Is a QROPS Right for You?
If you are planning to move away from the UK or are already living overseas you may considering your pension options and whether it would be beneficial for you to transfer your UK pension to a QROPS in your country of residence.
There are many benefits of transferring your UK pension to a QROPS and the reasoning for or against each pension transfer is as individual as you are. The benefits or reasons for making the transfer will depend on your unique personal circumstances, we would recommend seeking independent financial advice before making any changes to your UK pension or transferring it to a QROPS. Especially since the rules around QROPS can and have changed.
An independent financial adviser that specialises in expat pension advice, such as Prism Xpat will be able to provide you with tailored advice to ensure you have the most effective strategy in place. Our advisers provide advice on all aspects of expat pension advice and have extensive knowledge and experience with transferring UK pensions to a QROPS.
The Benefits of Transferring a UK Pension to a QROPS
QROPS operate outside of the UK and may be advantageous for expats. QROPS should certainly be explored by individuals considering an overseas move.
There are many advantages and benefits of transferring your UK pension to a QROPS and an independent financial adviser will be able to advise how these may affect your personal circumstances and which would be most advantageous for you. Some of the greatest benefits include:
Possibility for reduced tax – Depending on your QROPS jurisdiction, the lump sum and pension you can take may be more favourably taxed in your local jurisdiction.
Increased flexibility of pension income – When you transfer your UK pension to a QROPS and have been a UK resident for at least ten UK tax years, or five full UK tax years post date of transfer (whichever is later), you may be able to benefit from more flexible drawdown rules.
No currency conversion costs – Your UK pension would be paid in Sterling wherever you live and as a result incurs currency conversion costs. With a QROPS (assuming set up in your local jurisdiction) your pension is paid in your chosen currency and removes the cost of currency conversion.
Not affected by exchange rates – If left in the UK, your UK pension would be paid in Sterling, if exchange rates are low you could lose pension income you rely on to unfavourable exchange rates compared to the country in which your standard living costs are incurred.
These are just some of the benefits of QROPS and it is always recommended to seek independent financial and pension advice before transferring your pension to a QROPS from a UK pension to ensure you understand the solutions available to you, the benefits of each and any exit fees you may occur when entering or exiting your QROPS.
If you are moving to or already living overseas and are looking for independent advice on transferring your UK pension to a QROPS, our specialist team can advise you on your options and provide a formal recommendation on your optimal course of action. Get in touch to discuss transferring your UK pension scheme to a QROPS.