QROPS – Who Can have One?

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Qualifying Recognised Overseas Pension Schemes or QROPS can be dated back to 2006. These schemes allow UK non-residents the ability to transfer any UK pension funds overseas. Since they were launched QROPS have grown in popularity. A QROPS is a pension managed by Trustees. Your money is invested on your behalf by the Trustees into any investment of your choice. In addition QROPS have been approved by Her Majesty’s Revenues and Customs (HMRC). See more details here.

A QROPS can offer significant benefits:

  • No or lower tax on your pension.
  • Consolidation of pensions into one fund.
  • Investment freedom.
  • Your choice of currency.
  • Very low charges.

One of the most important things to consider before investing in a QROPS is to know that it might not be a one fit all solution and is completely dependent on your personal financial situation. It is always important to seek to guidance of a professional pension specialist before undertaking a QROPS.

Anyone who currently has a British pension fund can choose to invest in QROPS.  This means a QROPS is perfect for any UK citizen who has left the UK to permanently emigrate or retire abroad. A QROPS is also perfect for non-UK residents who have built up benefits while living in the UK and are registered with a UK-registered pension fund.

Investing your retirement pension outside the UK can have a number of benefits, especially if you are looking to move to that country after you retire. One of the most popular countries for this type of investment is Gibraltar.

For non-residents as well as residents in the UK a QROPS can be used to invest their money outside of the UK. It is important to note, however, that a UK State Pension cannot be transferred. There does not have to be an established QROPS in the country you wish to invest in either. In this case, you simply have to transfer the desired funds into separate jurisdictions and have the benefits paid in any country of your choice.

Because many QROPS are based in non-EEA member states, it is important that they have the following features:

Recognised tax purposes

Because the QROPS is open to residents of the country in which are it based you may find that either the scheme has tax relief benefits or it has no tax relief benefits.

Limitations

The maximum amount which can be withdrawn at the time of retirement may not exceed 30%. The remainder of the funds will be paid out monthly. But, a 30% nest egg to get you set up for your retirement is more than most people will have.

Age restriction

When investing you should know that the minimum age for retirement should not be earlier than 50 for those registered before 6 April 2010 and 55 for those who registered after 6 April 2010.

Country of establishment

The scheme you are looking at investing in must be registered outside of the UK. This gives you the freedom to pick a range of countries for your investment.

 

 

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