Photo Credit: Unsplash | Anthony Metcalfe
You have a frozen UK pension but have moved, or are thinking of moving, overseas. You want your pension to work for you and get as much from it as possible. You might not know it, but you need a QROPS!
A QROPS will provide you with a more flexible option than your standard UK pension and is almost an investment in itself.
What Is A QROPS?
According to Wikipedia, QROPS stands for ‘Qualifying Recognised Overseas Pension Scheme’. It is ‘an overseas pension scheme that meets certain requirements set by Her Majesty’s Revenue and Customs’ and which must ‘have a beneficial owner and trustees’ and can ‘receive transfers of UK Pension Benefits’.
The QROPS programme was launched in 2006 as part of UK legislation stemming from the EU human rights requirements of the freedom of capital movement and was set up for expats living abroad or anyone planning on leaving the UK.
As such the UK government provides actionable advice and guidance on overseas pensions and pension transfers.
What Can QROPS Do For You?
Put simply, QROPS can put more money in your pocket and maybe even get it to you that little bit earlier too.
QROPS enables you to transfer your pension to another countries pension scheme. It doesn’t even have to be the country you are living in. As long as the country is recognised as being HMRC approved you should be fine.
A QROPS pretty much can do everything your UK pension can but has added benefits like having a bigger pension fund. No UK tax to pay. Availability of a larger tax-free sum. And no UK death duties.
You might be retiring and moving abroad so it makes sense to have your pension there as you will receive it in the currency you deal with daily. Getting your money changed from Sterling to something else will be subject to fluctuations in the exchange rate and may cause avoidable headaches. QROPS helps you avoid such problems.
You may find it easier to deal with any tax or regulation changes that occur in your new country of residence also.
Because there are some differences in various countries rules and regulations towards pension schemes an QROPS can provide you with a certain degree of flexibility that you wouldn’t have in the UK. A flexibility that may allow you to skirt around some issues that will enable you to have a little bit of extra money for yourself.
How Do You Qualify For QROPS?
Most pension schemes in the UK can be transferred into a QROPS. The exceptions being any British Government or state pensions or if you have a pension from Defined Benefit or if you receive your UK pension income from annuity.
For a QROPS scheme to qualify, according to the Pension Advisory Service, it must meet ‘the requirements set by UK tax law’ like being ‘available to residents in that country and not being accessible before age 55 unless under special circumstances’.
As always, when dealing with your finances and your future, it is always worth seeking out some solid financial advice. You want qualified advisors with the right knowledge and insight. People who can look at your current pension, understand you wants and needs, and then put you on to a recognised scheme which best accommodates your requirements.
People with specific tax rule knowledge and experience in the transfer of UK pensions to QROPS. People who’ll do the job right and have your best interests at heart. That way you’ll be safe in the knowledge you have the right pension scheme, in the right place, for you.