QROPS for UK Pensions

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QROPS for UK Pensions

Traditionally, regulations have made it difficult to move UK pension benefits overseas. British citizens resident in Cyprus (and elsewhere in the world) could not move their pension to an overseas one without paying basic tax on the transfer. 

In April 2006 HM Revenue and Customs (HMRC) put in place a pre-approved system whereby UK pension rights can be transferred outside of the UK into a QROPS (Qualifying Recognised Overseas Pension Scheme) without tax deduction.

QROPS meets the criteria set by the HMRC, thereby creating a method for transferring UK pensions into foreign plans.

Qualifying Recognised Overseas Pension Scheme (QROPS)

QROPS is a pension scheme that has been set up outside of the UK and is regulated and recognised for tax purposes as a pension scheme in the country in which it is located. QROPS has been established in various countries, with many residing in low tax jurisdictions or in countries that have more generous tax-free lump sum rules. QROPS can be easily transferred to where you are residing.

HMRC only allows transfers into a scheme which it approves and recognises, therefore it is important to seek professional qualified and authorised advice.

Benefits of QROPS

A QROPS has major benefits for Britons residing outside of the UK: 

• No liability to UK tax on pension income. After five years there is no longer any reporting duty to the UK
• No requirement to purchase an annuity or alternatively secured pension
• Money belongs to you and becomes part of your estate, enabling you to leave remaining fund to heirs
• Payments are made in local currency, therefore not subject to currency charges
• Investment freedom: the pension can be taken out of the UK and invested as you wish 
• No lifetime allowance charge
• Spouses and dependents receive 100 percent of the pension
• Can start releasing money sooner and in a more tax efficient way than would have been done before
• Tax free lump sum
• Income can be taken from the pension in a tax efficient way

QROPS represents a valuable investment and tax planning opportunity for individuals with UK pension rights who are not resident in the UK or are considering leaving the UK. 

Note: the system does not suit everyone and it is important to get the advice of a specialist in the field.

Related Information

• List of some qualifying QROPS schemes provided by the HMRC (updated monthly): Click here

Information supplied by Jeremy Fram, Expatriate Financial Advice
Tel: +357 25 812 477 / +357 99 955 176
e-mail / Website
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