Qualifying Recognised Overseas Pension Schemes (QROPS)

Since 6th April 2006 the UK’s Her Majesty’s Revenue and Customs (HMRC) has allowed individuals to transfer their UK pension funds to Qualifying Recognised Overseas Pensions Schemes (QROPS).

As a condition of being granted QROPS status, the Overseas Scheme, will have agreed with HM Revenue & Customs to report any payments made, from the scheme to the member, for the first 5 complete UK tax years of the member’s overseas residency. This period is known as the ‘Reporting Period’.

During the Reporting Period, payments to the member must not exceed the allowable UK Government Actuary’s Department (GAD) limits and must not be made to the member before retirement age 50 (increasing to age 55 on 6th April 2010).

After the member has completed 5 years of non residency, the reporting period falls away providing significant advantages.

QROPS could be of interest to any individual with UK pension funds, who is living or planning to live outside the UK, for the following reasons;

  • No requirement to purchase an annuity.
  • Potential to access benefits 100% tax free.
  • Increased flexibility in terms of how and when you access your benefits.
  • Greater choice of investments.
  • Hold pension funds in the currency of your new home country, removing exchange rate risks.
  • Pass your pension fund to your beneficiaries upon death free of Inheritance Tax.
  • Tax benefits for those with funds approaching the lifetime allowance (£1.65 Million in tax year 2008/09)

Whilst some QROPS require you to be resident in the jurisdiction to which you wish to transfer your benefits, others have no such restriction, allowing you to choose a tax friendly regime to suit your personal circumstances.

The strategy of using a QROPS in a third country can be useful for individuals in many circumstances. For example, the local regime of the migrant’s new country may have similar restrictions to the UK when it comes to accessing benefits. Another example may be that the migrant’s new country of residence has high levels of taxes or low levels of investment growth in their schemes.

With QROPS available in such a wide range of jurisdictions there is clearly a need for expert advice. To find out if QROPS are suitable for you, please contact us for a FREE report, tailored to your personal circumstances.



Arrange a Consultation