Qualifying Recognised Overseas Pension Scheme (QROPS) are pensions without borders even if you live in a country without a local provider.
The United Nations lists 196 member countries, but the HM Revenue & Customs (HMRC) lists just 40 financial centres with QROPS.
If you live in one of these 156 other countries, you can still consider the tax effective and investment benefits offered by a QROPS.
The key is some QROPS centres offer ‘third party’ QROPS.
These QROPS sit comfortably in a financial centre, such as Malta, Gibraltar or the Isle of Man, while the expat moves around the world.
Globetrotting contractors
This arrangement suits globetrotting contractors, like those in the oil and gas industries, finance and technology.
Expats settling in countries without QROPS also benefit, which takes in most nations in South America, Middle East, the Asia Pacific and Africa.
These third party QROPS offer all the features and advantages of similar pensions based in other financial centres, so expats transferring their pension pots out of the UK to an offshore scheme have nothing to lose and much to gain.
Choosing the right QROPS is more complicated than just sticking a pin in a map.
Expats need to consult a qualified and experienced international IFA who is regulated to give the pension advice they need.
Have QROPS, will travel
Besides the financial and investment aspects of a QROPS, the adviser will want to explore tax relationships between the country where they intend to live and draw pension payments and the financial centre where the QROPS is based.
Other issues will crop up in the discussion as well, such as which foreign currency benefits will be paid in, estate planning and inheritance tax.
With nearly 900 different QROPS available around the world, there’s an offshore pension out there for every expat, but the trick of choosing the right on is aligning personal financial objectives with the right tax and investment options.
So, you can switch to a QROPS if you are an expat or someone from overseas who has pension rights in a UK direct contribution pension – that’s a workplace pension, private pension of self-invested pension plan (SIPP) that pays out according to fund value rather than final salary and length of service.
As long as you are tax resident outside the UK and intend to settle permanently overseas, just because where you live does not offer a QROPS does not mean they are banned or unavailable.
