What are QROPS?
Introduced in April 2006, a QROP (Qualifying Recognised Overseas Pension) Scheme is an HMRC-recognised offshore pension scheme that allows non-UK residents to transfer their UK private / corporate pension offshore, tax free.
The first step in setting up a QROPS pension transfer is to be clear about your residence status. To qualify you must be living abroad permanently or be about to leave the UK to settle overseas.
To make it worthwhile financially your pension fund should also total 25.000 pounds or more. Once that is established your next move should be to contact an impartial QROPS pensions transfer specialist who will be able to advise on where best to invest your money.
Investment planning
Decisions made at this stage are crucial. Even though you can change your investment arrangements later, you stand the best chance of maximising your return by getting the best possible advice on QROPS providers and making the right initial decisions.
It is not just a question of which fund you transfer your pension to, but of which jurisdiction you base it in. This can have important financial consequences - in some jurisdictions you will not have to pay any tax at all at source.
Although you will still be liable for tax in your country of residence, there will be no capital gains tax on any growth in your assets and you may be able to avoid inheritance tax.
Managing assets
Your adviser will work with you to draw up an asset management plan that defines your income goals, growth targets and the level of risk you are prepared to take to achieve them.
Once this is decided your adviser will usually ask for authorisation from you to contact your pension provider to ascertain if the pension can be transferred and what its total value will be.
If your investment totals 100.000 pounds or more you will have even more control over how your money is invested because you will be able to choose which offshore portfolio bond to invest in.
With amounts less than this the adviser will select an automated strategy designed to meet your requirements.
Freedom from restrictions
The final stage is to apply to the QROPS provider and then transfer your pension pot, allowing you to begin reaping the benefits of having a retirement fund free of UK income tax and restrictions. At this point you will also be able to take up to 30 percent of the pot in a tax-free lump sum.
The whole process should take between one and three months. For the first five years you will be required to report payments to the UK revenue and customs office, but after this period there will be no further reporting requirements, leaving you with even greater investment freedom.
QROPS puts you in control of your financial future. Talk to an adviser today to find out how it can work for you.
Whichoffshore provides professional expatriate information on offshore estate planning, QROPS pensions and more, in order to help British expatriate make the most of their money.