QROPS FAQs – everything you need to know about QROPS
Guardian Wealth Management offers a wide variety of financial planning services to clients in the UK and expats internationally; we have offices across Europe and the Middle East, providing quality wealth management services including advice on Qualifying Recognised Overseas Pension Schemes.
To help you understand what a ‘QROPS’ is and how they can work for you, we have compiled a list of frequently asked questions. We hope that you find it useful.
QROPS – what does it mean?
A QROPS is a Qualifying Recognised Overseas Pension Scheme. QROPS are a type of offshore pension; they are recognised by HMRC in the UK and give registered UK pension holders the option to transfer their pension, tax-free, to an offshore location in the event of taking up residency abroad.
What’s the difference between a QROPS and a UK pension?
With a QROPS, you are not limited in the same way as you are with a UK pension, such as; less investment restrictions, no allowance cap (which is £1.8million in the UK).
I want to transfer my pension into a QROPS – how do I do this?
If you wish to transfer your pension into a QROPS there are a range of factors to consider, various jurisdictions and various schemes available. You will need advice in order to navigate your way. Speak to one of our financial consultants who can help you in this process.
What are the qualifying criteria for a QROPS?
You must be between 18 and 75 years of age. You must be living outside of the UK or have the intention to leave the UK for a QROPS. You must have the intention to live permanently away from the UK.
All nationalities are entitled to hold a QROPS if they have a UK pension.
How much money should I transfer into my QROPS?
There are no official restrictions on how much money you transfer into a QROPS, but it is a widely held opinion that for QROPS to be effective, you should have £25,000 to transfer as a minimum. You can combine more than one pension if you wish.
I want to return to the UK – what does this mean for my QROPS?
If you are planning on living back in the UK permanently or for work, your QROPS will become subject to the same regulations and tax treatments as a UK pension.
I only have a UK state pension – can I transfer this to a QROPS?
It is not possible to transfer your state pension into a QROPS – they are for corporate and private pensions only.
Will having a QROPS mean that I can’t get a state pension?
No, they are entirely separate; if you take out a QROPS, any entitlement that you have to a state pension in the UK will remain unchanged.
I’ve already taken an annuity – can I still apply for a QROPS?
No, you can’t transfer your pension if you’re already taken a lump sum payment or an annuity
How much will it cost me to set up a QROPS?
QROPS costs differ depending on the scheme, location and the service level that you require. The main costs you will be looking at are the initial set-up fee and an annual management fee. Speak to one of our advisers who will help you find the most cost effective solution for you.
I keep hearing the word ‘jurisdiction’ when talking about QROPS– what does this mean?
The jurisdiction in which you take out your QROPS means the country where you have placed your QROPS and therefore the country whose rules and regulations apply to your QROPS. Talk to one of Guardian Wealth Management’s QROPS financial advisers to find out which jurisdiction offers the best benefits for you
I think I want to transfer to a QROPS but what benefits will it offer?
Investment flexibility is one of the most favoured benefits of a QROPS, but there are many more including tax-free transfers, global fund accessibility, savings on tax and more flexibility regarding international currencies.
Is the purchase of an annuity necessary with a QROPS?
You do not need to buy an annuity if you have a QROPS, but providing your QROPS has been set up correctly, you have the option to do so if you wish.
I’ve heard that QROPS are flexible – what does this mean?
QROPS offer much more flexibility than UK pension schemes; you can withdraw your money as suits, adjust your portfolio and also pass on all of your money and assets as inheritance without the worry of inheritance tax.
I might want to change location, will this affect my QROPS?
If you live or work in another country, your QROPS will stay in the jurisdiction it was set up in. You can continue to make contributions regardless of where in the world you are living (remember though that if you move back to the UK, your QROPS will be bound by UK pension regulations).
You can receive income and contribute to your QROPS in any currency; so even if you move to several different locations, you can still use your QROPS.
I would like to manage my QROPS assets myself – is this possible?
It depends on your particular QROPS – some allow you to manage your own assets, while others will be restricted by certain conditions. It is a good idea to use a financial adviser for guidance, even if you wish to manage your QROPS assets yourself.
Please feel free to contact us if you have any further questions or would like some help with setting up a QROPS in Qatar, Dubai, Switzerland, Germany, Belgium and the Netherlands or anywhere else in the world.