QROPS Basic Advice and Facts
Browsing through much of the content on Which Offshore you will undoubtedly come across the term QROPS quite often, and you will probably have gathered that it is a type of pension transfer for holders of British pensions.
However, regardless of what you’ve seen or read, you may still have some questions about QROPS, so here is a basic explanation:
A QROPS is ideal for a UK citizen who lives and works abroad, or is planning to. It is essentially the best pension plan available for expats. QROPS are fully approved by HMRC.
When taking out a QROPS your existing pension fund will transfer out of the UK, and after five years you may be completely free from the taxes and regulations that UK pensions are subject to, thus helping you to preserve your wealth and also giving you more control over your money.
In short, the major benefits are:
> The ability to keep your money in different currencies.
> The ability to make payments and withdrawals from your pension without UK regulations and at lower rates of tax.
> The ability to pass on unused pension funds in the event of your death.
> The ability to handle your pension yourself or utilise the help of an adviser.
You may wonder how exactly a QROPS reduces UK taxes and regulations. QROPS providers are registered outside of the UK, thus answering to the regulations of the country in which they are established.
By operating out of a country that has much more attractive tax regimes the provider can then offer its customers flexible QROPS with good tax benefits. Also note that by taking out a QROPS in one country you are not obliged to live there, you can live where you please as long as it is outside of the UK.
During the first five years of your QROPS and non-residency, your QROPS provider will still have to inform HMRC of your deposits and withdrawals. Once this five year period has elapsed there are no reporting obligations to HRMC.
To transfer your existing pension into a QROPS you should first speak to an Independent Financial Adviser, they will then advise you based on your personal situation and go through the necessary paperwork and red tape with you. It is very important to find a good IFA, so you may use our Contact An IFA Form if you would like Which Offshore to recommend one. All in all taking out a QROPS is an essential point of consideration for any British expats.
