If you are planning to move overseas in the future, or already live abroad, you might want to consider a specialist overseas pension scheme. Called a QROPS or QNUPS scheme, these overseas pensions can help you to manage your retirement in the sun or supplement your UK pension contributions. In plain-English, what are these schemes and what do they do?
QROPS stands for Qualifying Recognised Overseas Pension Schemes. They’re essentially overseas pension schemes that meet conditions laid down by Her Majesty’s Revenue & Customs (HMRC) and can accept pension transfers from a UK registered pension scheme.
Most British pensions are eligible for transfer, with some exceptions (ie, state pensions and final salary).
QROPS allow you to:
Note: The amount of tax payable on income from a QROPS will depend on where the QROPS is held and where you live at the time. Also, when transferring funds from a UK pension scheme, note that the total fund will be subject to a taxation test against the lifetime allowance limits.
QNUPS stands for Qualifying Non-UK Pension Schemes. These are pension schemes based outside of the UK that meet certain requirements laid down by HMRC. The biggest benefit is that payments made into QNUPS are normally exempt from UK Inheritance Tax. You do not have to be employed to make contributions to a QNUPS and there are no reporting requirements to HMRC.
Note: You must start drawing an income from your QNUPS between the ages of 55 and 75. Also, QNUPS cannot accept pension transfers from existing UK pension schemes.
It is possible to hold both a QROPS and QNUPS, so that you can enjoy the maximum benefit.
Call our knowledgeable team today, for more info on whether an overseas pension could work for you.