In March 2017, the UK government introduced a 25% tax charge on any pension transfers to QROPS unless, from the point of transfer, both the individual and the pension savings are in the same country, both are within the European Economic Area (EEA) or the QROPS is provided by the individual’s employer. Whilst it has not been confirmed, it is widely expected within the industry that following the UK’s departure from the EU the government will introduce this tax charge on all transfers, meaning there is potentially a limited window of opportunity currently available.
UK PENSION TRANSFERS
A Qualifying Recognised Overseas Pension Scheme – a QROPS, is simply an overseas pension scheme that can accept a transfer from a UK registered pension scheme. If an individual wishes to transfer their pension to another jurisdiction, then a QROPS should be considered.
To be a QROPS a scheme must meet certain conditions laid out by HMRC, these conditions are regularly reviewed and it is vital that correct procedure is followed in order to ensure your pension transfer is in line with HMRC guidelines.
By transferring pension assets to a QROPS scheme, clients can enjoy increased flexibility in drawdown and investment choice, there is no need to ever buy an annuity (although a client may opt for this should they require the certainty an annuity can provide) and they can leave their funds to named beneficiaries on death. Some Key Benefits are highlighted below
- Consolidation of multiple pensions
- Flexible choice of currency
- Investment flexibility and freedom
- No obligation to buy an annuity
- Possibility to allay UK income tax or death charges of up to 45%
- Safe and well-regulated jurisdictions
- Transparent charges