Are you looking for a QROPS? If so, you may have some idea about what kind of foreign pension scheme you are looking for. But sometimes it is handy to have a shopping list of the requirements that are essential for a good QROPS.
Tax efficiency
First and foremost, investors are attracted to QROPS because they offer a chance to stop paying UK income tax on their pensions when they are abroad. But it is important to remember to take into account the effect of foreign tax systems when you are looking for a QROPS. There are potentially two tax systems that you need to be aware of. Firstly, there is the country where your QROPS is based. Your QROPS adviser should explain the tax consequences of wherever you choose to site your QROPS.
Secondly there is the country where you live, if this is different from your QROPS country. Many investors choose a QROPS in a “tax neutral” place like Guernsey (which means that they pay no tax there), and only pay tax in their country of residence.
IHT efficiency
Whether it is because people don’t like thinking about their own death or about taxes, IHT is often forgotten about. But IHT planning is an important part of wealth management. It has been confirmed this year that QROPS are exempt from IHT in the United Kingdom. However, there may potentially still be a charge in the country where your QROPS is based.
Adaptable
Have you got your retirement all mapped out, or will you just take it as it comes? If you plan to do certain things at certain times, you may need access to lump sums early on in your retirement. Accordingly, you will need a QROPS that allows you to do this.
Some QROPS insist on compulsory annuitisation, but others have no such requirement, so discuss the mater with your QROPS adviser to see whether this is an issue that affects you.
