What is QROPS?

A QROPS is a Qualifying Recognised Overseas Pension Scheme that meets criteria set by Her Majesty’s Revenue and Customs (HMRC) and is recognised by HMRC but not approved by them.  In most cases they are regulated by the country they are established in and recognised there for tax purposes.

Any QROPS can accept transfers from a UK registered pension scheme, personal or occupational, but if HMRC rules are not followed the individuals can face a 40% unauthorised payment tax charge plus levies on the Qrops and /or the pension scheme the funds were transferred from. any transfer is deemed to be a crystallisation event i.e. a value given against the lifetime allowance.

Who is it for?

1. Anybody married to a foreign national
2. A non UK national who has or is accumalating a Uk pension benefit
3. Anyone with dual nationality
4. Anyone looking to live abroad

They were originally for those living overseas, or those planning to move overseas ie. retire abroad.  However, UK residents can also benefit from the lower administration charges generally available with a QROPS.  They can also offer the same benefits as a UK SIPP for UK residents, but with additional benefits, for example, there is no need to purchase an annuity or pay the UK tax charge on death.

Like SIPPs, a QROPS is not suitable for everyone and so independent financial advice is essential.

What are the benefits of a QROPS?

• No need to purchase an annuity at age 75 or pay UK tax charge on death
• Maximum /minimum income limits are much higher/lower than a UK scheme
• Unlimited fund size
• Much greater investment freedom
• Tax free lump sum of 30% in some countries
• Total diversification – onshore / offshore funds
• Take income from your pension in a much more tax efficient way
• Tax income and benefits in currency of your choice thus reducing risk
• Protection against possible future creditors (dependent on QROPS jurisdiction)
• Greater confidentiality

What are the disadvantages of a QROPS?

• Can have high charges
• only a few specalist adviser have experience of these plans
• serious implication if the QROPS loses its HMRC approval 

As with all retirement plans, it is crucial that you seek pensions advice from an independent financial adviser.  However, as these are unusual plans an adviser experienced in this area is sensible.  By producing a financial plan, we will be able to tell you if this is the correct form of pension for you.  We will also be able to offer you extra tax help or tax advice to make the most of any scheme you choose to undertake.  The investment advice you obtain should take into account your existing investment portfolio.

Any questions about QROPS?

If you are part of the millionaire asset group or a small business owner, medical professional, legal professional or IT professional this is an important area for you to consider fully and a financial planner will be able to help you.  If you have any questions, please call us on 01582 839280 or Email us.