QROPS UK Pension Transfers: Important Things You Should Know
QROPS, or the Qualifying Recognised Overseas Pension Scheme, is one of the options available for expatriates who are looking for their UK pension to be transferred overseas. A transfer to a QROPS can provide more flexibility and efficiency in tax planning as well as benefits related to currency hedging.
QROPS pension schemes which are recognized by the HMRC accept transfers of UK registered pension funds. This scheme allows those expats who have pension funds within the UK to transfer these across the borders, usually without any tax liability. A main condition to avoid excess taxation is that the QROPS is located within the European Union/ EEA for EU/EEA residents.
Once a transfer to a QROPS is undertaken, the transfer of the funds is measured against the Benefit Crystallisation Event 8 (BCE 8) for pension Lifetime Allowance (‘LTA’) purposes. The LTA from 6 April 2019 is £1.055m, increasing with inflation on an annual UK tax year basis thereafter. From the point that the transfer has completed, the QROPS funds are outside the UK’s LTA. These funds, once invested post transfer, can hence grow according to your investment risk profile, without the risk of 25% – 55% taxes being levied otherwise through exceeding the UK pension LTA over time.
There are several other advantages of the QROPS scheme, such as flexible access to the funds, investment opportunities and many more. Contact an experienced investment specialist before planning your transfer of pension funds across the borders.