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What is a QROPS?
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QROPS (Qualifying Recognised Overseas Pension Scheme) is an HMRC recognised international pension scheme. According to the latest list of recognised schemes published by HMRC, there are currently around 2500 QROPS in over 35 different countries worldwide.
occupational pensions, QROPS provide UK expat clients with the ability to transfer their benefits to a jurisdiction that is more in line with their circumstances and objectives. Although it is possible for a UK resident to transfer a pension to a QROPS, a number of the benefits wouldn’t apply and it may not be in the client’s best interest to do so.
The vast majority of these schemes are occupational schemes and are only open to employees. Knowing which scheme and more importantly, which jurisdiction is right for the client, is paramount.
In many ways a QROPS works in a similar way to a Self Invested Personal Pension (SIPP). Whilst there have been several schemes trying to exploit loopholes to extract as much benefit as possible from a pension, more often than not these fall foul with HMRC and are removed from the recognised list of schemes. In extreme cases the jurisdiction as a whole can be removed, not just the individual schemes.
Although it has been possible to transfer a pension out of the UK to an occupational scheme for some time, the modern legislation was totally revamped and made available to personal pension schemes following A Day in April 2006. Since then there have been a number of developments and changes to the QROPS landscape. Designed specifically for UK personal and
Who is eligible for a QROPS?
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he vast majority of clients will be eligible for a QROPS. However, only certain pension schemes can be transferred in and there is little benefit to be gained by making further personal contributions as there may be no tax relief available. It’s not possible to transfer an occupational pension that is in payment, and in some cases it may not be possible to transfer an occupational pension that isn’t in payment, if the member has passed the scheme retirement age. It isn’t possible to transfer a state pension to a QROPS. There isn’t any hard and fast rule regarding the minimum or maximum transfer limits to a QROPS, however the suitability of a transfer is determined by a number of factors. As a general rule, due to the charges applicable to a QROPS and the annual tax allowances in the UK, transfers under £30,000 may not be viable.
SPECIALISTS IN WEALTH CREATION AND PRESERVATION.
Annual allowance limits apply on transfers from UK schemes, these are reviewed regularly and in the latest budget announcement the limit for 2014/15 is set to decrease to £1.25m, currently £1.5m. Any transfers in excess of this limit may be subject to an additional tax charge unless the client has secure protection.