April 6, 2016 is a landmark day for QROPS pensions for expats as they have reached 10 years old.
QROPS were launched on A-Day – April 6, 2006 – without much fanfare but have proved to be controversial if not tax-effective pensions for expats and international workers with UK pension rights.
They have survived accusations of tax avoidance, fraud and misselling to become a well-established part of the expat financial arsenal.
QROPS benefits
QROPS offer expats a range of benefits:
- A 30% tax-free lump sum that beats the 25% offered by UK providers
- Flexible investment options across a wide range of currencies, markets and commodities
- Flexible access in Malta
- Foreign exchange advantages as pension payments can be received in one of any major currencies
- Inheritance tax advantages for estate planning
- Shelter from the punitive 31 million lifetime allowance in the UK
Over the years, QROPS have had to clear many hurdles to become a popular pension for expats.
HMRC has suffered humiliation in the courts over the way delisting Singapore QROPS was handled.
The market has collapsed with sudden rules changes that have seen thousands of QROPS delisted and several financial centres hosting the pensions disappear.
Nevertheless, consumer watchdogs in the UK, the Financial Conduct Authority, insist IFAs must discuss the pros and cons of transferring retirement savings to a QROPS with any client suggesting they may become an expat at some time.
What’s next for QROPS
HMRC does not release figures about how many retirement savers may have switched to QROPS, nor how much money has found a way offshore into one of the schemes.
Over the years, the odd piece of information has revealed the number of QROPS transfers well exceeds 10,000 and the amount of cash switched offshore runs into the billions.
So what’s next for QROPS?
Despite the sudden rule changes, the market continues to adapt and prosper.
No doubt over the next few years, the number of QROPS pensions will increase – on average one opens every day.
The next big step will be the introduction of flexible access on a grand scale, but so far neither HMRC nor the Chancellor George Osborne have hinted when this might happen.
Whatever the future may hold, QROPS are here to stay.
QROPS Year by Year Summary
We review and summarise the QROPS news for each year from the launch of QROPS to now. Click on the below links to read:
QROPS 2006 – A-Day Launches New Offshore Pension
QROPS 2007 – A Year Of Explosive Growth
QROPS 2008 – HMRC Cracks Down On Rogue Pensions
QROPS 2009 – Gibraltar Tax Problem Rocks Expats
QROPS 2010 – Singapore Legal Challenge Launched
QROPS 2011 – Rooting Out The Rogues
QROPS 2012 – Hundreds of Pensions Delisted
QROPS 2013 – HMRC Humiliated In High Court
QROPS 2014 – Flexible Access On the Way
QROPS 2015 – No One Foresaw The Pension Age Test
QROPS 2016 – The Story So Far… But Not The End
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.
