The 5 year QROPS period
One rule relating to transferring your UK pension to a QROPS is that the QROPS must behave like a UK pension for 5 years. However, there is often confusion about exactly when that 5 year QROPS period starts.
The general mis-conception is that it starts at the point at which you transfer your UK pension to a QROPS, regardless of when you make the transfer. However, the rules state that the period actually starts at the beginning of the UK tax year following your departure from the UK. For example, if you were leaving the UK today (24 March 2010), your QROPS period would start on 6 April 2010 and would end on 5 April 2015.
Similarly, if you had left the UK 6 years ago (24 March 2004), the 5 years would have ended last April. If you were only now transferring your UK scheme to a QROPS, it would immediately take on the pension rules in place in the jurisdiction in which it resides. For example, a QROPS based in Australia would use rules set out by the Australian Tax Office.
In order to avoid confusion, it is important to seek professional financial advice in relation to your pension transfer to a QROPS, to ensure that the transfer is suitable, the jurisdiction to which you transfer is appropriate (it does not have to be the same country as you move to, but this must be assessed properly) and that your QROPS adviser knows exactly how the rules work.
Please contact us on 01483 202072 to discuss your situation.
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