What Are the Benefits of Transferring to a QROPS?

 

The Qualifying Recognized Overseas Pension Scheme (or QROPS) was launched in April 2006. It provides the opportunity for non-UK tax residents who are not in the United Kingdom, but who currently hold a pension based in the United Kingdom, to transfer pension assets to a QROPS. The currently held UK pension must be registered with Her Majesty’s Revenue and Customs in order for the scheme to work. This scheme can help make retirement as comfortable as possible.

In this article we’ll look at some of the benefits of taking advantage of the QROPS system. A QROPS is structured similarly to a normal United Kingdom pension. That is to say it is an investment vehicle that is owned and managed on your behalf by a trustee – or more specifically a pension administrator. The specific difference is brought about when the pension administrator is located outside the United Kingdom and merely reports back to the HMRC. It is worth mentioning that once that QROPS has been running for five years there is no further obligation to issue reports to the British authorities.

The QROPS has a number of advantages which attract many people to the idea of taking one out. It offers the possibility of receiving payments without any deductions being made from the UK taxation department. It is important to note that persons are responsible for declaring the income in the country they are resident in.

These investments can be domiciled in any major convertible currency.

It is also important to note that it is not compulsory to buy a UK annuity within the QROPS setup. There are no minimum payments and there are no age restrictions as regards entering the plan proper.

It also offers people the advantage of fees that are based on a sliding scale – something that many people will know could save them money in the long term.

For those who are on the look out for asset protection and planning for being tax effective, it is arguably worth considering the QROPS as an option. Before you do anything it is highly advisable to take highly regarded advice, so that you understand all the ins and outs of your pension plans. There are various sources of information you can find in order to help you make the right decision or obtain the right advice. It is very worthwhile ensuring that any conversion you make to a QROPS is handled by professional pension advisors.

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