QROPS came as a piece of good news in April 2006 when some of the UK pension restrictions were lifted and it was announced that with government approval UK expatriates could move their pension to a QROPS. It was required that any QROPS be fully certified by HMRC or HM Revenue and Customs department of UK.
To qualify for a QROPS transfer, one must be a non-resident of UK for a minimum of five years. A large number of QROPS are not open to US citizens, yet people of other nationality can freely apply. To keep the charges to the minimum, applicants must transfer a fund of 200,000 GBP to a QROPS. However, there are various floating schemes, too, allowing fund transfers starting from 50,000 GBP in case the applicant has cash deposits or some other investments.
Buying an annuity is not mandatory for someone transferring a pension into a QROPS. This clearly is a winner as it makes possible to invest in assets with better returns and pass on balance funds to loved ones upon death or other eventuality.
QROPS benefits can be availed between the ages of fifty and seventy-five, though it’s also possible to withdraw funds prior or after these thresholds. It is always wiser to look for schemes that offer withdrawals at lowest rates of tax. However, the tax liability in large part relies on the legislation of the country of residence. The benefits of QROPS far outweigh those of a UK pension scheme as it offers greater flexibility, investment freedom and a higher income potential.
QROPS allows for a smooth pension transfer to an overseas jurisdiction. Normally this can be organised through a QROPS provider. The market may be flooded by providers who list out the benefits of a QROPS infinitely. However, no less important is the need to consider the pitfalls of an available QROPS. A next logical step is to contact an approved QROPS adviser to get a window on existing schemes and jurisdiction of QROPS.
Guest Blogger: Sanjay Joshi