fbpx

Future Perfect

12.06.20

Transferring UK pensions to a QROPS can offer expatriates flexibility, tax, estate planning and currency benefits, but is it suitable for everyone? Wealth management consultants, Blevins Franks give Abode2 the expert lowdown

One of the many pension options available to British expatriates today is transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS).

QROPS are foreign pension schemes recognised by HM Revenue & Customs (HMRC) to receive tax-free transfers from UK-registered pension funds. They were introduced in 2006 to help Britons who have permanently moved abroad simplify their affairs by taking their pension savings with them.

Despite being widely seen as the answer for expatriate retirees, QROPS are by no means a one-size-fits-all solution.

Currently, EU residents can transfer one or more UK pensions into a QROPS without taxation, while transfers outside the bloc attract the UK ‘overseas transfer charge’ of 25%. There are expectations the UK will extend this within the EU/EEA post Brexit, so time may be limited for tax-free transfers.

Once in a QROPS, funds are sheltered from UK taxes on income and gains. They also no longer count towards your lifetime pension allowance (LTA), so can grow unlimited without attracting LTA penalties of 25% or 55% when accessing your money.

While QROPS funds become taxable once you start taking benefits in your country of residence, many expatriates resident in Europe can receive favourable tax treatment.

QROPS funds only become taxable once you start taking benefits in your country of residence, but expatriates can usually receive favourable tax treatment.

While UK pensions can be restrictive, many QROPS allow you to take as much cash or income as you like, however and whenever you want. You could, for example, draw a higher income in early retirement when you are most active and reduce it in later years. Or you could take a lump sum and preserve the rest for a rainy day or for future generations.

However, with this freedom comes more potential to exhaust your funds – unlike a UK annuity or ‘final salary’ pension which provide a guaranteed income for life.

Top Tips

  • QROPS usually offer more options than UK pensions for how your money is invested. You can choose a flexible investment plan across a wide range of funds to suit your circumstances and risk appetite.
  • While most UK pensions are only payable to your spouse on death, QROPS offers the option to include other heirs. So rather than dying with you or your spouse, your pension wealth could pass to any named beneficiary, even across generations.
  • QROPS may also offer some protection from UK inheritance tax when passing pension assets to non-UK resident heirs, although they may still be subject to local succession taxes.
  • Some QROPS allow you to invest your funds and make withdrawals in more than one currency. This is a major advantage for British expatriates living abroad as it reduces dependence on pound/euro exchange rates and removes currency conversion costs.
  • Overseas pension transfers are a complex area – so regulated advice is essential. Take extreme care to explore your full range of options to establish the most suitable pension solution for your particular circumstances.

 

Abode Affiliates

  • Alleyne Real Estate
  • Blevins Franks
  • Coldwell Banker
  • Crane Resorts
  • The Hideaways Club
  • Monaco Real Estates
  • RDO
  • Rosemont Consulting
  • St Francis Links
  • Unique Home Stays
  • Yoo
  • Worldwide Dream Villas
  • Cyan International Properties
  • Enigma Yachts Limited
  • Cornerstone Tax Advisors
  • Lida Cucina
  • Pedini London
  • Alexander James
  • Wings
  • Moore Stephen
  • Ibiza Transit Express
  • Oyster Yachts
  • Jumeirah
  • Wall Street Luxury
  • Heron Real Estate
  • Edenhurst
  • MG&AG
  • Gama Property
  • Touch Design Group
  • St Edward
  • Ultra Villa
  • Luxury Italian Living
  • Habitat First Group
  • BDO
  • 7Storeys
  • Smart Currency Exchange
  • Prestige Architects
  • Worldwide Property
  • Panorama
  • Dimora
  • Dominic McKenzie Architects
  • The Coastal House
  • Chamonix Ski Chalet
  • Luxe Caribbean Properties
  • Harry Manning
  • Smart Living
  • Isle Blue
  • MAS Marbella
  • London Fractions
  • Page Architects
  • Millgate
  • Jersey Finance
  • guernsey-relocations-logo
  • viberts-logo
  • b-williams-management
  • kpmg-logo
  • author-interiors
  • Wilkinson Beven
  • BoConcept
  • Ante Vrban
  • Experience Invest
  • Move 2 Gozo
  • Deborah Garth
  • Extex
  • You home
  • Ra Shaw Designs
  • Caudwell Collection
  • eastwood private client
  • accanto-interiors
  • Fritz Hansen
  • capital-rise
  • jarrods-staircase
  • neil-davies-logo
  • Tina Shone Group
  • Taplow riverside
  • Aimo
  • ns-ceramics-logo
  • Rusk
  • Consilium Expert Group
  • Ben Krupinski Builder
  • Swoffers
  • Guernsey Relocation Services
  • Douglas Graneto
  • Strutt & Parker
  • wilsons
  • MJC Associates
  • plainspace
  • Fine & Country
  • Bramble Ski
  • Page Architects
  • Penthouse queen
  • Sarco_Affiliate_Logo
  • taylor wimpey
  • cooper-gardner
  • M Design Architects
  • codan
  • Lovells
  • London DE
  • HELENA JORNET FINQUES
  • Prime Lands Group
  • Bellegarde Estates
  • Sinclair
  • Pippa Paton
  • Ecole d'Humanite
  • Miller
  • Benedek Lewin
  • Inspired Villages
  • Huelin Homes
  • Gaudin
  • Lovells Property
  • Racecourse Lodge Logo
  • Paseo
  • Moores Rowland
  • Lemay + Escobar
  • Octagon

Enter your dream destination