If another year has passed and you have done nothing to detox your retirement savings, then now’s the time to take action.
Expats with UK pensions have some decisions to make about whether to transfer into a Qualifying Recognised Overseas Pension Scheme (QROPS).
In April, the lifetime allowance for a UK pension drops to £1 million, which means savers face penalties if their retirement savings rise above this cap.
If cash is shifted into an offshore QROPS, the current value of a pension pot will be tested against the 2015 lifetime allowance limit, which is £1.25 million.
Providing the value of savings are under this limit, the money can transfer into a QROPS without any tax penalty – and then grow unrestrained offshore whatever the lifetime allowance figure is set at in the UK.
Tips for streamlining your QROPS
Expats and workers from overseas who have pensions in the UK can take advantage of transferring their money into a QROPS.
Now’s the time to act as dealing with red-tape involved in transferring to a QROPS will eat up the weeks between now and the end of the financial year .
Any retirement saver considering a switch to a QROPS should also run the rule over their financial strategy.
Currencies, interest rates and markets are prone to move quickly and now may be a good time to review financial decisions made over the past couple of years to make sure any QROPS investments are on track.
Also think about consolidating pensions to save on charges and boost investment growth.
Choosing the right QROPS
Choosing the right QROPS is a job for an experienced independent international financial adviser.
The market offers almost 1,000 pensions across more than 40 countries, and the IFA will whittle down the number to a short list that should match the saver’s personal circumstances.
These take into account issues such as tax residence, how tax residence overseas interacts with UK tax, whether a QROPS saver intends to move countries and other matters like estate planning.
The HMRC web site has a list of current QROPS pensions – but although some are marketed as ‘HMRC approved’, the administrators self-certify compliance with QROPS rules and an IFA should ensure any documentation about the pension meets the current rules.
