When you first find out that QROPS is not a new form of genetically modified wheat but discover instead that it stands for Qualifying Recognised Overseas Pension Scheme – the relief is only short lived. This complicated sounding pension scheme seems to have been developed by the Inland Revenue to put people off considering one. But joking aside, a QROPS might well be worth thinking about if you’re planning to move abroad in your retirement.
A Qualifying Recognised Overseas Pension Scheme is a recognised pension scheme that can receive the funds of an existing United Kingdom pension. One of the main benefits of organising such a scheme is that you potentially won’t pay tax on your money. Another big plus is the fact that if there are any other beneficiaries of your pension upon your death (i.e. your spouse or relatives) there will be no inheritance tax to pay. You can also hold pension funds in your own currency, thereby eliminating any risk of exchange rate fluctuations.
Some QROPS require the person involved to be resident in the country in which the scheme is held, whereas some do not. A little research or professional advice might clarify which ones are best suited to your own circumstances, depending on what you want from your pension.
It is worth noting that the country you move your pension to will have its own rules and regulations regarding taxation of a pension. There is also a reporting period, insisted upon by Her Majesty’s Revenue and Customs (HMRC), whereby any payments made by the pension scheme to the beneficiary over the first 5 years are reported to HMRC. This is normal for any Qualifying Recognised Overseas Pension Scheme.
What can sometimes be a complicated process (just the title is enough to make you want to settle under the British sun/rain instead) – might be made a little simpler by having access to qualified people who know the ins and outs of Qualifying Recognised Overseas Pension Schemes.
There several factors to consider – the most prominent of which is the fact that you need to consider the laws of two countries – the UK and the country of proposed residence.
Further to this, there may be situations whereby a third country has more favourable tax conditions, depending on your specific circumstances.
Whatever you do, it is crucial to research your options fully, so you can thoroughly enjoy your retirement – whether you choose a Qualifying Recognised Overseas Pension Scheme or a pension with a briefer title!