Have you worked in the UK at any stage in your career? Did you work in the public or private sector and contribute to a pension? If so, then you may have retirement benefits still sitting in the UK!
A Qualifying Recognised Overseas Pension Scheme, or QROPS, is an overseas pensions scheme that meets certain requirements set by Her Majesty’s Revenue and Customs (HMRC). A QROPS can receive transfers of UK Pension Benefits without incurring an unauthorised payment and scheme sanction charge. The QROPS program was launched on 6 April 2006 as a part of new legislation with the objective of simplifying pensions.
Transferring a UK pension fund into a QROPS can reduce taxation and avoid UK taxation as long as the pensioner remains tax resident outside the UK. A QROPS can be appropriate for UK citizens who have left the UK to emigrate permanently and intend to retire abroad having built up a UK pensions fund. Alternatively, a person who is born outside the UK having built up benefits in an HMRC-approved UK pension scheme can move their pension offshore if they want to retire outside the UK. UK state pensions cannot be transferred, but defined contribution, defined benefit pension schemes and SSAS can be transferred abroad.
QROPS and Defined Benefit Schemes
While there are no complications transferring from a defined contribution scheme to a QROPS, there are a few new rules introduced in April 2015 associated with transferring a defined benefit scheme to a QROPS:
- Funded verses Unfunded Schemes: It is no longer possible to transfer from an unfunded defined benefit scheme to a QROPS. An example of unfunded schemes are the NHS pension scheme and Teachers Pensions scheme.
- Value over £30,000 or more: a professional pension adviser who is regulated by the FCA in the UK must check it. The measure will also apply to any pension that has a guaranteed annuity rate.
How Rockcourt can help?
The new rules mean expats or international workers with UK pension rights making a transfer to a QROPS need two tiers of advice from April 6th 2015. First, an overseas pension adviser (Rockcourt) will need to give QROPS advice, then a UK authorised adviser will have to check that advice and rubber-stamp the recommendation to transfer the fund. The retirement saver will not need to discuss the transfer with the UK adviser, but the case will have to go to one for checking. Under FCA rules, the UK adviser takes on liability for giving the investment advice.
Rockcourt has teamed up with a UK Authorised Financial Adviser who will ensure that HMRC’s rules have been met for all UK defined benefit scheme transfers. We will also outline the advantages and disadvantages of moving your pension to Ireland. If you decide to move, it will require investing in a fund and an Investment Questionnaire will have to be filled out.