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Read more »QROPS
A QROPS, Qualifying Overseas Pension Scheme, is a type of expat pension that is recognised by the UK government.
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Read more »Understanding a QROPS Transfer
What is a QROPS?
A QROPS 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 have a UK pension and wish to retire abroad, a QROPS will allow you to transfer your UK pensions abroad in the jurisdiction that you choose.
In the case of France, there are no French QROPS, however you can still have a QROPS if you are a French resident.
Who can transfer to a QROPS?
If you have one or more pensions in the UK, you can apply for a QROPS transfer. Once you have moved to France, if you were to decide to move back to the UK, your QROPS would become subject to UK pension regulations or you would be able to switch your QROPS back into a SIPP.
If you have been living in France or elsewhere abroad for the past five tax years, the QROPS will abide by the laws in which country it is based. You will be able to take pension income with no limits and no deduction tax at source, however taxation will apply in accordance with France taxation regulations.
Who Is Eligible for a QROPS Transfer?
QROPS Eligibility
Those who are eligible for a 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. This pension scheme 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.
If you are not sure if you are eligible for a transfer, or confused by the options available, speak to a Harrison Brook financial adviser for a 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 any 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.
Commission based financial advisors often sell and encourage QROPS and they tend to put a commission paying investment bond within the pension structure, making it more expensive.
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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