If you are planning to move abroad for your retirement, you can either leave your pension arrangements in tact in the United Kingdom, or transfer your pension assets to a foreign scheme. Overseas schemes that are authorised to accept UK pensions are known as QROPS (Qualifying Recognised Overseas Pension Schemes), and have been available since 2006.
As long as your current UK scheme is a private one and is not yet in payment, transferring it to a QROPS is probably allowed by its rules, although of course a QROPS adviser should look over the details before any transfer is actually made.
However, assuming that your current scheme will permit a transfer, a QROPS may have the following 4 advantages leaving the assets behind in the United Kingdom.
Tax
The first thing that draws investors’ attention to QROPS is their tax advantages. Given that no UK income tax is payable on QROPS (as long as you remain outside of the United Kingdom for at least 5 years following the transfer), you can see why thousands of people have been tempted by them.
Whilst you will fall into the tax regime of the place that administers your QROPS and also where you live, you have the luxury of choosing both of these places, and as such you may choose jurisdictions that may give favourable tax treatment.
IHT
People do not like to think about inheritance tax, but it could take a large chunk out of the amount available to be passed on to your dependants. Accordingly, if you choose a QROPS in a jurisdiction that treats your pension assets as exempt from IHT, you may be able to mitigate your potential IHT bill significantly.
Choice
Do you have a particular underlying asset in mind to underpin your pension? If so, you may wish to escape the restrictions of the UK pension regulatory regime and strike out into the world of QROPS, where you may find that pension rules offer you more choice.
Flexible access to your money
There is nothing more frustrating than working hard all your life to provide a comfortable retirement and then being told how to spend your own money. With QROPS, if you shop around for the right product you may find that you can access bigger lump sums than the UK system would permit you to take.
