Questions & Answers re SIPP-QROPS

What is a SIPP-QROPS ?
A QROPS is a recognised overseas pension scheme that meets certain requirements. 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 Her Majesty’s Revenue & Customs (HMRC) with information on certain ‘events’.

However, if the SIPP-QROPS is administered in a country where there is no stipulation on how retirement benefits are taken, it is possible to transfer the benefits to an international pension where the pension’s value can be withdrawn after the age of 50 without any tax deducted at source (however there may be a tax liabilty on income depending on where you are currently resident).

How are SIPP-QROPS structured?
A SIPP-QROPS is structured in a similar manner to a UK pension; i.e. there is an investment vehicle which is owned on your behalf by a pension administrator (trustee). This trustee must be based outside the UK and approved by HMRC as a SIPP-QROPS administrator.

Through the investment vehicle you can access a wide range of cash, bond, property, hedge, equity and commodity funds - and switch between these funds as market conditions change.

Should I transfer my pension to a QROPS?
If you are moving or are already residing abroad, with no intention of returning to the UK, then a QROPS may well be the best course of action.

However, if you have no intention of residing abroad but are simply trying to circumvent the rules that would apply to a UK registered pension, then The Overseas Pension is not for you.

Which jurisdiction should I choose for my QROPS Transfer?
Pryce Warner International Group have chosen the Isle of Man as our jurisdiction of choice. The Isle of Man fulfils its obligations to the Client and provides many advantages over other jurisdictions. We believe that the Isle of Man is the most highly regulated of the QROPS jurisdictions available. It provides the client with a well regulated market place and tax efficient solutions. The Isle of Man is one of the foremost offshore financial centres in the world. It enjoys a reputation of the highest standing as an International Financial Centre.

Who can move their pension into a SIPP-QROPS ?
Anyone who has been living overseas for 5 years or more ,or who intends to live outside of the UK for more than 5 years and who has a UK ‘onshore’ pension scheme. As such, this scheme applies as much to Australians, New Zealanders and South Africans (and any other nationality) who have worked in the UK as to British expatriates.

Individuals who have not been non UK resident for 5 years can also apply for a SIPP-QROPS if they believe they not going to return to the UK within 5 full tax years of leaving.

Can I transfer my UK pension when benefits are already in payment?
It is possible to transfer a pension where benefits are in payment provided that they are not from an annuity or certain company pension schemes.

My pension has a large proportion of Protected Rights - can I move these into a SIPP-QROPS?
Yes. However, in certain circumstances it may not be advisable to do so.. Protected Rights often have far more favourable terms than standard pension benefits so we would strongly recommend speaking to us before transferring protected rights. If an individual does decide to transfer protected rights, disclaimers will need to be signed to confirm the policyholder understands the potential implications.

When can I take the pension benefits?
Technically, you can take the benefits from the day of transfer. However, virtually all of the investment vehicles will have a minimum term of 5 years (unless you have less than 5 years to retirement). It is important to point out at this point that the money being transferred has been set aside for your retirement and we would strongly recommend leaving a large portion of the pension value in the SIPP-QROPS until you reach retirement.

What is the minimum transfer I can make into a SIPP-QROPS ?
There is no minimum level. However, it may not be efficient to transfer a single smaller pension into a SIPP-QROPS . We can advise on the most efficient vehicle based on the size of your pension ‘pot’ and the length of time you have until you retire. Generally the minimum is 50,000 GBP

Can I make additional contributions to my SIPP-QROPS ?
Yes - depending on the investment vehicle being transferred into.

Is there any Taxation on the Transfer?
A transfer of a registered pension scheme to a SIPP-QROPS is a Benefit Crystallisation Event (BCE). This means it will give rise to an additional income tax charge where the transfer exceeds the individual’s lifetime allowance. Currently, this allowance is set at £1,500,000. Below this amount there is no taxation at transfer. Anyone with a pension fund larger than £1,500,000 who is contemplating such a transfer should obtain specialist advice from Abbey Financial Solutions before proceeding.

My UK pension is IHT protected - is a SIPP-QROPS ?
At present, no. However, in the Pre-Budget Report delivered by the Chancellor of the Exchequer on 9 October 2007, it was announced that IHT “protection” is to be extended to UK tax relieved pension’s savings held in overseas pension schemes. The change will be backdated to have effect from 6 April 2006

Can I return to the UK after taking the benefits?
Yes, you can return without prejudice. If you return to the UK then the transfer will have a neutral affect as UK pension regulations will apply to the QROPS. However, to ensure there is no taxable event, we would recommend staying offshore until the next tax year begins.

What happens if I return to the UK before taking the benefits?
Yes, you can return without prejudice. However, to ensure there is no taxable event, we would recommend staying offshore until the next tax year begins. The SIPP-QROPS administrator will have to report this ‘event’ to HMRC and the pension scheme will become subject to UK pension regulations again. If the administrator does not do so, they will lose their approved status - if you do not inform the administrator, you are breaking the law.

What happens if I transfer to an international pension that isn’t a QROPS?
There are serious tax implications if the scheme turns out not to be a QROPS, including unauthorized member payment and surcharge, as well as a scheme sanction charge.

The scheme sanction charge is 40% of the transfer value payable by the pension scheme. The unauthorised payments surcharge is 15% of the transfer value and would be payable by the individual.

Can my existing UK pension transfer investments "in specie" rather than selling them and transferring cash to the QROPS?
It is possible for a QROPS to receive assets transferred from a UK scheme. However, both the UK pension and QROPS must be willing and able to complete the transaction.

Can I invest in residential property?
Investment in residential property is permitted provided that you have not been resident in the UK for tax purposes at any time during the last five years. The investment may need to be made using a corporate structure.

If you have been resident in the UK for tax purposes during the previous five tax years then the current UK rules apply: i.e. if the investment is not made using a genuinely diverse commercial vehicle a prohibitive tax charge will be levied.

I am interested in transferring my UK pension to a SIPP-QROPS - What do I do next?
Pryce Warner International Group are one of the first international advisory groups to be able to offer SIPP-QROPS to expatriates. We have teamed up with some of the world’s largest financial institutions, and the most respected provider of SIPP-QROPS administration, to offer a safe, quick and easy transfer of benefits.

Pryce Warner International Group do not charge for providing the pension transfer analysis and there is no obligation to proceed. Any transfer of pension benefits would be directly from your existing pension provider to the SIPP-QROPS provider.

As a first step send us your information via the response form on this page and we will review the information and have an advisor contact you.

Click on the button below to send your information to us.