What is a QROPS?
A Qualifying Recognised Overseas Pension Scheme (QROPS) is an HMRC-recognised pension transfer scheme that is based in a jurisdiction outside the UK but still keeps the same standards or equivalent as a UK pension.
If you are thinking of moving away from the UK but have a local pension, then those savings are easily transferrable into a QROPS, provided that the overseas scheme of your choice is registered with HMRC and fully compliant with the standards of the jurisdiction it is domiciled in.
Why should I choose a QROPS?
A QROPS provides you with more control over your pension fund investments. With a QROPS, you can combine various smaller pensions into one large pot. Additionally, you can even do away with purchasing an annuity thanks to this scheme.
QROPS will also let you bestow the rest of the fund to your beneficiaries without any deduction of UK tax upon death, as long as you have spent five years or more living outside the UK.
Is a QROPS suitable for me?
If you have left the UK or are planning to leave, then a QROPS may be the best option for you to unlock your UK pension. That being said, it is always essential to consult a professional and get the advice you need before taking steps to set up a pension transfer. Speak to one of our financial advisers for a no obligation consultation.
What are the key benefits of a QROPS?
- Consolidation of multiple pensions
- Flexible choice of currency
- Funds fully conferred on to heirs after death (after five full years of non-UK residence)
- Investment flexibility and freedom
- No obligation to buy an annuity
- Possibility to allay UK income tax or death charges of up to 55%
- Safe and well-regulated jurisdictions
- Transparent charges
- Up to 30% pension initial lump sum (see rules of residence above)
Which is the best jurisdiction for QROPS?
The QROPS jurisdiction you choose will vary depending on your individual requirements - however, we highly recommend Malta and Gibraltar. Malta is an integral member of the EU, with a highly-regulated banking sector and a fully transparent tax system while Gibraltar's links with the UK make it subject to EU rules and regulations.
Please note: Any transfers to a Hong Kong pension that has UK QROPS status after 9 March 2017 could be subject to a retrospective tax charge should you leave Hong Kong and become resident in another jurisdiction within 5 years of the transfer. Professional advice should be sought.
To find out more about QROPS, contact Acuma Hong Kong today.