QROPS FAQ's
On this page you will find a list of QROPS frequently asked questions. For further information please feel free to fill in your contact details above for a professional QROPS adviser to contact you direct who will then be able to provide you with a personalised QROPS consultation relating to your specific circumstances.
What are QROPS?
QROPS are Qualifying Recognised Overseas Pension Schemes and consist of a foreign pension scheme which has been approved by Her Majesty’s Revenue & Customs to accept pension transfers from the UK.
A QROPS offers enormous financial benefits for ex-pats now living or planning to live out their retirement abroad.
What costs are involved with the transfer of a pension into a QROPS?
This depends because several factors will determine the amount of the corresponding costs such as pension fund size, individual circumstances, the type of QROPS chosen and the nature of the benefits.
In general the costs as a percentage work in a way that the larger your pension fund, the lower the charges will be. Transfer values can start as low as ₤50,000 although funds of ₤200,000 upwards will be able to qualify for some of the better QROPS plans.
As a guide, a set up charge between 0.5 – 1.0% of the pension fund value will apply with additional yearly maintenance charges in the region of ₤1000 that are levied each year depending on the fund value and structure. Contact an adviser to obtain accurate and detailed costs relative to your specific situation.
How long does a QROPS transfer take to process?
The transfer of a pension into a QROPS plan usually takes around 1 to 3 months to complete with each particular case varying as individual circumstances will play a part in the length of time required for a successful QROPS transfer.
The first part of the process is to complete a letter of authority and submit a fact finder statement. This allows for information to be obtained about your specific scheme such as benefits and transfer value.
Your current pension provider will also then be able to release the relevant discharge forms, allowing a QROPS expert to provide you with a detailed breakdown of the current benefits being received and informing you on both the advantages and disadvantages if any, of the option to transfer your pension into a QROPS.
Can residential property be purchased with my QROPS plan?
Purchasing residential property with a QROPS is something that is possible but also an option that is subject to conditions. All QROPS are subject to the relevant legislation's in the jurisdiction to which they have been passed over to once the member has been a non UK tax resident for 5 years or more.
There are indeed QROPS jurisdictions that permit this type of investment although generally via indirect ownership by means of a corporate structure. For further information on this contact a QROPS consultant.
I have assets held in my UK pension scheme, can these be passed over into a QROPS without having to liquidate them into cash first?
This will depend on whether the assets you hold are within an insurance company based scheme. If this is the case then your assets will be converted into cash and the subsequent transfer into a QROPS will be made in cash.
However, if your registered pension scheme is a SSAS or a SIPP and providing the trustees and administrators of the receiving scheme are willing to accept them, then there may be a possibility to transfer your existing assets into a QROPS.
Contact a QROPS adviser for further details on this particular type of transfer.
What jurisdiction should I transfer my pension into?
There is currently a huge selection of QROPS providers to choose from which operate out of many different QROPS jurisdictions. Some of the better known jurisdictions offering attractive QROPS solutions include Guernsey, Isle of Man, Gibraltar and New Zealand.
In general it is recommended to opt for a QROPS jurisdiction where (after the member has been a non UK tax resident for 5 years) a wide variety of benefit options and investment vehicles become available. Some of the main factors to consider are transparency of charges and tax efficiency and the option of not having to purchase an annuity. Also, look for strong investor protection principles and well established QROPS jurisdictions that are similar to those associated with the UK.
By speaking with a QROPS adviser they will be able to identify which particular QROPS scheme and jurisdiction is best suited to your particular situation.
If my pension is in draw down and benefit payments are already being taken from my existing pension fund, can I still transfer into a QROPS.
As long as you are receiving alternatively secured or unsecured income and providing the QROPS supplier is willing to accept this type of transfer then the answer to this question is YES.
However, if you have already purchased an annuity or are currently receiving payments from your pension in an occupational final salary scheme then unfortunately the answer to this question is NO
If I transfer my pension into a QROPS does it affect my rights to a UK state pension?
Occupational and personal pension funds which are transferred into a QROPS will have no affect whatsoever on your eligibility for a UK state pension.
What types of pensions can be transferred into a QROPS?
A wide variety of UK pensions can be passed over into a QROPS. These include personal pensions, occupational pensions, pensions in draw down, stakeholder pensions, SIPP's and pensions used for contracting out of SERPS. Some final salary schemes can also be transferred if you have not begun drawing benefits from it.
If you have more than one pension scheme then you can also transfer several pension schemes into just one QROPS which makes keeping track of your retirement savings much easier.
What kind of access will I have to my pension fund once it has been relocated into a QROPS?
During the first 5 complete tax years you will only be able to take benefits in the same way as you would be eligible to them if you were still resident in the UK. After the 5 year HMRC reporting period, access to the fund will then be dependant on the jurisdiction that the QROPS has been set up in and the individual QROPS rules of the QROPS provider. It may also depend on your country of residence on whether you will be subject to any taxation consequences or not.
Some of the better QROPS pension schemes will typically allow a lump sum in the region of 25% of the pension value to be withdrawn tax free. For detailed information on this, get in touch with a QROPS adviser.
Where can I choose to have my pension fund invested in?
With your pension relocated into a QROPS a much wider variety of investment vehicles will be available to you. Some of these include UK invested trusts, fixed interest investments, listed property trusts, managed funds and stocks and shares.
To find out more information on pension investment options contact a QROPS adviser for a free, no obligation consultation.
If my pension fund is of substantial value is there any tax issues that I should be worried about?
With reference to HMRC QROPS rules, a transfer into an offshore pension scheme qualifies as a benefit crystallisation event. This simply means that your UK pension will be given a valuation against your lifetime allowance or LTA. The allowances currently set are ₤1.65 million for 2008-2009, ₤1.7 million for 2009-2010 and ₤1.8 million for 2010-2011.
If the amount transferred into a QROPS exceeds the members unused LTA then this will give rise to a tax charge so it is therefore wise to check whether there is any possibility of the allowance being exceeded. If this becomes possible then you will be able to register for enhanced protection which will remove any possibility of the QROPS transfer being attacked.
Is there any reason why I should NOT transfer my pension fund into a QROPS?
In the majority of cases the answer to this question is simply no as the potential benefits to be gained by the decision to transfer your pension into a QROPS makes it very worthwhile and a very wise move.
However, your particular case may be as such that you have guaranteed annuity rates that were put in place at a time where there was much higher interest rates than there are today. If this is indeed the case then it may be best to stay put. In any case, it is specifically because of reasons such as this that you really should seek advice from a QROPS transfer consultant to discover what is best for you.
Is it possible to set up a QROPS myself?
This is not possible as all QROPS providers only accept pension transfers via their appointed intermediaries. Even if this was possible, you would find that you would require the services of a professional QROPS adviser as the processes involved with a QROPS transfer can be extremely complex.
