QROPS are pension funds set up outside of the UK, allowing UK expatriates to attain greater control of their investments for retirement as well as circumvent the red tape, restrictions and taxes imposed on UK Pension Funds by the government. QROPS funds must by recognized by the HMRC (Her Majesty's Revenue and Customs) and must be governed by the federal laws of the country of origin (If the fund will be held in a United States bank then the QROPS account – and bank-- must be regulated by the U.S.). Even if the holding country levies a tax rate of zero the QROPS is required to be recognized for tax purposes. Here are five key points, benefits, of QROPS to help you decide if transferring your UK pension is right for you.
You can live in one country and base your QROPS account in a different country (jurisdiction) thereby allowing you to place your money where you find lower tax rates. Lower tax rates improve fund growth. Keep in mind that pension benefit income is taxed based on residency during accrual of the recognized income. The annuity or alternative secured pension (ASP) purchase requirement that the UK imposes on UK pension holders at age 75 is eliminated. There is a limit of 25% cash lump sum payouts on your UK pension.
QROPS funds provide a new level of flexibility by offering investors a choice between self-managed, fully managed or collaborative packages. Pension account holders can consider a variety of different stock markets, assets, onshore/offshore funds and commodities that are not available to UK pension holders. There is an exemption from Lifetime Allowance charges and there is no risk of surpassing the designated pension threshold.
In the UK, residents are well aware of the UK inheritance tax. QROPS is not taxed under that tax. Two thirds of a UK Pension can be automatically given to the spouse despite beneficiary specifications but not so with a QROPS fund. There is also no need to purchase the annuity (required of UK Pension holders) and there are reduced tax implications meaning more of the individual's actual fund balance will reach the beneficiary.
QROPS takes advantage of currency exchange fluctuations by making your fund available in many of the most popular currencies and payable, in gross, to the holder in the currency of their choice.
Finally, pension holders with their funds in QROPS accounts find themselves protected against business associates, ex-spouses, creditors and in some cases future creditors thanks to confidentiality of the account.
There are cost considerations when discussing QROPS accounts but in general a UK expatriate would benefit from making the move. Flexibility, growth potential, fewer taxes and greater confidentiality make QROPS a profitable and enticing option for most expatriates. There are rules in reference to property owned by these funds and there are tax issues for when an expatriate returns home. It is best for any individual seeking the most profitable option to research and retain a specialist to review their situation and their individual needs.
Making life abroad easier with ExpatFinder, the comparison website for expats around the world.
Should I Transfer My UK Pension Fund to a QROPS?
More Expat Resources
Related articles
- Serviced Accommodation vs. Typical Rentals
- How To Save Money On International Calls
- First Steps if You Get in Trouble with the Law Abroad
- Is it worth it to Ship My Belongings Overseas?
- Tips for Researching Your Health Insurance
- Selecting an Overseas School for Your Child
- Advice for Moving With Children
- Building Your Own Offshore Business
- Capital Towns Worth a Visit- Funny Towns With a Claim to Fame
- Finding the Right Serviced Apartment for You
Get a quote and compare the many top rated Cigna policies offered especially for expats. Fill out your information to speak with a representative!
Learn about the benefits of an offshore savings account and determine which company will be best for your needs.
US expats are expected to continue filing taxes in the States even while living abroad. Learn about your tax obligations today.
Free download now!
Simple and free city guides to prepare your relocation, housing tips, visa, everyday expat life...
ExpatFinder.com is a website designed to bring support to people and families living abroad or planning to move overseas. It provides the user with information to help make informed decisions when looking for International health insurance with global cover around the world. Expat life insurance are explained for review at the same time as a choice of selected International medical insurance companies are displayed and free quote by direct contact available. Other sections of the website include online broker and offshore banking reviews including a choice of offshore savings accounts to make the most of your expat money. Users can also transfer money abroad and learn more about QROPS and overseas foreign currency exchange. The one stop place to answer all your needs will bring you information on expat health insurance and US Expat Tax. Should you be preparing to move abroad or living overseas you might be looking for a room for rent or else expat often start with an extended stay in serviced apartments