QROPS planning
The benefits
QROPS offer considerable benefits to those with UK pension rights.
QROPS provide the opportunity to mitigate or eliminate UK taxes, on income and ‘inheritance’ that would otherwise be levied on pension rights that remain in the UK . They also allow complete freedom in choosing beneficiaries as well as much broader and more flexible investment options after the five complete qualifying UK tax years of absence from the UK.
QROPS also offer the sometimes overlooked benefit of being able to diversify away from the British Pound which had suffered a 15% fall in value against the Euro in the year to April 2008.
The planning
Selecting the right QROPS arrangement is at least as important as the provision of ongoing investment management services to your retirement fund.
Whilst all HMRC approved QROPS are required to comply with certain UK regulations, there is some variation between the individual scheme rules.
Your own personal circumstances will also have a significant bearing on the choice of your overseas pension scheme. Your age, place of residence and nationality are just some of the factors that contribute to the selection of both the jurisdiction of your QROPS as well as the most suitable scheme within that jurisdiction.
With around a thousand HMRC approved schemes around the world and growing, QROPS planning is a very specialised area of financial planning for which UK qualified financial advisers are likely to be the most suitable.
The caveat
In many if not most cases, expats may be financially much better off when transferring their UK pension rights to an overseas scheme.
For some people, QROPS arrangements may very well be the factor that provides for a genuinely financially secure retirement.
But despite the rather compelling reasons for transferring UK pension rights overseas, this may not be the the best course of action for everyone.
Depending on the value and form of your UK pension rights, age, attitude to risk and even state of health of the UK scheme member, best advice in some cases may be to leave pension rights in the UK!
Best advice
It is important that you are shown the benefits and the potential (or actual) drawbacks of moving your UK pension rights overseas before embarking on a QROPS transfer.
UK qualified advisers will have the most relevant professional qualifications for giving guidance in this vital area of financial planning.
For more information please email us.
QROPS Bureau