Thousands of British expats have transferred billions of pounds into QROPS offshore pensions, but many more expats could benefit if they realised the benefits.
QROPS are tax and investment efficient pensions that run on similar lines to a self-invested personal pension (SiPP) in the UK.
Just over 1,700 QROPS in 28 countries are listed by HM Revenue & Customs, which supervises the running of the scheme.
Since QROPS started in April 2006, 122,000 pension savers have transferred £10.77 billion from UK pensions into the offshore scheme.
Who can have a QROPS?
Anyone with money in a UK pension scheme that is not a public or civil service pension can move the money offshore to a QROPS.
The state pension is also outside the scheme.
The rules apply to British nationals and foreigners who have worked in the UK and now live somewhere else in the world.
Nine reasons to switch to a QROPS
There are lots of reasons why expats might want to consider moving their UK pensions to a QROPS. Here are some of them:
- QROPS pay benefits in several major currencies wherever you live, unlike onshore pensions that only pay in Sterling, which can lead to transfer and exchange rate issues
- Keeping up with tax and pension changes is easier
- You are close to breaching the UK lifetime allowance of £1.055 million – once in a QROPS the allowance does not apply to your retirement savings
- Funds in a QROPS are out of reach of the UK government
- You are aged 55 or over and want to access money locked in your UK pension until you are 60 or 65 years old
- Health issues mean you want to enjoy your money earlier
- You have concerns that the employer holding your pension may go bust
- You could withdraw a larger tax-free lump sum if you transferred your fund to a QROPS
- You want more choice and flexibility to invest
Finding a QROPS
QROPS pension advice comes with some strict rules, so look for a professional IFA who is qualified and experienced in offshore pension transfers.
For example, any transfer of more than £30,000 out of a pension in the UK must be advised by law.
Expats in Europe switching to a Malta QROPS must also use an adviser with a licence to give the right level of pension and investment advice and be authorised by a financial regulator in the country where the expat lives.