QPROPS

A viable pension scheme for expats in France?

QROPS (Qualifying Recognised Overseas Pension Scheme) was brought about following changes to UK pension legislation on April 5, 2006.

The structure of a QROPS is similar to that of a UK pension, i.e. there is an investment vehicle which is owned on your behalf by a pension administrator (trustee). The difference arises where the pension administrator is based outside the UK and only reports back to HMRC (Her Majesty’s Revenue & Customs).

This scheme has been specifically designed to enable non-UK resident individuals who have accrued pension benefits in the UK, to transfer these out once they have left the UK. Provided that the UK Registered Pension Scheme and the QROPS provider both have the appropriate transfer authority, individuals who leave the UK and establish a QROPS are able to request a transfer of their UK benefits.

Due to the fact that this scheme is an international contract, future benefit payments can potentially be received without deduction of UK tax. Individuals will be responsible for declaring the income in their own country of residence. A QROPS provides asset protection and tax efficient planning opportunities. More importantly, after the policy has been running for five years there will no longer be any obligation to report to the UK HMRC.

What are the Key benefits

• No requirement to purchase an insurance company annuity, so retain control of the pension assets.
• The ability to pass on remaining pension assets to nominated beneficiaries on death.
• A wider choice of acceptable investments offered over UK plans.
• Greater flexibility around the level and manner of income payments which can be taken from the plan.
• The underlying investments and income payments can be denominated in a choice of currencies to reduce the risk of currency fluctuations.
• Where held offshore, income payments made without the deduction of UK income tax with income tax payable as appropriate in the jurisdiction in which it’s received.

Can any pensions be transferred into a QROPS ?

If you have already taken an annuity with your pension then it cannot be transferred, state pension are also non transferable into a QROPS. GMP (guaranteed minimum pensions), Protected Rights schemes, and pensions where the total fund is valued at under £200,000 also may not be suitable to transfer into a QROPS.

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Provided by Steven Grover, English Chartered Institute of Insurance qualified expatriate based in Troyes.