QROPS Explained

QROPS is an abbreviation, it stands for Qualifying Recognised Overseas Pension Scheme and in April 2006 legislation in the UK was changed to enable individuals with UK pension rights who have, or will become, a non-resident of the UK for tax purposes, to effect a UK pension transfer, moving the benefits out of the UK to a QROPS or Qualifying Recognised Overseas Pension Scheme with the approval of HMRC and thus take advantage of, often, significant savings in taxation and investment advantages, both directly and upon death.

There are certain rules of the scheme, that must be adhered to which should, in the main, correspond to the rules that govern any authorised pension scheme found in the UK. The trustees overseeing a UK pension transfer to a QROPS must report to HMRC - Her Majesty's Revenue Customs, any relevant information concerning the taxation of an individual if he or she was resident in the UK for tax purposes during the previous 5 years. This information will include:

• The transfer of the QROPS, overseas pension.
• Benefits paid out such as any income payments, a lump sum payment and death benefits.

In the event that an individual has been non-resident in the UK for 5 or more complete tax years then HMRC will no longer require the reporting of any such information.

Should you wish to make a UK pension transfer to a QROPS in a jurisdiction with advantageous pension criteria, depending upon the size of your fund it is possible to gain significant tax and investment advantages in comparison to a standard UK pension. Other benefits are available, again depending upon the type of QROPS selected.

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