What is a QROPS?
QROPS stands for Qualifying Recognised Overseas Pension Scheme and is an international pension scheme based outside of the UK but still registered with Her Majesty’s Revenue and Customs (HMRC). It was introduced on 6th April 2006 which was also known as A-Day.
Won't I be fined 25% for transferring to a QROPS?
Transfers to QROPS after the 9th March 2017 will only be subject to a 25% tax charge if both the individual and the QROPS are in a different country. This doesn’t leave many options available.
Can't I just transfer my UK pensionto a local pension in the country i live in?
Unfortunately not. You can only transfer your pension to schemes which are recognized by HMRC. Anything that isn’t could be subject to a 55% penalty. There are several different QROPS available in different countries so depending on where you live will depend on what you can do.
I've heard QROPS is a scam?
HMRC has helpfully set up a fraud squad to deal with these issues and most have disappeared with the tightened regulations in 2015.
Cease UK Regulations
Upon transferring to a QROPS, your pension will cease to be governed by the regulations of the UK and your pension will be paid gross of tax from the UK also.
UK Lifetime Allowance
QROPS removed the effect of the UK Lifetime Allowance (LTA) tax which is currently £1m. The tax occurs on transfer and is not tested again like it is in a SIPP.
Death Tax
Death tax refers to the tax your beneficiaries will pay when you pass away. Pensions don’t fall under your estate which means you don’t pay Inheritance Tax (IHT), so instead, you pay what they call “Death Tax”. With a QROPS you will potentially pay no taxes upon death, depending on certain criteria.