It’s only recently that Qualifying Recognised Overseas Pension Schemes (QROPS) have become an option for the large number of UK pension holders now residing in the USA.
The regulations regarding these transfers are strict, and it took a group of US law attorneys, working in collaboration with an esteemed selection of global pension providers, to design and create a bespoke scheme which meets all the criteria necessary to be compatible with the US regime.
The IRS has never been a fan of what it sees as over-generous British pensions, and as such it doesn’t accept UK pension transfers into the US, even if the US pension scheme has been recognised by HMRC as a QROPS.
Demand
But as client demand continued to grow, and the QROPS market continued to establish itself, the need to provide a model appropriate for US residents was identified. The answer was found in Malta, the Double Taxation Agreement they have in place with the US was examined, and a pension scheme was designed which allowed for the majority of UK pension holders in America to benefit from transferring their pension into a more flexible, tax-efficient overseas model.
While the complexities involving a transfer seldom make the process black and white, part of expatriate financial planning simply has to include the consideration of a QROPS.
Thousands of US residents have already taken up the option introduced by HMRC to take their savings with them as they left the UK, and the huge interest generated by QROPS in the States currently has led a number of global pension providers to Malta in order to introduce schemes designed to benefit this growing market.
Benefits of a QROPS includes:
- Investment flexibility and diversity
- No exposure to currency fluctuations
- The chance to consolidate multiple pensions into a more manageable pension model
- Tax efficiency
- Up to 30% as a tax-free lump sum
A QROPS is only an option for a saver who no longer resides in the UK, and who has plans to retire overseas. It should be noted that a QROPS may not always be the best option available, much depends on personal circumstance.
Qualified advice and guidance should always be sought before beginning the transfer process. You can contact iExpats if you require more information, and we will put you in touch with a US QROPS expert.
The iExpats QROPS guide is also available for free download, and can provide a valuable source of information for those concerned at leaving their pension in the volatile and uncertain UK pension market.
