Qualifying Recognised Overseas Pension Schemes (QROPS) are hitting the financial headlines as the British government readies to extend flexible access to more than 1,200 offshore pensions for expats.
The big change is expected in April 2017, following a policy heads-up from HM Revenue and Customs (HMRC) in December.
The move effectively extends pension freedoms enjoyed in the UK to all expats with a QROPS.
This supercharges the already generous tax and investment incentives offered by QROPS enjoyed by almost 110,000 expats retirement savers who have switched £8.8 billion offshore from their UK pension funds.
QROPS qualification
If you are a British and tax resident in another country, you are eligible for a QROPS. The opportunity also extends to soon-to-become expats ready to move overseas soon.
What pensions can transfer to a QROPS?
Expats cannot move the state pension or a public service pension.
Personal pensions, SIPPs and workplace pensions are OK – even final salary pensions providing an IFA has explained the consequences of giving up guaranteed income.
Will all QROPS come with pension freedoms?
No. The decision will be made by the provider. So far, only Malta QROPS offer pension freedoms like the UK, but Gibraltar, Guernsey and the Isle of Man are expected to take advantage of the new rules.
When can I draw on a QROPS?
From the age of 55
Do I get a tax-free lump sum?
Yes. Most QROPS offer a 30% tax-free lump sum compared with 25% in Britain.
Do expats pay tax on the rest of the fund?
This depends on where they are tax resident. For example, Dubai has a zero rate of income tax, so because QROPS benefits are paid gross and reported to the local tax authority, no income tax is due.
For countries with higher rates of income tax, this would be due locally.
QROPS are not paid in sterling
Another bonus is QROPS can be denominated in a range of major currencies and paid direct to a local bank. This cuts out exchange rate juggling, is quicker than staging payments through two or more banks and saves transfer costs.
No QROPS in the country where you live?
Don’t worry. Some providers will let expats base their QROPS in one country while they live in another – a QROPS professional can advise on the best options where you live.
QROPS Information and Guidance
For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.
