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Cyprus QROPS, how does the bail out affect UK expat investors?

Cyprus QROPSCyprus was a QROPS financial centre, for 4 schemes which were approved by the UK. HM Revenue and Customs until April 2012.

The Cyprus 10 billion euro bail out has led to banking problems across the island – but what about the hundreds of Qualifying Recognised Overseas Pension Scheme investors who have money tied up in the island?
From April 2012, the Cyprus QROPS remains a pension scheme, but they are subject to the rules set by the regulator in Cyprus, not HMRC.

Contributions may still go into the scheme – providing they are not tax relieved in the UK.

No more transfers can come in to the former QROPS from a UK pension, as it becomes an unauthorised withdrawal from the UK pensions and subject to a 55% tax charge.

The QROPS investor can:

Stay within the current QROPS under Cyprus pension rules
Transfer to another QROPS

The decision depends on the prospects of the pension fund remaining ring-fenced and intact in Cyprus – and how the government might treat the transfer.

Will the Cyprus Bank crisis affect British pensioners and QROPS transfers?

The Cyprus bank crisis continues to drag on into a second week.

Originally a one off levy of 9.9% for sums of more than 100,000 EUR and a 6.75% on smaller amounts was announced.

Capital controls were soon introduced and depositors could only withdraw small amounts of money from the bank.

Depositors could now lose up to 60% of their savings and instead of a levy; the banks will offer shares which may never return capital.

On top of this, the Financial Times has been reporting on widespread corruption with nearly 20% of all deposits withdrawn in February before the crisis and Russians, apparently being offered to get their money off the island, but incurring hefty sums.

Cypriots and foreigners can only take 1,000 EUR when they leave the country.

Anyone who was in the Cyprus QROPS will be protected under the old rules and won’t be punished for unauthorized payments, as long as no more UK tax relieved monies are added into the QROPS.

Members can either stay put in Cyprus or move to somewhere like Malta which is also in the EU and has over 65 Double Taxation Agreements which can severely reduce your tax burden if you live in Europe. But, questions have been asked over Malta as well.

Investor options

Retirement savers in Cyprus schemes have decisions to make, but obtaining a pension transfer analysis valuing the fund from the provider is a good first step.

Guardian Wealth Management can give you professional financial advice in regard to QROPS, contact one of our financial planners for expert guidance or visit the download page on the website.

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