Introduced in 2006, thousands of members of UK pension schemes who have moved abroad have found their perfect QROPS. So how can you tell which product suits you, and what are you looking for?
First, what is right for one investor may not be appropriate for somebody else. Accordingly, it is essential to go to a well respected QROPS adviser and ensure that they are aware of your personal retirement plans before they look around at the marketplace to see what is available.
For example, if you want to access some of your retirement pot in the next couple of years to pay off a mortgage, there is no point signing up to a scheme that will force you to annuitise before you need the lump sum.
Choosing a destination for your QROPS is about balancing the need for flexibility in a pension scheme with the tax implications. Given that you are probably looking at QROPS primarily as a tax mitigation exercise, it is essential that the numbers stack up from the point of view of tax efficiency.
Fortunately your QROPS does not have to be based in the same country as you. This makes that offshore jurisdictions are popular, as they typically treat non-residents well. Your QROPS adviser will also take into account the tax regime of the country that you will eventually live in, and give you an idea of how much, if any, tax you would end up paying for any combination of countries.
If you are currently drawing your pension in pounds to spend abroad, no doubt you are becoming weary of the effect of currency fluctuations eroding your pension pot. This is a problem that can be solved by a QROPS, as this is an ideal chance to “fix” you pension into a new currency. Of course, that choice of currency is a decision that is best made with professional advice.
If no “off the peg” QROPS appeals to you, it may be possible to create a bespoke QROPS around your individual needs. However, as with clothes, a tailored solution may be slightly more expensive!
