Chancellor George Osborne’s pensions overhaul has had an overreaching effect of small pot funds and buying annuities in the UK – but many Qualifying Recognised Overseas Pension Schemes (QROPS) savers want to know if the measures will apply to their offshore pensions.
Osborne is allowing retirement savers with defined contribution pensions easier access to their funds from the age of 55 by relaxing drawdown rules.
Effectively, anyone with a consolidated pension or pensions totalling fun ds of no more than £30,000 can draw down the cash as a tax-free lump sum and pay income tax on the balance.
QROPS have not yet been mentioned as part of the plan, but in general the same pension rules apply to the offshore schemes as to onshore pensions, so the future months may see an extension of Osborne’s measures overseas.
Tax effective QROPS for small pension funds
The question then becomes where is the best QROPS jurisdiction for early drawdown?
Certainly expats could look at transferring their cash into one of the 30% tax free lump schemes offered by financial centres like Malta.
QROPS would immediately become more tax-efficient as savers would receive more cash tax-free and pay income tax at the prevailing rate in the country where they live, not the UK.
Malta is also a ‘third party’ QROPS centre, which means providing proof of tax paid is supplied to regulators, retirement savers can live where they wish and are not restricted to relocating to Malta.
Top 10 QROPS lists
The exclusive tables below look at the Top 10 countries with:
- The most QROPS
- The most QROPS added year-on-year
- QROPS market share by number of QROPS
These top 10 financial centres are responsible for running almost 90% of the QROPS market.
Australia leads the table with a 41% share, followed by Ireland with 22%, making up two-thirds of the market between them.
| QROPS - Top 10 Financial Centres | ||
|---|---|---|
| Jurisdiction | Count of QROPS pensions | |
| Values | ||
| April 23, 2014 | May 1, 2014 | |
| Australia | 1390 | 1390 |
| Ireland | 747 | 749 |
| Isle of Man | 236 | 236 |
| Switzerland | 136 | 138 |
| Jersey | 136 | 136 |
| Netherlands | 108 | 108 |
| Canada | 101 | 100 |
| Guernsey | 68 | 68 |
| Germany | 56 | 56 |
| New Zealand | 55 | 55 |
| Total: | 3033 | 3036 |
| Source: HMRC | ||
| QROPS - Top 10 Jurisdictions Adding Most QROPS | ||
| Year To | ||
| April 23, 2014 | May 1, 2014 | |
| Australia | 269 | 251 |
| Ireland | 47 | 46 |
| Guernsey | 28 | 26 |
| Isle of Man | 23 | 22 |
| Gibraltar | 19 | 19 |
| New Zealand | 12 | 11 |
| India | 9 | 9 |
| Malta | 6 | 8 |
| Canada | 7 | 6 |
| Netherlands | 6 | 6 |
| Total: | 0 | 404 |
| Source: HMRC | ||
| QROPS - Top 10 Jurisdictions by Market Share | ||
| Year To | ||
| April 23, 2014 | May 1, 2014 | |
| Australia | 41.06% | 41.00% |
| Ireland | 22.07% | 22.09% |
| Isle of Man | 6.97% | 6.96% |
| Switzerland | 4.02% | 4.07% |
| Jersey | 4.02% | 4.01% |
| Netherlands | 3.19% | 3.19% |
| Canada | 2.98% | 2.95% |
| Guernsey | 2.01% | 2.01% |
| Germany | 1.65% | 1.65% |
| New Zealand | 1.62% | 1.62% |
| Total: | 89.59% | 89.55% |
| Source: HMRC | ||
