Understanding Offshore QROPS

Posted: 28 October 2008

On 6th April 2006, the UK introduced a new pension regime known as Pensions Simplification. A significant rule change that emerged in the new pension’s regime was the legislation for overseas pension transfers from the UK.

 

Her Majesty’s Revenue and Customs (HMRC) decided to change the rules and introduce reporting requirements. HMRC now monitor the UK pension funds post transfer overseas to ensure that scheme members, and the schemes involved, were registered as QROPS and continued to follow UK pension rules.

 

Where as the rules for QROPS are clearly stated in the legislation, many advisers and overseas schemes are still unclear as to what they are. Offshore QROPS have been advising on pension transfers overseas since the inception of QROPS and can advise schemes on the rules that need to be followed and assist clients (and their advisers) on the opportunities that are available.

 

When advising to transfer pensions out of a UK scheme to an overseas, Offshore QROPS analyse all the factors that are involved. This includes looking at the benefits available from the UK scheme and the benefits that a QROPS could provide. In addition to the benefits each scheme provides, the tax implications of each regime or jurisdiction would also be a factor. Would benefits paid from the UK have higher tax charges then that of the new overseas regime of a potential QROPS?

 

Each country that can provide a registered QROPS would also have their own tax rules. This adds an extra consideration with the advice to transfer as advisers have to be familiar with more than one tax regime.

 



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