What to look for in a pension

If the only pension scheme you have been a member of is an occupational one, you may not have done any “shopping around” to find it. When the personnel department hand you a bunch of forms to sign and set up everything on your behalf, you simply go ahead with what has already been organised.

But when something happens in your life that makes you review your finances, what should you look for in a pension?

If you are taking a work placement abroad or moving to another country for a different reason, you may wish to consider a QROPS. Qualifying Recognised Overseas Pension Schemes are foreign pension arrangements that allow UK pension assets to be transferred into them without incurring UK income tax.

Aside from the condition that you have to remain outside of the UK for at least 5 years after the pension has been transferred, the rules and regulations surrounding them are not restrictive. So what are the criteria you should apply when choosing one?

Tax efficiency

Just because QROPS are not liable to UK tax, it does not mean that they are exempt from local taxes accordingly, you need to check what the tax implications of holding a QROPS would be from the point of view of the place you are moving to. QROPS can be held anywhere that HMRC has authorised to run them, so you may find it advantageous to live and have your QROPS in different places.

Freedom

Having been dictated to by HMRC and the UK government for so many years about how much and when you can make withdrawals from your UK pension, you may be surprised that at how flexible QROPS can be on the issue. Some QROPS can let you take larger lump sums sooner than UK schemes will allow.

Currency

QROPS can be held in most of the major currencies, so even if your pension is not in the same country that you live in, you may be able to hold your pension (and receive payments) in the same currency that you spend. This can cut down on the exchange rate costs, which will save you money in itself.