QROPS or Qualifying Recognised Overseas Pension Schemes can often be complex and difficult to understand. However, because of their great financial benefits if you are an ex-pat living outside of the UK on a permanent basis, it is good to try and understand them. In the following post we will look at several important things you should keep in mind before you decide to transfer your UK pension into a QROPS or not.
It’s Not Necessary to Have a Local Provider
There really is no real need for you to have a local provider, though there are some benefits if it’s possible. Even if you are living in somewhere like the Philippines or Thailand and there is no local provider, you could still benefit from QROPS by party pensions that are based in one country but don’t require you to live in that country. You can read more about this on the QROPS Help Centre.
You Don’t Have to Be Incredibly Wealthy
While many QROPS are designed to be suitable for the wealthy, there are many providers out there who offer lite versions for smaller pensions. The specific line between larger and smaller pots usually falls between £100,000 in retirement savings. With lite varieties of QROPS there are usually lower fees and have access to managed funds.
You Are Not Allowed to Put Government or State Pensions into QROPS
It has never been the case that you could transfer your state pension into a QROPS and since September 2015, the British government banned transferring civil service and public sector pensions into them also. Be cautious of any QROPS provider who tries to tell you anything different.
Lifetime Allowance Is Not Applicable to QROPS
If your fund does not exceed the lifetime allowance, there is no limit applied to the fund size on QROPS.
You Can Transfer To QROPS, No Matter Your Nationality, If You Have Pension Rights in the UK
If you have pension rights in the UK, you can transfer into a QROPS regardless of your nationality.
Able to Gain Benefits in Various Currencies
With a QROPS you can take several payments in different currencies to hedge them against the foreign exchange rate fluctuations, instead of using your funds in sterling.
You Don’t Have to be Some Kind of Financial Expert
If you don’t have the experience, inclination, expertise or even time to spend on being a fully involved investor, it doesn’t mean you can’t reap the potential benefits of QROPS. You just need to work with a fully qualified and licensed independent financial advisor who has the appropriate authorisation to work in that capacity from the government of the country where your QROPS is based and simply select a managed funds pension.
Ignore Salesmen Who Try to Offer QROPS that are HMRC Approved
Although it sounds like a good thing, it isn’t a real thing. The HMRC do not approve QROPS. Before you transfer any money into any QROPS, you and your IFA should check any scheme falls in line with the stipulations and rules set out for QROPS.