A QROPS (Qualifying Recognised Overseas Pension Scheme) is a scheme established outside the UK that is broadly similar to a UK registered pension scheme.
Over the course of your working life you may have had the opportunity to work in one or more countries, to have experienced different cultures and possibly even found a place that has captivated you to such an extent that you have decided to build your life there. Or perhaps you are a foreign national that lived and worked in the United Kingdom with a private UK pension, and have decided to return home. Whatever your unique personal circumstances may be you should consider the benefits of transferring your UK based funds into a Qualifying Recognised Overseas Pension Scheme (QROPS).
Who are QROPS for?
Anyone with a UK personal and/or occupational pension scheme with at least £50,000+ invested and who has either left or, is planning to leave the UK in the next 12 months.
If you fall into the above category you have the opportunity to maximise the growth and income potential of your pension, rather than be limited to the restrictions of a UK scheme and the lifetime allowance.
Top Five Benefits of a QROPS
1. No UK tax payable on pension income
Transferring your pension out of the UK to a QROPS means that you will no longer be paying UK tax of up to 45% on your pension income. With a QROPS it may be possible to pay no tax depending on your country of residence.
2. No tax on death
Although UK rules have changed, your beneficiaries will still have to pay tax at their marginal rate if you die over the age of 75. QROPS have no tax on death at any age.
3. No lifetime allowance
Currently in the UK the lifetime allowance is 1 million GBP and this was recently reduced from 1.25 million GBP. This has been reducing incrementally for several years now from 1.7 million GBP. QROPS have no lifetime allowance so your pension can grow to any size without a tax charge.
4. Higher lump sum
A 30% lump sum can be taken from a QROPS, whilst only 25% can be taken tax free in the UK. This will be applicable for anyone who has been non-UK resident for more than five years.
5. Currency and investment options
QROPS can give the ability to hold and invest the funds in any currency, whereas a United Kingdom scheme may be restricted to GBP sterling. Some investment options may be available that would not be available in a United Kingdom scheme.