There’s no time like the present for expats planning to switch their UK pensions to an offshore Qualifying Recognised Overseas Pension Scheme (QROPS).
New Chancellor Phillip Hammond is under pressure to ‘reset the economy’ in his own words following the referendum vote to leave the European Union.
Despite observations, opinions and predictions from economists, politicians and the City, no one knows for sure where the post Brexit future of Britain lies and how any changes will impact on personal wealth and pensions.
Expats have options.
They can leave their retirement cash tied up in onshore pensions where they are taxed on paying out, suffer exchange rate buffeting as the Pound rises and falls and in a place where further tinkering by the government could devalue them.
QROPS options for expats
The alternative is a QROPS.
QROPS operate in a similar way to onshore SIPP pensions, only they are based in an offshore financial centre. Around 45 centres host QROPS, from Australia to Malta and Gibraltar.
Switching funds to an offshore QROPS allows a retirement saver to take control of their money.
Once transferred into a QROPS, although HM Revenue and Customs (HMRC) closely monitors a scheme to ensure no rules are broken, managing the fund and applying tax benefits is much easier.
These benefits include:
- A tax-free lump sum of up to 30% of the fund value rather than the 25% offered onshore
- A wider range of investment options across more markets, currencies and commodities
- Foreign exchange advantages that avoid juggling rates and timing cash transfers
- Flexible access through some QROPS based in Malta
- No lifetime allowance restrictions after transfer from the UK
- Estate planning opportunities for leaving unspent funds to relatives or loved ones
Timing the switch
The timescale for a transfer averages around 12 weeks – and that time will fly by after the holiday season to when Hammond is planning an Autumn Statement that could further impact on onshore pensions.
Expats do not have to worry about arranging the QROPS fund transfer.
QROPS providers will expect the transfer to follow a recommendation from an international IFA.
The IFA’s role is to discuss financial objectives and to match taxes where an expat intends to live with those where the QROPS is based and the UK, then to manage the transfer.
Further 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.
