QROPS (qualifying recognised overseas pensions schemes) was first introduced by HM Revenue & Customs in 2006.
In the beginning there were a few problems which has given some people a ‘not so good’ impression of QROPS. However, as the years have passed and these ‘fails’ have been recognised the rules and regulations have become more and more strict.
Are you planning to retire abroad?
If you are planning to retire abroad you will need to make arrangements with how to handle your pension. A full list of QROPS can be downloaded here at the HMRC website. www.hmrc.gov.uk/pensionschemes/qrops.pdf – This is a useful resource, even so, this is a complicated matter with a myriad of rules and regulations attached. Before going ahead it is a wise decision to consult an independent financial advisor, preferably who specialises in QROPS, before making any permanent decisions.
Death & taxes
The saying there are only two things in life that are for certain, and they are death and taxes. Changing to a QROPS can significantly save money with regards to taxes. For example, in the UK your pension is accounted for in your estate and the taxes on this can be 55%. However, in the Isle of Man it would be significantly lower at just 7.5%. Another plus is that often it is possible to take a bigger proportion of your pension as a tax-free lump sum. Indeed, some QROPS allow up to 25% as a tax-free lump sum.
In a changeable environment nothing is guaranteed
Of course, there are many schemes available outside of QROPS. However, opting for an unauthorised scheme is incredibly risky. How much your pension is worth and the taxes you pay depends on the country. Another thing to consider is that currency exchanges change on a daily basis and even if you opt for a qualified scheme, this is something that can and does happen. Take the euro for example. As the euro has become stronger many expats in European countries have seen their pensions devalue.
Why professional advice is important
Because economies and pension rules change, for the ‘average’ person the whys and what ifs can simply be too much to handle: They can end up feeling somewhat lost in the wilderness so to speak! Professional advisors are specialists in this area and have the experience and knowledge it takes to assess your particular situation in ‘the big picture’ and help you make the most of what you have. You might think you are saving on fees and commissions by doing it yourself, but unless you are prepared to study VERY hard and are generally a lucky person, this is usually a false economy.
A QROPS specialist can save you a lot of money, not to mention stress. There are QROPS help centres available online that provide all the basic ‘ins and outs’ as well as get you in contact with an experienced QROPS professional. Without doubt, they will be able to help you get the most for your hard earned sterling!