QROPS - What Can I Do With My UK Pension?
If you are a non UK resident with a UK pension fund did you know that you have the ability to "unlock" your UK pension funds and release them to a HMRC approved offshore location such as Guernsey or New Zealand? Transfers are done via QROPS or "Qualifying Recognized Overseas Pension Schemes."
Potential benefits of transferring UK pension rights offshore include:
* Freedom to Control Investments - the possibilities become more or less
unlimited and can include antiques, jewelery, works of art and in certain
circumstances, residential property.
* Flexibility to access funds at any time between the ages of 50 and 75
with the potential to access the funds outside these ages.
* No requirement to purchase an Annuity - under a UK scheme a possible tax
charge of 82 percent is payable if an annuity is not taken by the age of
75.
* Access to income and capital without deduction of tax.
* Transfer of the fund to future generations upon death.
* No deduction of tax at source. Taxation will apply in accordance with
the legislation governing the QROPS scheme member's country of residence.
All of the above advantages become possible after your UK pension fund has been transferred to a QROPS and you have been a non UK resident for five complete tax years.
How do they work?
Transfers are done via HM Revenue and Customs approved schemes called "QROPS" or "Qualifying Recognized Overseas Pension Schemes." A transfer can take place to an approved scheme as soon as you become a non UK resident and intend to remain so for the foreseeable future.
HMRC maintain a list of approved schemes that is updated twice a month. An important safeguard is that if the proposed pension transfer is to an unapproved scheme the transfer can't take place.
For someone who has been a non UK resident for less than five complete tax years the benefits provided under the new scheme will be similar to those provided under UK law. After that point in time everything changes.
Is it suitable for me?
QROPS transfers tend to be suitable if you now live permanently abroad and have a UK pension pot in excess of £50,000. Typically, this can include anyone with a fund that has been built up in a Company Scheme (Final salary / defined benefit or defined contribution), Public Sector Schemes (including for example, doctors, nurses, police, members of the Armed Forces, Teachers and Local Government), and those with Personal Pensions.
Transfers are not available for state pensions or to anyone who has started to take their pension as an annuity. However, they are available to those who are "drawing down" income from their pension fund but have not secured an annuity.
Taking Advice:
The transfer of pension rights from any UK registered pension scheme is not a matter to be taken lightly and specialist advice is essential.
This article about QROPS is written by Stephen Ward and Robert Burns. At the forefront of the industry liaising directly with providers and HMRC, they are arguably two of the leading authorities on QROPS transfers. See http://www.qrops.es/what-is-qrops.htm for further information.