People residing in the USA with a UK pension are slowly starting to take advantage of QROPS, Qualifying Recognised Overseas Pension Schemes.
The pension funds are HM Revenue and Customs (HMRC) compliant overseas pension schemes which can hold a UK pension. They can be based in a number of offshore jurisdictions, including Malta, the Isle of Man, Ireland and Australia, to take advantage of favourable tax treatments and other factors which make life easier for those no longer living in the UK.
So far for US residents, Malta is leading the pack for those looking to utilise QROPS legislation.
This is due to a tax treaty which specifically handles the safe treatment of pensions held on the island and confirms it as holder of US qualifying pension funds.
Out of the nearly 50 QROPS jurisdictions in operation worldwide, Malta is one of the few with this built-in protection.
“We know that the [Malta] QROPS providers have worked hard with tax authorities, legal teams and financial advisers to get it right,” notes John Cassidy
“This has allowed them to succeed where others failed.”
As an established QROPS centre, the island has a total of 15 schemes offered by different providers – which includes a small number that have been specifically designed for American residents.
And whilst new schemes are created every day, it is important to note that not all Maltese QROPS are created equally.
QROPS in detail
On the whole, Maltese QROPS offer effective tax and investment opportunities to many American nationals, and UK and international expats living in the USA.
This includes:
- A lump sum of 30% of the total pension value.
- Protection against US Federal Income Tax on any pension growth made from the wide variety of investment classes available – including cash, shares, certain types of property and commodities.
- Using foreign tax credits to offset any taxable income you would incur after transferring your pension. In addition to pension income not being taxed in the UK.
- Tax benefits upon death for your beneficiaries.
- Pension structured in US dollars – meaning you receive your pension income in a suitable currency, and avoid having to time pension income to make the most of exchange rates.
In addition, Malta is a full member of the European Union, is a long-respected financial hub, and holder of a British-style legal system; making the island a stable and safe destination for an individual’s pension assets.
Finding the right advisor
Certain leading firms have arranged QROPS transfers for American residents for a number of years, yet a prevailing lack of awareness has meant many advisors have avoided this type of transfer.
To ensure your pension transfers is handled properly, you should therefore consult with a financial advisory with regulated USA offices, and international experience in QROPS transfers.
To learn more about QROPS pension transfers for American residents, you can complete the Get Advice form beneath this article to speak to a regulated advisor with the appropriate experience, or download our QROPS guide.
