Qrops are special pension arrangements for people with UK pensions who either live overseas or are planning to move abroad soon.
Switching your UK pension funds in to a Qrops offers tax, investment and currency exchange advantages that are unavailable in a standard UK pension.
Before making the decision to start a Qrops , you need to make two key reviews –
- Establish you are not a UK resident taxpayer as Qrops are only available to people living overseas away from the UK.
- Review the performance of your current pension arrangements, are you happy with the growth and performance?
Then contact one of our advisers to draw up a list of suitable Qrops pensions from the choice of nearly 2,500 offshore pensions available from 47 countries.
An adviser will start by looking at the features and benefits of each plan and how cross border tax issues may affect the income generated by your fund. Set up and running costs will be reviewed and the solution will be tailor made to your personal circumstances.
Qrops are structured around the same template set out by HM Revenue & Customs. Different jurisdictions have variations on the features and benefits, but the underlying structure remains the same.
Although the market is vast and fast-changing, your QROP.org team will have the latest product and tax information.
IF you are looking for the right Qrops , here are some key pointers to consider:
Tax-free lump sum
Many Qrops pay a tax-free lump sum of up to 30% of the transfer fund paid in, providing at least 70% of the transfer is ring-fenced to generate an income in retirement.
Pension rules in the offshore centre where the Qrops is based detail if some or all of fund growth is available as a cash lump sum. Our advisers will explain the options.
Estate planning and IHT
Qrops are for retirement saving rather than a tool for estate planning, but because the funds are outside of the reach of UK inheritance tax, any money left in the pension when the investor dies can pass without tax to family and loved ones. This can amount to the entire fund as the investor does not have to take any payments from the Qrops .
Income tax on benefits
Income tax paid on pension benefits depends on where you live and where your Qrops is based.
If you and the Qrops are based in the same country, local income tax rules apply.
Should you live in a separate country to your Qrops home, any income tax due depends on the tax treaties between the two places – a formal tax agreement should trigger foreign tax credits, but if the countries have agreement could mean Qrops benefits are taxed at source.
Your QROP.org advice team will consider this when discussing your pension transfer.
Smoothing currency rates
Volatile currency exchange markets make timing transfers at a good rate between pensions paid in Sterling to a currency you can spend where you live a constant worry. Qrops can remove this hassle as you can invest and get paid in most major currencies.
Investment selection and management
Qrops flexible investment options are a real winner compared with many other retirement saving methods.
Most Qrops offer investment platform with a wider selection of funds, currencies, commodities and markets than standard UK pensions – even self-invested schemes (SiPPS).
You can either take a hands-on approach and look after your own fund, or hand the responsibility to an investment manager. These are options and depend on the Qrops jurisdiction, again one our our expert advisers will explain the possibilties.
Who are Qrops aimed at?
Qrops are designed to cater for expats and international workers who were once based in Britain and accumulated UK pension funds, but now live permanently overseas.
Mobility is not a problem – however often you move for work does necessarily affect your pension as you can base your Qrops in one overseas financial centre and move between countries without affecting your investments.
Qrops have no base limit for transfers in – you can consolidate several smaller funds in to a single Qrops to cut costs and enhance investment growth.
Switching to a Qrops is not always best for every investor as small funds may attract high charges and some pensions may have valuable benefits that are lost on transfer. Expert advice is required from the very start.
Looking at the bigger picture
QROP.org believes taking a broader view of your financial affairs is vital to a successful overseas pension transfer.
Our holistic, whole of the market approach focuses on you and managing your wealth. The aim is to match you and your Qrops – and then to regularly review investment performance to make sure you are on track to meet your goals.
Talk to an adviser today, contact us now using the Contact Form here.