UK Pension Advice-QROPS explained!
I have been working within the pension arena for some time and there are a lot of companies out there advertising on the internet so I am sure you are all familiar with seeing the word "QROPS".
To become a QROPS, a pension scheme must apply to and be approved by HMRC. A list of QROPS that have consented to have their names published is available on the HMRC website and is regularly updated.
You will see on this list the company I work for which is Global Fiduciary Solutions Limited and we are now one of only a couple of approved schemes here in Hong Kong under the "GFS Superannuation Scheme 2"
A QROPS should operate broadly in line with UK pension rules. A UK pension holder who has transferred their pension to a QROPS should be in a similar position as they would have been if the transfer had not taken place. What differentiates a QROPS from a UK held pension is that it must be recognised as a pension scheme under the country's legislation where it resides whilst still complying with the rules set out by HMRC. As the jurisdiction's rules, where the pension resides, differ to UK rules this leads to benefits available to the holder in comparison to a UK pension scheme. These benefits include having a greater choice of how much income can be drawn and the ability to avoid death taxes. On returning to the UK a QROPS will be treated the same as any other UK pension scheme which may necessitate changes to the underlying holdings. A key requirement prior to returning to the UK is to ensure all investments held within the account are UK compliant. This may involve selling some or all of the current investment holdings. The policy can then be fully endorsed.
QROPS schemes are required to report to HMRC any payments made to the member for at least ten years from the date that the transfer took place. However if the pension holder has been non-UK resident for five complete tax years they can benefit from more attractive options than those allowed under UK pension schemes.
QROPS are increasingly popular with British Expats due to the tax advantages they offer on pension draw downs and their ability to be transferred to chosen beneficiaries in the event of the pension owner's death. Pension funds left in the UK are heavily taxed, in some cases up to 55%. Transferring a UK pension fund into a QROPS can avoid UK taxation.
For more advice on anything related to your UK pension and whether it is a benefit for you to look at a QROPS, you are welcome to contact me for a free consultation.
Simon Lee Bishton
Global Fiduciary Solutions Limited