QROPS Rules

Transferring the UK pension into a QROPS offers many benefits. Individuals that are planning to leave the UK or Non-UK residents, who have a UK Pension, can now transfer their accrued pension benefits overseas. In order for the overseas pension scheme to be able to accept UK pension funds, the scheme must be registered by the HMRC as a ‘Qualifying recognised overseas pension scheme’ also known as a QROPS.

The QROPS has to be active and recognised by HM Customs & Excise. HMRC have extremely strict rules that the Qrops provider must adhere to. If the QROPS rules are not followed, the scheme can and will be removed from the QROPS list.

The Qrops Scheme Administrators are required as part of their status as a QROPS provider to abide by the Reporting Requirements. The QROPS scheme provider must comply with information requirements and must inform HM Revenue & Customs when a payment is made to the member.

The reporting requirements only apply if the member is a UK resident when the payment was taken, has been UK resident in any of previous five tax years.

Some of the rules that a QROPS must follow are:

• Must be a Pension scheme established outside of the UK
• The Pension Scheme must be regulated as a pension scheme in the country it resides.
• The scheme must also be recognised by the countries tax authorities and must meet the primary tax conditions
• Not an occupational pension scheme
• At least 70% of the member’s pension funds must be used to create an income for life
• Benefits must not paid to the member before the normal pension age

When a transfer application is received by a UK Pension scheme, the administrators must confirm that the overseas transfer is a registered QROPS by referring to the QROPS list. If the scheme is listed, the UK pension provider may request information direct from HMRC for confirmation. Once the administrators are satisfied, the transfer is processed.

To find out more how the QROPS rules affects your transfers and for further information on QROPS transfers complete the contact form on the contact QROPS Adviser page to receive free QROPS advice.