Should I transfer my pension to a QROPS?
If you are living abroad or are planning to move overseas, with no intention of returning to the UK, then a QROPS may well be a great option for you. A QROPS has enormous financial benefits for any expat permanently living overseas.
What happens if I return to live in the UK?
If circumstances change and you decide to return to live in the UK then the QROPS transfer benefits will be neutralised by having UK pension legislation applied to it. Therefore a transfer is only advisable for those who intend to permanently remain overseas.
Does it matter where a QROPS is established?
It is important to consider the legislation, tax laws and political stability of the country in which a QROPS is set up. Based on this, Guernsey, Isle of Man and New Zealand are the primary choices that accept non-residents to operate a QROPS.
Guernsey does not withhold any tax at source therefore any investment growth or benefits paid from your pension will be received free of tax. The Isle of Man and New Zealand may impose tax duties on death and investment growth.
Can I transfer my UK pension once I have started to drawdown from it and I am receiving payments?
Yes, you can still transfer your pension providing the payments are not from an annuity or certain company pensions.
How is a QROPS pension taxed?
Guernsey does not withhold any tax at source therefore you will receive your pension free from any deductions of tax. Depending on where you live in the world will depend how much local tax, if any, you will have to pay on this pension income. For example, if you retired to Thailand or Malaysia, where there is no tax on worldwide income, you would receive all of your pension tax free. You are advised to seek local tax advice for your country of residence.
Can I transfer assets held within my UK pension into a QROPS without having to liquidate them into cash first?
This will depend on what the assets are and how they are held. If the assets are held within an insurance company based scheme then they would need to be converted into cash before being transferred into a QROPS. If the assets are held within a SIPP or SSAS, providing the administrators and trustees of the receiving scheme are willing to accept them, then it may be possible to transfer the assets into a QROPS.
Can I transfer commercial property held by a UK pension?
You can make an ‘in specie’ transfer of commercial property into a QROPS. The transfer would attract no stamp duty unless the property is mortgaged, in which case stamp duty would be payable on the value of the debt. Once transferred, the rental income less any allowable expenses would be taxed at 20%. Any capital gains would be tax free.
What types of UK pensions can be transferred into a QROPS?
A wide variety of UK pensions can be transferred 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.
Is it possible to set up a QROPS myself?
No, all QROPS providers will only accept transfers from an appointed intermediately. The process can also be extremely complex and it’s imperative that relevant legislation is adhered in order comply with UK regulations.
How long does a QROPS transfer take to complete?
The transfer of a pension into a QROPS usually takes around 2 to 4 months to complete from start to finish. Initially we would require a letter of authority and a fact finder statement in order to obtain details about your scheme such as benefits and transfer value. Your current pension provider will then be able to provide the relevant discharge forms.
If you have any more questions or require further information on pension investment options then please feel free to contact a QROPS advisor for a free, no obligation consultation.
Should I transfer my pension to a QROPS?