What is a QROPS and why should it be of interest to me before Brexit?
A QROPS (Qualifying Recognised Overseas Pension Scheme) is an international pension plan which can accept a UK pension transfer. If you have built up a UK pension, or pensions either as a defined benefit scheme, or personal pension scheme, it is possible to transfer these into an International pension plan called QROPS.
Since the change in legislation earlier this year a QROPS is now only available to those living in the EU. Currently expats and retirees living within the EU are still able to have a QROPS, but they must act soon as there are concerns that BREXIT may stop the facility altogether.
The window of opportunity is now, so if you are currently living abroad, or you plan to retire abroad you must take advantage before it is too late and the option of a QROPS is removed completely.
What are the benefits of a QROPS to someone who has retired overseas, or intends to retire in Europe within the next 2 years before BREXIT?
Why are QROPS so popular?
Since their launch in 2006, the popularity of the HMRC QROPS continues to grow amongst expatriates and individuals considering a move overseas. Recent legislation means that these are now restricted to the EU. (Prior to the budget this year a QROPS was available to anybody worldwide).
Demand for QROPS has experienced a year on year growth since inception in 2006 – which looks set to continue throughout 2019 with a major impetus.
We would suggest that any clients considering a retirement or becoming an Expat within Europe or have already retired in Europe should investigate a QROPS pension transfer and should do so as soon as possible to avoid missing the opportunity all together due to potential changes.
Why consider a QROPS?
Here are the top 20 most important benefits to you.
- Up to 30% Tax Free Lump Sums compared with 25% in the UK
- Greatly increased investment freedom and opportunities
- Income taxed in country of residence often lower than taxes in the UK
- Final salary schemes can be transferred if appropriate
- No Income Tax charge on death- Outside the scope of the 45% tax charge
- No exchange rate risk, as you don’t have to leave your UK pension in Sterling
- Benefit from Worldwide investment options
- The ability to base your pension in a country other than your country of residence
- Portability and flexibility as can be transferred to jurisdictions that can offer the best tax advantages
- Consolidation, can put all pensions together under one roof
- Maximising a Spouses Pension i.e. 100% can be transferred to your spouse or children
- Early Retirement can retire as early as 55 irrespective of your current schemes restrictions
- Flexible Pension Income for Tax Planning
- Continuing advice on your pension assets
- Clean Break for UK Inheritance Tax (IHT) so no liabilities for next of kin
- Early Retirement from a Final Salary Scheme
- Breaking away from UK Pension Legislation and imposed taxes
- Protection against creditors in the event of bankruptcy
- Protect your pension asset against any Divorce settlement
- Easily pass on your wealth
There are other advantages of QROPS, some of them potentially more important to your particular situation than those listed above. For example, you could benefit from consolidation of your savings, better control and management if you are living outside the UK, or your spouse could have better access to death benefits in case of your death.
Transferring your pension is a big decision, which must not be made without careful analysis of all the facts and benefits. In order for you to look at this option and have a wealth review, get in touch with Laurus Financial today.