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Guide To QROPS

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Guide To QROPS

15:51 08 February in Other Guides by prismxpat
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Prism Xpat has put together this basic guide to QROPS to help you understand what these are and what to consider if transferring a pension fund from the UK.

What is a QROPS?

A Qualifying Recognised Overseas Pension Scheme. Recently, the HMRC removed the ‘Q’ from QROPS, placing more onus on the receiving scheme, advisers and clients to ensure that the scheme is qualifying for UK purposes. However, we have used the term QROPS for this guide, being industry accepted terminology.

The QROPS regime was established as part of the UK’s pension simplification regime on being 6 April 2006 (otherwise known as ‘A-Day’). A QROPS is a type of non UK based pension (or superannuation) scheme which meets certain requirements set out by the UK’s HM Revenue and Customs (HMRC) and which can receive a transfer of pension benefits from the UK without incurring an unauthorised payment or scheme sanction charge.

A QROPS differs from a UK pension scheme as it needs to be a complying superannuation/pension fund in your country of residence, whilst also meeting with the QROPS rules set out by the HMRC. QROPS are required to report to the HMRC any payments made to the pension scheme member for at least ten years from the date the transfer took place. However if the pension holder has been non-UK resident for at least five complete and successive UK tax years they can benefit from more attractive options than those allowed under UK pension schemes.

A Checklist – Transferring your UK pension funds into a QROPS – What to Consider

  1. Plan in Advance. Ideally, you should consider what to do with your UK pension in advance of any move, to maximise the benefits available;
  2. Possible. Is a transfer from your UK pension fund is actually possible?;
  3. Lifestyle. Will a QROPS transfer fit in with your lifestyle requirements?
  4. Financially Worthwhile. Is a transfer of your pension funds from the UK in your best financial interests?;
  5. When?. If a transfer is worthwhile, when should the transfer be undertaken?;
  6. Jurisdiction. Consider whether use of a local QROPS, or QROPS based abroad is likely to be best for you from an after-tax point of view;
  7. Where? Which is the best QROPS to have your pension funds transferred into?;
  8. Transfer. To avoid paying significant rates of tax on the transfer (ie 55%+), make sure that the transfer and any subsequent withdrawals or roll overs are undertaken in line with the QROPS rules set out by the HMRC
  9. Investment. Ensure that you do not breach the UK’s QROPS investment rules
  10. Withdrawal. Ensure that you do not breach the QROPS withdrawal of income rules.

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Where do I find QROPS Funds?

The full list of QROPS can be found on the published list produced by the HMRC.
A QROPS is added to the list once the non-UK scheme has notified the HMRC that it meets the conditions to be a QROPS. The list is usually updated twice per month.

The list is not intended to give any assurance that the HMRC has checked all the information for the named scheme and a scheme’s name will be removed from the HMRC list if the HMRC is aware that the scheme no longer meets the criterion to be regarded as a QROPS, or if the HMRC has concerns about the scheme’s status at any time.

Note that publication on the list should not be seen as confirmation that HMRC has verified all the information supplied by the scheme in its QROPS notification. Further, the list should not be considered as a recommendation for any scheme or product listed. Nor should it be taken that any scheme featured on the list is approved or backed by HMRC.

Further, if a scheme is included on the list, whereas in reality is has not satisfied the considerations to be treated as a QROPS any transfer made into the scheme may not be a recognised transfer and could give rise to an unauthorised payments charge and unauthorised payments surcharge liability for the member and to a scheme sanction charge liability for the scheme administrator.

Professional advice should be sought prior to any transfer to a QROPS being considered to ensure this is in your best financial interests.

For further information, please contact Prism Xpat on +44(0) 845 450 4004, or by email to welcome@prismxpat.com