QROPS or Qualifying, Recognised, Overseas, Pension Scheme, came into being on pensions A day on 6th April 2006. It is an HMRC regulated scheme that allows expats, or anyone planning on becoming an expat in the next 12 months, to transfer their UK personal or company pension offshore.
The receiving plan must:
- Be a recognised overseas pension scheme and have HMRC QROPS number.
- Ensure at least 70% of the transfer fund will be used to provide an income for life.
- Undertake to notify HMRC of any payment in respect of a member for 10 years from the date of transfer.
The benefits of QROPS are:
- a. Potential to avoid the 55% UK tax charge on death.
- b. Potential to save between 20% and 45% tax on pension income.
- c. Up to 30% pension commencement lump sum.
- d. Eliminate the LTA, (Life Time Allowance).
- a. Greater control of where the pension fund is invested.
- b. Ability to influence the investment strategy for the pension fund.
- c. Pension fund can be passed on to beneficiaries on death.
- d. Simplicity – numerous pensions can be consolidated into one QROPS
- e. Choice of currency options to help mitigate exchange rate risk.
To transfer your pension to a QROPS you need two things:
- Trustees – a company approved and regulated by HMRC.
- An investment platform to allow funds etc. to be purchased and sold.
PADS use Castle trust as the trustees and Cornhill as the investment platform both of whom’s brochures you can see eblow.