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What is QROPS
A QROPS is a Qualifying Recognised Overseas Pension Scheme that has met the criteria set by HM Inland Revenue (HMRC) and is recognised by HMRC. Any QROPS can accept transfers from a UK registered pension scheme.
For many years, British expatriates and those moving overseas have been faced with difficulties when dealing with UK pensions, as the pension is usually 'trapped' back in the UK. One of the main difficulties has been the tax treatment of UK pensions. Until now it has been virtually impossible to move a UK pension to an overseas pension without being forced to pay basic rate tax on the transfer.
On the 6th April 2006, new regulations for pensions came into play, this created attractive options for transferring UK pensions into foreign plans. Recognised schemes, known as QROPS (Qualifying Recognised Overseas Pension Scheme) are now available and mean that those who are or will be non UK-resident can transfer UK pensions without tax deduction and ultimately draw them without UK tax liability. A key benefit is that up to 20% of the total value of the pension can also be released to the beneficiary as a cash lump sum.
A pension scheme set up outside the UK, with many residing in low tax jurisdictions or in countries that have more generous tax-free lump sum rules, and/or no ultimate requirement to use any pension fund to buy an annuity as in the UK. This has a major benefit of gaining the ability to leave remaining pension funds to heirs. UK expatriates around the world and foreign workers who have spent part of their career in the UK and have accumulated UK-registered pension benefits will benefit greatly from QROPS? In order to be an eligible scheme, the QROPS must be fully approved by HMRC.
SCF gives the best advice by means of not just telling you about the benefits, but also any potential pitfalls you should consider. That's where our free review service becomes invaluable in helping you decide if QROPS is the best thing for you and your future wealth management plans.