QROPS Basics
Qualified Recognized Overseas Pension Schemes were introduced in the United Kingdom in 2006 as part of reforms through the government's Pension Simplification initiative.
Below is a look at some of the basic information to guide a pension holder as they navigate the world of QROPS.
As a member of the UK private pension scheme, you may carry out your pension transfers into a QROPS, as long as the QROPS you opt for has been individually approved by HMRC.
This entails Her Majesty's Revenue and Customs having examined the particulars of the scheme and deciding that it will be taxed and regulated as a pension in its own country of residence.
Failure to opt for the HMRC approved QROPS may lead to a situation whereby the taxman suspects that you chose that rogue scheme for purposes of tax evasion, which may result in your incurring penalties of up to 55% of the value of the fund.
In most cases, QROPS will be sold on their tax advantages.
Once you transfer your UK pension into a QROPS, you are not eligible to pay any UK taxes, as long as you remain resident for taxation purposes outside the UK for a minimum period of five years.
It is recommended that you seek professional advice regarding tax residency in order to avoid ending up in the taxman's net as well.
Of course, your QROPS will still be liable for taxes in your new country of residence - although with a good QROPS adviser, you may find a place with the most favourable tax regime for your expatriate pension or offshore pension fund.
QROPS can also aid in your retirement planning.
This is because you may opt for a QROPS country of residence which will permit the tax free distribution of your assets directly to your beneficiaries.
In addition, QROPS have been proven to increase the financial flexibility of pension holders.
The availability of numerous QROPS schemes in many countries around the world gives the pension holder a wider variety of options to choose from in terms of underlying assets than any other pension scheme in the UK.
Below is a look at some of the basic information to guide a pension holder as they navigate the world of QROPS.
As a member of the UK private pension scheme, you may carry out your pension transfers into a QROPS, as long as the QROPS you opt for has been individually approved by HMRC.
This entails Her Majesty's Revenue and Customs having examined the particulars of the scheme and deciding that it will be taxed and regulated as a pension in its own country of residence.
Failure to opt for the HMRC approved QROPS may lead to a situation whereby the taxman suspects that you chose that rogue scheme for purposes of tax evasion, which may result in your incurring penalties of up to 55% of the value of the fund.
In most cases, QROPS will be sold on their tax advantages.
Once you transfer your UK pension into a QROPS, you are not eligible to pay any UK taxes, as long as you remain resident for taxation purposes outside the UK for a minimum period of five years.
It is recommended that you seek professional advice regarding tax residency in order to avoid ending up in the taxman's net as well.
Of course, your QROPS will still be liable for taxes in your new country of residence - although with a good QROPS adviser, you may find a place with the most favourable tax regime for your expatriate pension or offshore pension fund.
QROPS can also aid in your retirement planning.
This is because you may opt for a QROPS country of residence which will permit the tax free distribution of your assets directly to your beneficiaries.
In addition, QROPS have been proven to increase the financial flexibility of pension holders.
The availability of numerous QROPS schemes in many countries around the world gives the pension holder a wider variety of options to choose from in terms of underlying assets than any other pension scheme in the UK.
