Qualifying recognized overseas pension schemes or what is more commonly known as QROPS can be dated back to 2006. Through these schemes, non-UK residents have the ability to transfer any UK pension funds overseas. It is not hard to see why since their launch QROPS have grown in popularity. Before setting out to invest in QROPS there are a few important things you need to keep in mind.
Know what QROPS means and what it stands for
As we have already discovered QROPS stands for Qualifying Recognised Overseas Pension Scheme. In short, QROPS refers to an overseas pension scheme or fund which meets the requirements set out by the HMRC. The schemes which meet the qualifying requirements will then receive a pension payment from a UK registered scheme. These payments are also tax-free on transfers. For residents of the UK who are thinking of moving to other countries after retirement, one of the best things you can do is to invest your pension into a QROPS.
Know why you want to talk about QROPS
As mentioned already if you are looking at retiring abroad you will want the best option for your pension. Through QROPS you are offered an effective and more importantly a tax efficient way to move your savings.
Understand the benefits of QROPS
One of the top reasons so many retirees opt for QROPS lies in the advantages of the scheme. Those who choose to go down the QROPS route will find that their UK pension is paid without being taxed for income tax. This however only kicks in after five years following the retiree’s move abroad. Additionally, should the retiree die the remainder of the fund can be paid to selected beneficiaries with the mandatory 55% UK tax charge. You can read more about this here: HMRC QROPS explained.
If you are looking at taking up QROPS you will need to know that all payments made in the first five years will be subjected to UK tax regulations. QROPS offers non-UK residents much more flexibility in that the scheme does not have to be implemented in the retiree’s new country of residence for the plan to kick in. You do need to take note that the lump sum which is needed for QROPS will vary between jurisdictions. To find the best investment opportunity, you should contact a knowledgeable adviser.
Understand what your options are
If you have decided that you will want to retire abroad, you need to know that QROPS might not be the best alternative for your pension. Before heading into a QROPS scheme, you need to understand all of the alternatives available to you. Understanding these benefits will help you best understand what the right option for you is.
Talk it through with a professional
Deciding to retire abroad is an exciting prospect which will hold many challenges for you. Before you decide on a destination or a retirement plan, you need to make contact with a professional who will be on hand to assist you at all times. A knowledgeable professional will be able to help you find the best alternative for your pension.