Qualifying Recognized Overseas Pension Scheme

A QROPS is a recognised overseas pension scheme that meets certain requirements. The rules of the scheme must be broadly equivalent in terms of tax treatment, to a UK registered pension scheme.

With an ever increasing aging population, there are not enough young people paying into the state scheme to take care of pensioners. The likely result is a crack down on pensions schemes in the future and an increase in taxes (as we have witnessed already). Luckily for UK citizens, they can transfer their UK private pensions offshore to mitigate tax.

The Qualifying Recognized Overseas Pension Scheme (QROPS) allows most types of UK private pensions ot be transferred offshore. QROPS was designed with the intention of giving UK expats who are not returning to the UK the option of moving their pension to a white list country offshore such as Guernsey or the Isle of Man. Not only do you mitigate tax, but you don’t need to purchase an annuity. This means that your whole pension fund is left to your spouse upon death and then onto your kids should your spouse pass away.

Furthermore you do not need to report to the HMRC (UK tax office) after 5 years. If you’ve been abroad for 5 years already, you do not need to report to them at all. You may even be able to access 25% of your fund immediately after transfer provided you are over 50 (55 from 2010) and you can include your property within the QROPS, so your kids do not have to pay inheritance tax on your house(s).

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