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QROPS Advice for Expats

There are many wealth management choices we have to make throughout our lives, so it’s important to be armed with as much information as possible. Deciding how to invest your pension can be difficult, especially for expats who have already made big changes to their lifestyles.

The introduction of QROPS (Qualifying Recognised Overseas Pension Schemes), provided expats with an extra choice when it came to their pensions, but investing overseas is a step outside of most people’s comfort zones. As with any matter of wealth management, there is no substitution for seeking the help and advice of a professional financial advisor – but if you’re still in the early stages of researching QROPS, here is Guardian Wealth Management’s quick ‘for and against’ rundown of this investment solution.

Transferring Your Pension into a QROPS: FOR

Investment flexibility
Some people find it quite frustrating that they have so many limitations imposed on their wealth management decisions. When you’ve worked hard all your life to build a nest egg, why should you be restricted with your investment choices? Matters of annuities are also contentious for many. For expats transferring their UK pensions into a QROPS, these restrictions are alleviated, providing more investment freedom and versatility.

Tax Advantages
If you’re an expat living abroad but you still hold a pension in the UK, HMRC will apply UK tax to your income. Although QROPS are still taxable under the laws of the country from which they’re sourced, generally speaking you will pay less tax on your pension fund if you move it into a QROPS.

Currency Fluctuations
If you invest in a QROPS, you can withdraw funds in any currency you wish – with the Pound in such a weak position against the Euro, this could prove to be a shrewd move in terms of your wealth management planning.

UK pensions and money left in your estate upon your death are taxed by HMRC. With a QROPS however, your loved ones will benefit from the full amount of funds, without the need to pay inheritance tax.

Transferring Your Pension into a QROPS: AGAINST

Your Circumstances
Because pension packages and personal circumstances differ, you can’t just assume that you’ll be better off with a QROPS. Make sure you consult a financial advisor who understands your existing pension and also different QROPS from around the world. In some situations, you may be better to stick with your UK pension.

Long Term Plans
If you move back to the UK within 5 years of taking out your QROPS, you can face fairly hefty tax penalties. Make sure that the expat life is truly for you and consider other potential changes such as health issues before you make the leap.

Set Up Fees
There will be fees to pay when you set up a QROPS and you may want to leave a wealth management or financial advisor to manage your QROPS for you, which will also come at a cost. Weigh these things up and make sure you’re willing to pay.

As with any wealth management matters it’s vital to seek expert help from qualified financial advisors who are authorised to operate by the authorities in your resident country.

Guardian Wealth Management have qualified professional advisors in various locations in Europe and the Middle East, who are experienced in dealing with expats and their specific, individual circumstances. Please feel free to contact us if you would like more information about QROPS, or download our free guide to QROPS now.

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