QROPS: FAQ

QROPS: Frequently Asked Questions

Talk to us direct for expert answers to all your QROPS questions

How do I know if my QROPS Pension Transfer scheme is HMRC approved?

•           The current list of eligible QROPS Pension Transfer schemes can be found here: http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops.pdf

 

How does a QROPS work?

•           A QROPS has a nominated Trust, based in an offshore jurisdiction

•           A QROPS provides a cost effective, tax efficient and safe Trust for its clients and ultimately for their beneficiaries.

•           The Trust typically will be used to purchase an Offshore Personal Portfolio Bond, this is effectively a ‘wrapper’ that can hold the ideal spread of investments suitable for a pension portfolio

•           The nominated Trust ensures that these investments are properly managed

 

Who Qualifies for a QROPS Pension Transfer?

•           Any UK/EU expatriate citizen between the ages of 18 and 75 may apply for a QROPS Pension Transfer of an existing or ‘frozen’ UK/EU pension

•           Any UK/EU non-expatriate citizen provided that you have a clear intention to become an expatriate within the next 12 months

•           A QROPS Pension Transfer may also apply to ANYONE who has officially worked in the UK or any EU member country for any length of time

 

If I do not Qualify for a QROPS Pension Transfer are there other alternatives?

•           Yes, there are suitable alternative, international pension investment solutions depending on the size of your current pension, tax and domicile status. For example, a SIPP (Self Invested Pension Plan). Please contact us for an assessment

 

Can I transfer to a QROPS once I have taken an annuity?

• No.

Can I transfer to a QROPS once I have taken a payment on a final salary scheme?

• No.

Can I transfer to a QROPS once I have taken drawdown from my pension scheme?

• Yes.

 

Talk to us direct for expert answers to all your QROPS questions…

 

Can I transfer a UK state pension?

•           No. Unfortunately, you cannot transfer a state pension into a QROPS. •    Having a QROPS will also not affect your entitlement to a UK state pension

 

What will happen to my QROPS Pension Transfer upon my death?

•           A QROPS Pension Transfer ensures that all remaining assets upon your death are distributed to Named Beneficiaries.

How long does it take to setup a QROPS Pension Transfer?

•           The length of the process varies. It all depends on the speed with which your existing pension scheme will release the monies.

 

What UK pensions can be considered for a QROPS Pension Transfer?

 

• Personal
• Pensions
• Final
• Salary
• Pensions
• Money
• Purchase
• Section 32 and Section 226
• FURB/URB
• Civil Service & Armed Forces
• Protected Rights/GMP

 

When should I not transfer my ‘frozen’ pension?

•           Each instance varies and you will require the advice of a pension professional.

•           No matter what pension you have, given the large benefits, it is definitely worthwhile to discuss the option of a QROPS Pension Transfer with us.

 

What are the tax implications of moving my pension?

•           The transfer to a QROPS plan is tax free.

 

Will I have to purchase an annuity if I transfer my UK pension into a QROPS?

• No

 

Can I manage my own QROPS assets?

•           Some schemes will allow you to manage the assets with total freedom, while others have certain restrictions.

•           You may also appoint an investment adviser to make the decisions with you or for you, it all depends on what you are looking for. The best option would be to discuss this aspect with us.

 

What happens if I move around the world?

•           No matter where you move in the world, nor how often you may move, your QROPS plan stays in the neutral offshore jurisdiction that you have chosen.

•           You can make contributions &receive income in any currency.

What jurisdiction should you transfer your QROPS to?

•           The jurisdiction should have strong investor principles, such as the UK.

•           It should offer significant improvement in investment and benefit options available. E.g. some jurisdictions require you to purchase an annuity, and place major restrictions on the funds you can go into.

•           You should ensure that it is in a tax-efficient, secure jurisdiction for your QROPS Pension Transfer.

•           A jurisdiction such as Guernsey would be optimal, as they offer both tax efficiency and flexibility.

 

Why is Guernsey one of the best options?

• Guernsey is an independent, well regulated and internationally accepted jurisdiction with a firm framework of legislation in the financial services sector.

•           Pension providers on the island have worked closely with HMRC to ensure a robust QROPS offering for both its resident and international clients.

•           It is a neutral jurisdiction which allows tax-efficient structures. This means that income and capital gains from the assets within your plan are not subject to Guernsey tax. Therefore, the assets within your plan grow in a tax efficient environment.

•           You can choose your QROPS Pension Transfer to be denominated in a hard currency (Pounds, Dollars or Euros).

 

What is the minimum value I can transfer to a QROPS?

•           Different schemes have different charging structures and as a result they are only worthwhile provided that a certain tax-efficient threshold is reached. We have found that the minimum value is in the region of GBP75 000. Remember though that you can combine more than one pension to reach a higher value threshold. Therefore, whatever the value of your pension or other assets are, there is a solution for you.

•           In the event of you being unable to secure the minimum investment, i.e. GBP50 000, we could look at transferring your pension into a SIPP (Self Invested Pension Plan).

 

Is my plan subject to EU savings tax directive for European citizens?

•           A QROPS Pension Transfer plan is currently not subject to the EU Savings Tax Directive

 

Does the HMRC in the UK require the QROPS pension fund to report payments?

•           The HMRC requires that all QROPS providers notify them of any payments from transferred pensions for the relevant member.

 

Will a QROPS Pension Transfer accept the transfer of a protected rights fund?

•           Yes, provided that the QROPS trust is willing to accept it.

•           If you are transferring your protected rights it is necessary to state that you

understand that all protection associated with UK pensions legislation is being given up.

 

Can I purchase residential property with my QROPS fund?

•           Yes – If you have been a UK resident at any time in the last five tax years.

•           If you have a QROPS and have not been at any time resident in the UK for the last 5 tax years, then the operation of the QROPS trust is subject to the legislation associated with the jurisdiction where the QROPS is based.

•           Some of these jurisdictions do permit investment into residential property although most frequently this will be only permitted through indirect ownership that is through a corporate structure or property fund.

 

What investment flexibility and choice will I have with a QROPS?

•           One of the biggest benefits of a QROPS is the investment flexibility. The better schemes offer greater flexibility and the degree of choice and flexibility depends on the scheme you choose

•           You may also appoint an investment adviser to make the decisions with you or for you, it all depends on what you are looking for.

 

If I transfer my UK pension to a QROPS can I access my fund as a 100% lump sum?

•           No. Schemes and advisers in certain jurisdictions that are offering 100% will be being shut down by the HMRC.

 

 

What happens if I transfer to a QROPS and return to the UK within 5 tax years?

•           If you are returning to your home country within 5 tax years, then you will need to report your QROPS to your governing tax authority and although it can remain offshore, it will fall under domestic rules and regulations.

 

 

What is the minimum age I can draw benefit and how much?

•           From 55 years old

•           You can take up to 30% lump sum of your fund, tax free

•           70% minimum, remaining funds need to provide ‘income for life’

 

If a client has been a non-UK resident for less than 5 years and transfers to a QROPS, then dies prior to completing this 5 year period – are the pension proceeds automatically subject to 35% inheritance tax (IHT)?

•           No – the Finance Act of 2008 protects all QROPS Pension Transfers since April, 2006 from both inheritance tax and capital gains tax.

 

 

What is a QROPS Jurisdiction?

•           This is the location in which the pension trust is held and therefore, the pension fund is governed under those laws of that land.

 

For more information on LOW COST QROPS, contact us today!