Overseas Pension Schemes

Sandy King

Control of Your UK Pensions and Investments

It isn’t uncommon for expatriates to remain unaware of the fact that their pensions can transfer from the UK. Did you know you can take control of your UK pensions using Qualifying Recognized Overseas Pension Schemes (QROPS)?

Beginning in 2006, those who moved from the UK and left behind their company or private pension, are eligible to transfer to a QROPS, which is overseas pension schemes used to take control of your UK pensions and investments.

QROPS: The Need for More Information

Expats can significantly enhance the flexibility of their pensions by transferring to a QROPS due to their tax efficiency. Restrictive tax rules are applied to UK pensions regarding succession planning, and improvements are possible through moving it to another jurisdiction.

Under some circumstances, transferring your pension may not be appropriate. Therefore, the proper analysis must be carried by a fully qualified and licensed adviser. Analysis should occur if you fit the following criteria:

  • You are no longer a UK resident.
  • You have no intention of returning to the UK.
  • You have a defined benefit (final salary) Scheme.
  • You have one or multiple pensions equalling, at a minimum, GBP 90,000.
  • You have beneficiaries that may not benefit from your pension on your death.

QROPS: How to Maintain Control of Your UK Pensions and Investments

There are many benefits to transferring your pension to a QROPS. Here are five examples of how you can take control of your pension through a QROPS:

  1. Succession: you may want your pension to pass to your heirs upon your death. In the UK, however, high tax charges can occur on the remainder of your pension before it is paid out to your beneficiary. Additionally, the majority of final salary schemes only allow the widow or widower to receive about half the main pension.  With a QROPS You’re given the option to pass the full pension value on your death to your spouse, children, grandchildren or anyone you choose.
  2. Choice in Investments: You have a much wider selection of investments available to you. Many pension schemes in existence can be restrictive regarding their choice of funding (only UK), or allowed investments. QROPS can provide a broad range of access to funds and investments that are managed to suit your lifestyle stage and risk profile.
  3. Currency Risk Management: The QROPS investment can be can be converted into your choice of currency to reduce foreign exchange fluctuations on drawdown.   The Sterling has experienced depreciation in recent months and many retirees have suffered in the currency zone they reside. You can manage this risk using a QROPS.
  4. Retirement Flexibility: During your retirement years, your circumstances may undergo some changes. For example, you may move to another country again, or you may still have some work to do. In these cases, numerous options are available to you regarding maintaining control of your pension benefits.
  5. Retirement age:  you can start drawing your pension from age 55 if you wish.

When making plans to control your QROPS, you must choose a highly qualified advisory team. They will provide you with advice regarding retirement options as well as portfolio management.