QROPS or Qualifying Recognized Overseas Pension Scheme, as the name suggests, is a type of overseas pension scheme. This scheme completes certain conditions, so that it can be recognized by Her Majesty’s Revenue and Customs (HMRC). QROPS is primarily availed by U.K. pensioners who have a plan to move to abroad after their retirement. It is also applicable to people born abroad who have build up benefits in an HMRC approved U.K. pension scheme and who decide to return to U.K.
QROPS pensions transfer has always proved a better option than any other pension plan and it is the first choice of people who are planning to settle abroad after their retirement and enjoying the benefits of U.K. pension schemes. Many people have this misconception that QROPS pensions transfer scheme is a tool devised for the rich to escape from income tax, but it is not so.
Who is Eligible for QROPS Pensions Transfer?
Any person with a frozen or private U.K. current pension, living overseas as an expatriate or planning to live overseas as an expatriate within the next 12 months, can be said eligible to transfer his/her pension funds to his current country through QROPS providers services.
Following are some conditions that are necessary to be fulfilled in order to make use of pension transfer scheme from the U.K. to other countries:
- Your age must be between 18 and 75 years.
- You should be a non-tax resident for at least five successive financial years.
- You must possess a private pension instead of state pension.
- You must have not withdrawn annuity amount from your pension.
What are the Primary Benefits of QROPS?
The primary benefits of QROPS pensions transfer can be listed as under:
- No need to purchase an annuity; although if you want you can, but there is no obligation.
- Tax saving (this saving alone is enough to cover all the associated costs)
- You get higher investment flexibility and more options.
- Multiple small pension funds can be consolidated into one.
- You get protection against future creditors.
- On death, all unused pension funds and assets are transferred to your beneficiaries without any inheritance tax.
Costs involved in Pension Transfer?
Costs incurred on QROPS pension transfer are nothing when compared to the benefits provided by it. These costs vary with your U.K. pension amount. The higher the pension value, the lower are the costs. Generally, following costs are involved:
- Setup cost (which is fixed)
- Annual management cost
- Underlying fund charges (vary with the…