Switching retirement savings to an offshore QROPS is a straightforward process, proving you follow some simple rules.
But with all things official, the devil is in the detail and you should be ready to deal with some basic questions.
Are you really an expat?
Determining your residence is important as UK residents cannot hold a QROPS pension.
Do this by going through the statutory residence test and if necessary, consult a specialist lawyer or accountant.
Becoming an expat is not a choice but the result of some lifestyle decision you take to move overseas and sever connections with the UK.
Find out more with the HMRC’s official statutory residence test guidance
Where are you planning to live?
The country you move to is important if you are starting a QROPS because of the overseas transfer charge. The charge is calculated as 25% of the pension transfer value.
Expats are exempt from the charge if:
- You are moving to a European Economic Area country and take out a QROPS in another EEA country
- You live outside the EEA but in the same country as where your QROPS is based
- You transfer to a multinational non-governmental organisation QROPS
- You transfer to an employer-run QROPS
How much is your pension worth?
Ask you pension provider(s) for a transfer value analysis. This report will say exactly how much your fund is worth, which you need to know.
Give this report to an international IFA who can then discuss your financial goals and recommend a short-list of QROPS solutions.
At this stage, your adviser should also talk about investments within the QROPS wrapper, estate planning and how you plan to spend your pension money.
Some QROPS come with flexible access options like UK pensions, but not many.
Linking a QROPS with your finances
You also need to discuss cross-border tax, such as how the country where you intend to live taxes your estate when you die.
A good international IFA will have links with tax experts who can help with international estate planning and writing wills in the UK and overseas.
Switching the funds to a QROPS
You cannot transfer money from a UK pension or another QROPS to a QROPS which does not feature on the current HMRC QROPS List. If you do, the transfer triggers a fine starting at 55% of the value of your pension fund.
