What is a QROPS?

Before 6 April 2006 it was very difficult to transfer your pension overseas but the 'A' day changes also brought with them 'Qualifying Recognised Overseas Pension Schemes ('QROPS') which allow UK pensions to be transferred overseas. A QROPS is an overseas pension scheme that meets various criteria and is authorised as a pension scheme overseas. To obtain QROPS status the pension fund needs to meet Revenue reporting requirements for five complete tax years after you've left the UK. This time limit doesn't apply from the date of the transfer of the pension benefits but rather applies to the date of your move abroad. In order to transfer your pension overseas you would need to have left or intend to leave the UK for tax purposes. The pension rights can then be transferred to the QROPS tax free and this can be done either before you start taking the retirement benefits or after you've started receiving payments. You don't have to establish the pension in the same jurisdiction that you are moving to so you can choose any offshore tax friendly jurisdiction. Most forms of pension can be transferred with the exception of the state pension and the tax benefit is that given you are to be non UK resident you are taking your pension fund out of the UK tax net. After you've been non UK resident for five complete tax years the QROPS reporting requirements stop and the pension fund is subject to the local rules governing pension funds. As there are some jurisdictions that have no restrictions on allowable investments or how much income you can withdraw this is another advantage to a transfer overseas. You should ensure that you take detailed advice on this from a pensions specialist.