Are you thinking about getting a QROPS but can’t face reading mountains of information about them? If so, you may wish to consider the following questions.
What is a QROPS?
First and foremost, what is a QROPS? QROPS stands for Qualifying Recognised Overseas Pension Scheme. They were introduced by HMRC so that members of UK pension schemes who were no longer resident in the United Kingdom for tax purposes could take their UK pensions overseas without incurring a tax charge.
Is there much choice?
There are over a thousand QROPS to choose from. The schemes are offered by a number of recognised financial services providers.
QROPS do not have to be based in the same country as the expat who is looking for one, which means that an investor can choose from a variety of jurisdictions that offer them. Accordingly, your QROPS could be on the other side of the world from you, if one is available in a jurisdiction you like the look of.
Is there a catch?
There is no catch, but there are rules that have to be adhered to strictly – otherwise you may risk a large tax bill and possibly a penalty if HMRC suspect that there was any skulduggery involved.
The first rule is that the QROPS must be one that HMRC have vetted. Whilst they do not recommend schemes, they do check over the details of individual arrangements to make sure that they are taxed and regulated as pensions in their own countries.
The second but no less important rule is that the expat concerned must reside outside of the United Kingdom for at least five years after their pension has been transferred. If you do not plan to be away from Britain for as long as that, you may wish to consider an alternative investment vehicle. However, if your plans to emigrate are long term, a QROPS may be ideal.
