QROPS, or the Qualifying Recognised Overseas Pension Scheme is one of
the options available for expatriates, who are looking for their UK pension to
be transferred overseas. A transfer to a QROPS can provide more flexibility and
efficiency in tax planning as well as benefits related to currency hedging.
QROPS
pension schemes which are recognized by the HMRC accept transfers of UK
registered pension funds. This scheme allows those expats who have pension
funds within the UK to transfer these across the borders, usually without any
tax liability. A main condition to avoid excess taxation is that the QROPS is
located within the European Union/ EEA for EU/EEA residents.
Once a transfer to a QROPS is undertaken, the transfer of the funds is
measured against the Benefit Crystallisation Event 8 (BCE 8) for pension
Lifetime Allowance (‘LTA’) purposes. The LTA from 6 April 2019 is £1.055m,
increasing with inflation on an annual UK tax year basis thereafter. From the
point that the transfer has completed, the QROPS funds are outside the UK’s LTA. These funds, once invested post transfer, can
hence grow according to your investment risk profile, without the risk of 25% -
55% taxes being levied otherwise through exceeding the UK pension LTA over time.
There are several other advantages of the QROPS scheme, such as flexible
access to the funds, investment opportunities and many more. Contact an
experienced investment specialist before planning your transfer of pension
funds across the borders.
