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Read more »QROPS
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Read more »Understanding a QROPS Transfer
What is a QROPS?
A QROPS (Qualifying Recognised Overseas Pension Scheme) is an overseas pension scheme that meets the requirements and pension rules set out by HMRC to transfer and consolidate UK registered pension schemes.
If you’re considering retiring abroad, and have UK pension provisions, a QROPS allows you to transfer your pensions abroad, within the jurisdiction of your choice.
Who can transfer to a QROPS?
If you have accrued UK pensions, anybody can apply for a QROPS transfer. Once abroad, if you decide to return to the UK, the QROPS will become subject to UK pension regulations or you can switch your QROPS back into a SIPP.
If you haven’t been a resident of the UK for the past five tax years, the QROPS will be subject to the laws in which country it is based. You can, however, take pension income with no limits and no deduction of tax at source (although taxation will apply in accordance with your current country of residence).
Who Is Eligible for a QROPS Transfer?
QROPS Eligibility
Those who are eligible for a QROPS pension transfer are UK residents who wish to emigrate or to retire abroad and who have built up a pension fund within a privately administered scheme.
In addition, a person can qualify if they were born abroad but have spent some time working in the UK and built up benefits in a UK Pension Scheme. A QROPS pension provides great flexibility and stability as it doesn’t have to be established in the new country of residence.
However, in order to qualify, you must fit the following criteria:
- You have UK pensions (excluding state pensions) with a total fund value of at least £50k.
- You currently or are planning to live overseas.
- You will be not be returning to the UK within the next five-ten years.
- You haven’t already purchased an annuity.
- If yours is a final salary scheme, then the scheme should not be already in drawdown.
- UK Budget 2017 Changes – there was also an array of changes for QROPS particularly for expats who are resident outside of the EEA where an International SIPP would be the most prudent option.
Transfers to QROPS requested on or after the 9th March 2017 are subject to a 25% tax charge, unless:
- The QROPS is in the EEA and the Member is also resident in a EEA country.
- The QROPS and Member are in the same country or territory. This is a limited if negligible part of the market.
- The QROPS is an employer-sponsored occupational scheme, overseas public service pension scheme or a pension scheme established by an international organisation.
If you are not sure if you are eligible for a QROPS transfer, or confused by the options available speak to an HB financial adviser for a free pension review.
What are the Benefits of a QROPS Transfer?
Retirement and pension planning are highly important and if carried out properly, British expats can get significant benefits from their pension:
No Lifetime Allowance Charge +
Protection from UK Inheritance Tax +
Easier Inheritance Process +
Gross Income +
Alternative Investments Options +
Things to Consider
Potential Drawbacks of a QROPS
The Overseas Transfer Charge (OTC) means that transfers to QROPS are subject to a 25% tax charge, unless:
- the QROPS is in the EEA and the Member is also resident in an EEA country; or
- the QROPS and Member are in the same country or territory.
QROPS are generally quite expensive. Set up and annual trustee fees are typically three or four times the cost of an International SIPP.
By taking your pension out of UK jurisdiction, you lose all the protection afforded by the Financial Conduct Authority (FCA), as well as the Financial Services Compensation Scheme (FSCS), which would normally cover any UK pension.
Often sold by commission-based advisors, who tend to put a commission paying investment bond within the pension structure.
Maltese QROPS
Comparison - March 2020
| Momentum QROPS Plus | STM QROPS | Trireme Pensions QROPS | Sovereign Centaurus QROPS | Optimus QROPS | Azure | |
|---|---|---|---|---|---|---|
| Setup fee | £645 / £895 | Nil | £750 | €1000 | Refused to confirm pricing | £400 / £700 |
| Annual fee | £895 / £945 | £803 | £950 | €1400 | Refused to confirm pricing | £400 / £700 |
| Establishment of benefits fee | Time / Cost Basis | Nil | Nil | €0 | Refused to confirm pricing | Nil |
| Income drawdown fee | Time / Cost basis | Nil | £150 | €0 (unless monthly then €100 PA) | Refused to confirm pricing | Nil |
| Termination fee | £1500 | £1000 | £2000 | €1000 - €3000 dependent on length held | Refused to confirm pricing | £400 / £700 |
All pricing will be + VAT if you reside in the EU. PA= Per Annum.
Want to find out more?
Video FAQ
For more information on this service/blog, please watch our FAQ video below. You can also find more video guides on expat financial planning on our YouTube channel.
7 Key Questions on QROPS
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