Overseas Pension for Expats

QROPS Overseas pensions are fairly new, and were introduced with the SIPP-QROPS-HMRC Approved (Qualified Recognised Overseas Pensions Schemes) by the HMRC (Her Majesties Revenue & Customs). In order to transfer your UK pension to an overseas scheme, the receiving scheme must meet the criteria established through the SIPP-QROPS-HMRC Approved rules.

At this stage, only Non-Protected Rights (money that you or your employer has contributed) can be transferred into a SIPP. It is anticipated that it will be possible in the near future to also transfer Protected Rights (SERPS, or S2P, rebates from your National Insurance Contributions from being Contracted Out).

Our QROPS are available in several jurisdictions all of which are fully approved by Her Majesty's Revenue & Customs (HMRC). HMRC state that the rules of the scheme must be broadly equivalent in terms of tax treatment, to a UK registered pension scheme and the scheme manager must provide HMRC with information on certain 'events'. Our QROPS are fully recognised and approved HMRC structures in the locations & jurisdictions in which they operate.

Overseas pensions are not suitable for everyone, especially if you only plan to be overseas for a short period of time and intend to return to the UK before you retire. It is vitally important that you seek independent financial advice regarding your options from one our fully qualified financial advisers.

We offer a free initial consultation, if the scheme is not suitable for you, we will advise you and there will be no fee. If it is suitable, ongoing advice can either be on a fee or commission basis and can be agreed beforehand.

Until recently it was very difficult to legitimately move UK retirement benefits built up during a working lifetime outside of the UK. All that has changed. You can now quite easily transfer pension assets outside the UK, as long as they meet the rules of the jurisdiction to which they are transferred and they are authorised in that jurisdiction as a pensions.

HMRC, backed by primary legislation, have put in place a pre-approved system whereby UK pensions rights can be transferred outside of the UK into a qualifying approved scheme at the pension holder's request.

To obtain approved status, the provider must meet a number of HMRC rules relating to how and when benefits can be taken, together with reporting requirements for five complete tax years after the member has left the UK. Not all schemes qualify, and therefore attempting to transfer into un-authorised schemes should be avoided at all costs.

In order to transfer UK pension rights into an approved scheme, the member must have left or intend to leave the UK for five years or more. In such cases, UK pension rights can automatically be transferred outside of the UK into approved schemes in the same they can be transferred between approved providers within the UK.

UK-based retirement assets may be transferred outside of the UK into an approved scheme either before the member commences benefit or once they have come into payment. This includes most types of scheme including income drawdown currently in payment and protected rights, which have accrued as a result of UK national insurance rebates. However it is not possible to transfer an entitlement to the basic UK state pension into an approved scheme, or to make a transfer after an annuity has been purchased, or Final Salary Schemes that are in payment.

Many approved schemes impose some restrictions, to the extent that an individual must be resident in the country into which they are transferring their pension benefits. However, others do not have this restriction and so there does not necessarily need to be a link between where the member lives and the geographical location of the scheme. This means individuals can choose tax friendly jurisdictions that have more flexible rules for how benefits can be taken.

A significant benefit for those who are not UK resident at the time they start drawing their retirement benefits is that payments from approved schemes will not suffer any UK tax. The jurisdiction in which they are resident for tax purposes may apply local taxes but with careful planning and specialist advice this can be minimised.

Once someone has been resident outside of the UK for ten or more complete tax years and has transferred their pension rights to an approved scheme, the reporting requirements to HMRC cease.

Do not hesitate to contact us if you have any queries.

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