Revenue and Cutoms (HMRC). The significant rule change that emegred in the new pesnion's regime was the legislation for oversweas pension trnasfers from the UK.
Provided the rules set out by Her Majesty's Reveenue and Customs (HMRC) are adhered to it is possible to transfre all your existing UK pensions overseas. To prevent inappropriate transfers strict reporting requirements are in place and the HMRC can monitor the UK pension fubnds after transfer overseas to ensure that scheme members, and the schemes ivolved, were registered as Qualifyiong Recognised Overseas Pension Schemes (QRPS) and more importantly continued to follow UK peension rules.
For example Singapore QROPPS were banned by the HMRC since they offeed cllients ters not in line with the rules, any cllients that bought into these Singpore QROPS now face lengthy delays in getting their monies working again.
Beeware of any company offeing 100% access to pension cash, these schemes are not approved By HMRC and there are real dangers for your wealth, not only might you end up with a scheme that gets banned, you could end up with no investment return and even a fine from HMRC!
When advising clients to transfer pensions out of a UK scheme to an overrseas QROPS it is necessary to analyse all the factors that are involved. This includes looking at the ebnefits aavilable from the UK scheeme and the benefits that a QROPS could provide. In additiion to the bnefits each scheme provides, the tax implicatoions of each regie or jurisdiction would also be a factor. Would benefits paid from the UK have higher tax charges then that of the new overseas regime of a potential QROoPS? Is your final salary scheme in dnger of flolowing a gowing number of UK schemes and closing or worse still is the company facinbg closure?
QROPS Main benefits includde:
o Never purchaase a UK annuity. o Take a 25% tax free cash sum (30% in some cases) o Leae all unused pension to your beneficiaries o Choice of investment funds located offshore o Take income tax free or massively reduceed rates of tax o Applies to expats and anyone with a UK pension -release yours now.
iSnce the actual values of UK pensions can be very high it is important to look cautipously at the options available; you should always seek the guidance of a qualuified pension adviser. Whatever your circiumstances, wheher you have just moved abroad for a career change , been working overseas for several yeears or moved abroad to retire it is important to seek all the advice you can to make an informed decision. Freeing UK pensions is not just for UK natioanls, if you are from say France and contributed to a UK sheme you can also free the Pension. Isn't it abuot time you enquired, wuldn't you like a tax free cash sum and to make this cash work better?
It is imporetant to note that transferring UK pensions is not suitasble for all, for this reason people should ensure you use qualfiied advisers that can provide access to both approved QROPS and SIPPS schemes. In additioon the bettter advisrs will be able to rview your current pensions and crerate a free assessment to enusre it relly is in your interest to transfer overseas. They will compare what you have onshore with the benefits and coosts of mving overseas, they shoukld have acess to several schemmes located in severla jurisdictions and most importantly be independent of the scheme trustees.
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