“There seems to be many different pension schemes for retiring abroad so how do I know which is the right one for me?” Derry Thornalley, from Argent International gives us his tips and explains to us about Qualifying Recognised Overseas Pensions Schemes (QROPS)…

Whether they are QROPS (Qualifying Recognised Overseas Pensions Schemes), SIPPs or any other sort of retirement savings – Pensions are basically tax-efficient wrappers that hold assets which can deliver income, capital growth or a mixture of both. The thought of transferring your fund overseas can sound very scary, especially when you take into account the 46 different Jurisdictions (Countries) where it could be held and over 2200 different providers. So, with this in mind it is vital to consider your options carefully, in conjunction with experienced financial adviser who has knowledge of the QROPS scheme.

No single answer to this most important question will be right for everybody because individual and family circumstances vary so widely. Some of the most popular jurisdictions available to QROPS are Guernsey, Jersey and New Zealand, but new Jurisdictions are being introduced regularly, case in point Malta was given permission by HMRC in April 2010.

Qualifying Recognised Overseas Pension Schemes, as its name suggests, is a form of pension based outside the UK which is recognised by the British authorities as being eligible to receive transfers from registered UK pension funds and has been made available since 2006 by HMRC. Reputable advisers should only recommend transfers to countries which provide consumer protection equivalent or greater than the safeguards in the UK.

Whether you are currently living in the UK or the call of warmer climates is on the horizon or you are a seasoned expatriate retired or nearing retirement, QROPS could be a great tool to fulfil your retirement financial needs, while simultaneously reduce or even eliminate your income tax burden.

Once you have been residing outside the UK for 5 years or more, QROPS enables you to draw an income from your pension fund free of UK tax, this is done with the full blessing of HMRC and without any reporting requirements to them. Advice should be taken as to your individual circumstances, however if the QROPS provider is domiciled in a tax-free jurisdiction you could be able to receive pension distribution completely tax free, for example, Australia does not charge tax on pension income, provided you are over 60. You can imagine what a difference this could make to your retirement needs and lifestyle in the future.

What can be transferred into a QROPS?

• Personal Pension/Membership of GPP
• Final salary (also known as defined benefit)
• GMP (guaranteed minimum pension)
• Protected rights (the scheme your employer provided if you opted out of the state pension)
• Frozen scheme (ie you’re not paying anything into it anymore)
• Money purchase scheme
• Section 32 or section 226
• Civil service scheme
• Armed forces scheme
• FURB (funding unregulated pension benefit scheme)
• URB (unapproved retirement benefit scheme)
• Defined contribution schemes
• SIPP or SASS arrangements

You can also transfer your pension to a QROPS if you are intending to move abroad even in the future, doing so prior to leaving the UK will enable you to take advantage of the huge choice of investments that can be held within it. For instance you may be able to transfer in your existing pension holdings directly into the scheme and from that point have the opportunity to invest in Fixed Income Assets including Gilts & Corporate Bonds plus Unit Trusts, OEICS, Mutual Funds and ETF’s with over 5000 to choose from. Investment choices can and should be discussed with a Financial Adviser to make sure the assets held fit your risk criteria and long term plans.

Benefits of a (Qualifying Recognised Overseas Pension Scheme) QROPS

• Tax-Free Growth
• Tax-Free Income (dependent upon the members country of residence)
• Passing wealth between generations. QROPS enable you to pass the portion of your pension savings that you do not spend to your heirs and, depending on the tax laws of the country where you choose to become resident, there may be a lower rate of Inheritance Tax to pay or none at all.
• Avoid or diminish exchange rate risks and costs. You can take income and capital from your QROPS in the currency of your choice.
• Investment choice. Select from a huge range of funds, asset types and providers to enable you to have a completely diversified portfolio of assets.
• Estate planning simplification.
• Open to all nationalities.
• Transparent fee structure with no hidden penalties or exit fees.
• 100% of fund available for surviving spouse and then children, IHT Free.
• Live where you like in the world, no complex reporting requirements.
• Consolidation of pensions into 1 pot.

Care must be taken when considering where to place your pension and many factors must be born in mind, including taxation and IHT where registering as domicile, tax and IHT treatment of proposed pension jurisdiction,

We would always suggest taking Professional Advice when it comes to Pension matters. We at Argent International can offer completely independent advisory service with free or charge discussions at your disposal.

If you would like to speak to one of our advisers and discuss the benefits of QROPS please call 01664 444625. We will offer impartial advice with obligation to you and with complete confidentiality. Once we have ascertained your specific requirements we will be happy to recommend to the best provider and Jurisdiction for your needs.

For more information on QROPS and to enquire online go to www.rightmove.qrops-advisers.com.