British non-residents can transfer their assets from an existing UK pension scheme into an HMRC recognised scheme abroad. You can do this with most pensions providing you’re living outside of the UK, or intend to be within the next 6 months. Your pension should have a total value of at least £25000 to be considered worthwhile to transfer.
It is essential that British expats understand Qualifying Recognised Overseas Pension Schemes. QROP Schemes allow expats to carry their paid up UK pensions to almost all overseas locations, now even the USA. There are huge advantages to transferring your pension offshore, and very few disadvantages.
Reduced Tax Liability:
Because QROPS are based in offshore jurisdictions they benefit from zero taxation at source. While in your country of residency you may be liable for taxation on your income, you will avoid capital gains tax on asset growth, as well as potentially avoiding inheritance tax.
You will have the option to select an asset management strategy that best reflects your risk level and growth / income requirements. You will work with your Independent Financial Adviser to construct a bespoke asset management plan that fits your needs. Also, you will be able to select the currency of your choice.
You won’t have to purchase an annuity as most offshore pension plans are fully flexible, allowing you to retain ownership of the asset. You can opt for a percentage drawdown instead; of up to 20% more than you could get by leaving your pension in the UK.
There are also more options when it comes to passing-on your wealth, including passing assets directly or investing assets for beneficiaries later on. UK pensions have severe restrictions and will lead to lots of red tape for your heirs to cut through, as well as being liable to UK Inheritance Tax.
Greater Growth Potential:
If your pension value exceeds £100,000 you may be able to select an offshore portfolio bond to hold your investments. This is usually a cost effective method for your IFA to buy a wide variety of investments in order to help your pension pot grow, hence providing you with the best possible income. With a pension value of less than £100,000 your IFA will select an automated asset management strategy in order to meet your growth requirements, while keeping costs at an absolute minimum. As well as this investment freedom you will be able to add lump sums to your plan at any time if you want.
The next step in your research should be to have a preliminary discussion with a QROPS specialist adviser. Please click here in order to have a Which Offshore approved adviser contact you.