What are the pension transfer options?
That really depends on whether or not you are committed to living and retiring overseas or not. For those who are intending to retire overseas, then a QROPS (Qualifying Recognised Overseas Pension Scheme) is unquestionably the best pension transfer solution for them.
For those who are still undecided about their future plans and want to retain some flexibility moving forward, then in those situations we can utilise a SIPP (Self Invested Personal Pension). A SIPP has all the advantages of a QROPS prior to retirement, but does not have any of the distinct tax advantages that the QROPS has aftersomeone’s retirement.
In any eventuality, we would normally arrange a SIPP – with a very low cost base – with a provider which would allow a pension transfer to a QROPS further down the line, with ZERO COST to the client. This allows a client who is undecided about his future plans, a hybrid solution with the option to convert that further down the line, if and when required.
A QROPS is a Qualifying Recognised Overseas Pension Scheme, which has been approved by Her Majesty´s Revenue & Customs (HMRC) to accept a pension transfer from a UK pension scheme. They offer enormous financial benefits for the thousands upon thousands of ex-pats now living or planning to live out their retirement abroad.
This ability to transfer a pension from the UK to another country was brought into action on 6th April 2006, dubbed ‘A-Day’, when massive reforms swept through personal and work pensions in the UK. However, on the 6th April 2012, HMRC changed all the legislation again and full details of these changes can be found by clicking the HRM link here.
Although a QROPS must be registered with HMRC, the on-going running of the QROPS and its compliance with HMRC rules is the responsibility of the QROPS Trustees. HMRC publish a list of QROPS on their website, which can be viewed here.
In summary, a QROPS can have significant taxation and investment advantages to individuals with UK pension rights who have, or will become non-resident in the UK for tax purposes. Most UK Pension Schemes can be transferred to a QROPS including ‘protected rights’. The exceptions are typically State Pensions and most Final Salary Schemes already in payment.
To find out whether your pension is suitable for a QROPS, a specialist QROPS adviser can advise you on your individual situation and help determine which offshore pension providers would be best for you. The benefits are many and varied but include being able to draw a tax free lump sum of 30 per cent, no obligation to purchase an annuity at 75 years of age, higher levels of pension income, greater investment flexibility and avoidance of crippling UK inheritance tax.
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