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Why British expats need to transfer to a QROPS pension

March 5, 2010

Thousands of Brits leave the UK every year either to retire to a new life abroad or for work.

Most have to make quick arrangements to cover healthcare, banking and savings so they can manage their money and deal with any medical emergencies in the short term.

For most, financial planning stops there while they get on with the business of living or working in a new country.

Expats, like most people, live for the day rather than making plans for the years ahead.

Some time considering retirement and pension options is essential.

Leaving one or more pensions in the UK is not good financial planning for retirement and breaks several financial planning rules by leaving a hugely important asset at under the control of third parties: -

  • The pensions are for the most part in the control of employers who cannot guarantee to pay benefits many years down the line and who are underfunding their schemes
  • The benefits are paid in Sterling and spending power is reduced by exchange rate fluctuation
  • Tax planning opportunities are eroded because most UK pension reliefs are only available to UK residents
  • Pension investors have to buy an annuity or alternative secured pension, and in most cases, their pension dies with them however much is left in the fund

That’s where a QROPS pension comes in. Forget the initials, which stand for Qualifying Recognised Overseas Pension Scheme, because a QROPS is just a retirement scheme for people with UK pension rights who no longer live in the country.

The rules for managing and investing with a QROPS are set out by HM Revenue and Customs, who supervise the hundreds of schemes available in 48 countries worldwide.

A QROPS pension eliminates the problems of taking a UK pension overseas.

With a QROPS transfer, an investor suddenly has a retirement strategy that offers:

  • Fund control - either by transferring to a self managed QROPS or a managed fund
  • Financial control - benefits are paid without deducting tax in any major currency
  • Flexible tax and investment options
  • No annuity or ASP - Remaining QROPS funds can be passed on to family or loved ones, often without the worry of inheritance tax, when the pension holder dies.

Transferring a pension to a QROPS scheme is straightforward, but individuals need the help of an independent financial adviser as QROPS providers do not deal directly with investors.

QROPS Adviser is the leading QROPS advisory and can help with switching pensions from the UK to any international scheme.