What do I need to know about QROPS?

OK, so just what are the key features of QROPS? Whether you wish to retire abroad having worked in another country for many years and have a real sense of belonging there, or have simply always had the desire to retire to a country other than the UK having previously visited it or to fulfil a dream – transferring a pension out of the UK used to be a costly business.

In recognition of the increasing numbers of people leaving the UK to retire abroad and that the countries to which people retire may have different approaches to pensions than are inherent in the UK, the government introduced legislation to enact QROPS. So, as a pension scheme for those living abroad the first difference between a QROPS and ‘ordinary’ UK pension is that the capital accrued in a QROPS – does not have to be used to buy an annuity.

This means that in the event of the QROPS holder dying any remaining funds in their QROPS can be inherited, tax free, by whoever the QROPS holder leaves it to. The advantage of QROPS here being that if that person had not used QROPS, but had bought an annuity, any benefits from the annuity would cease at the time of death. QROPS are also not restricted in the investment choices you make to make your pension fund grow, but by investing in QROPS you can still take advantage of the UK tax relief available for saving into a pension fund.

Those are, in essence, the key facts for QROPS. Needless to say, your pension fund is one of the most important pieces of finance you will ever be involved with and there are some countries that are not recommended to invest QROPS in. To that end the government produces a monthly updated list of approved QROPS, with appropriate consumer protection, that your QROPS adviser can discuss with you.

For a list of QROP’s as recognised by HMRC, please visit the HMRC website:

www.hmrc.gov.uk/pensionschemes/qrops.pdf