QROPS Pension schemes came up in the UK as a part of the Pension Simplification initiative in 2006. This is a scheme that could help avail individual UK pension benefits while living abroad or outside the UK. The article explains the finer points of the scheme.
QROPS pension scheme is set up outside the UK and is governed and regulated by the country that hosts the same. A scheme can qualify under the QROPS plan only when approved by the regulatory body named the HMRC of the UK. The second most important factor governing the QROPS is that it is governed by the tax laws of the country which hosts it and where the UK pension beneficiary is now resident. You do not have to necessarily be British to avail the QROPS pension however you have to be an eligible participant of a UK Pension scheme and have to necessarily be residing outside the UK for 5 fiscal years.
It is known to be a tax friendly scheme for those who leave the UK for more than 5 taxable years. For the first five years the QROPS manager or adviser institution will report back all details of the QROPS to the HMRC in the UK. However, subsequently the UK HMRC cannot control or regulate the QROPS overseas. While the UK government taxes may not be applicable, the home country where your QROPS has been running will be charging tax rates as applicable there. The QROPS pension has to be necessarily established in a country which taxes pensions at a minimal rate of 0%. This could mean that some tax havens could also be chosen by UK pensioners while managing their finances.
There are several safeguards inbuilt into the QROPS scheme to avoid unpleasant and risky outcomes for individuals and the first and foremost is that the overseas managed QROPS pension has to be approved by the HMRC.
QROPS pensions are being run by well known brands and names of the financial services sector. However, they almost never accept applications directly from individuals. QROPS routing is always done through an advisor and consultant who can help individuals take informed decisions on their pensions. It would be unadvisable to avoid the consultant or advisor as an intermediary because if by error or oversight we choose an unapproved QROPS scheme then the HMRC could levy penalties and high taxes on the QROPS. As of now the rules allow most UK pension funds to be transferred to QROPS except for state pension. Option for QROPS pension is an important decision and financial choice. While life cannot always be planned, if there is any circumstance that forces your return to the UK after having chosen a QROPS abroad, it would be better to check with the financial adviser as to how your tax liability should be managed and calculated. The idea of a QROPS is to be able to manage your investments better so you need to opt for things like SIPP and also exercise choices that do not necessitate an ASP or an annuity. Getting a lump sum at retirement is a great booster in favor of the QROPS pension [http://www.qrops.net/qrops-pension/]plans.
QROPS pension scheme is set up outside the UK and is governed and regulated by the country that hosts the same. A scheme can qualify under the QROPS plan only when approved by the regulatory body named the HMRC of the UK. The second most important factor governing the QROPS is that it is governed by the tax laws of the country which hosts it and where the UK pension beneficiary is now resident. You do not have to necessarily be British to avail the QROPS pension however you have to be an eligible participant of a UK Pension scheme and have to necessarily be residing outside the UK for 5 fiscal years.
It is known to be a tax friendly scheme for those who leave the UK for more than 5 taxable years. For the first five years the QROPS manager or adviser institution will report back all details of the QROPS to the HMRC in the UK. However, subsequently the UK HMRC cannot control or regulate the QROPS overseas. While the UK government taxes may not be applicable, the home country where your QROPS has been running will be charging tax rates as applicable there. The QROPS pension has to be necessarily established in a country which taxes pensions at a minimal rate of 0%. This could mean that some tax havens could also be chosen by UK pensioners while managing their finances.
There are several safeguards inbuilt into the QROPS scheme to avoid unpleasant and risky outcomes for individuals and the first and foremost is that the overseas managed QROPS pension has to be approved by the HMRC.
QROPS pensions are being run by well known brands and names of the financial services sector. However, they almost never accept applications directly from individuals. QROPS routing is always done through an advisor and consultant who can help individuals take informed decisions on their pensions. It would be unadvisable to avoid the consultant or advisor as an intermediary because if by error or oversight we choose an unapproved QROPS scheme then the HMRC could levy penalties and high taxes on the QROPS. As of now the rules allow most UK pension funds to be transferred to QROPS except for state pension. Option for QROPS pension is an important decision and financial choice. While life cannot always be planned, if there is any circumstance that forces your return to the UK after having chosen a QROPS abroad, it would be better to check with the financial adviser as to how your tax liability should be managed and calculated. The idea of a QROPS is to be able to manage your investments better so you need to opt for things like SIPP and also exercise choices that do not necessitate an ASP or an annuity. Getting a lump sum at retirement is a great booster in favor of the QROPS pension [http://www.qrops.net/qrops-pension/]plans.