Information on Pensions - Offshore QROPS

Offshore QROPS provide specialist Qualifying Recognised Overseas Pension Scheme advice to anyone who has accrued UK pension benefits and is interested in transferring their pension fund overseas when retiring abroad. QROPS based in countries where the pension regimes are lump sum based will be of particular interest to individuals wishing to access their pension benefits.

What is QROPS

QROPS - The Expats Retirement Solution?

In April 2006, we saw the introduction of A-Day and the so called 'Simplification' of the UK pension system. Amongst the many changes that were made, was the ability for a UK pension policy holder to transfer his / her pension into a QROPS.

The QROPS must behave in effect as if it were a UK scheme for those QROPS members who have been resident in the UK at any time in the previous five tax years.

Why transfer UK pension rights to a QROPS?

The key attraction of transferring UK pension rights to a QROPS lies in the fact that for those who are currently in the position of having been non UK resident for at least five tax years (or when they satisfy that condition) this requirement falls away.

After that time the pension fund becomes subject to the laws of the relevant overseas jurisdiction – and for example the UK requirement  to purchase an annuity by age 75 no longer applies.

The benefits can be fantastic to the discerning individual:

  • Avoidance of Inheritance tax on the pension fund.
  • A greater degree of investment management flexibility.
  • A tax free lump sum of up to 30%
  • All income and proceeds in a currency of your choice
  • No need to ever purchase an annuity, although this is still possible.
  • Protection against any future creditors.
  • And most importantly, you can take income from your pension in a much more tax efficient way.
  • The ability to leave 100% of your pension to a nominated beneficiary.

If we begin to dissect some of the obvious tax advantages, it could be argued that, in some circumstances the transfer should indeed be a 'no brainer'.

The essential benefits come into play when one has been out of the UK for at least 5 years or does not intend to return in the foreseeable future. 

In essence, the QROPS provider does not have to report any withdrawals or payments to the HRMC as the pension is simply subject to the laws of the relevant overseas jurisdiction.

In addition, the requirement to purchase an annuity by age 75 to avoid a possible 82% tax charge is no longer applicable and the age at which you draw the pension 50/55 can indeed remain the same.

At first glance, there appears to be very little argument to suggest that a transfer could be detrimental.

Taking advice

The transfer of pension rights from any UK registered pension scheme is not a matter to be taken lightly.

Where the transfer is from a UK occupational pension scheme any UK-based adviser advising on such a transfer must be suitably qualified and have the relevant permission granted by the Financial Services Authority. For advice contact your Argent International Cross-Border Financial Advice Specialist.

Overseas Pensions

We can provide advice on whether to transfer your benefits into an overseas pension in your new country of residence, or whether you should consider a pension in another jurisdiction that offers a more favourable tax regime.

If you are working overseas and wish to make provision for your retirement we can advise you on overseas pensions. In addition, we offer International Tax Planning service to individuals moving to and from the UK.

International Pension

Retirement Pension planning for individuals who spend time working overseas can be a complex area. An international pension plan can be a very tax efficient way of saving for retirement, and can provide greater flexibility over UK based pension, both in terms of investment choice and payment of benefits.