A ROPS (Recognised Overseas Pension Scheme) is probably the most well known of the overseas pension schemes. Also known as QROPS (Qualifying Recognised Overseas Pension Scheme) before HMRC dropped the ‘Qualifying’.
Her Majesty’s Revenue and Customs (HMRC) have acknowledged the pension issues that exist for UK expats and have created options, such as ROPS specifically for them. This gives individuals access to their benefits locally and is subject to taxation where they reside, rather than the UK.
If you live abroad or are planning to do so in the near future transferring your pension to a ROPS could allow you the freedom and flexibility you need.
Introduced in 2006, ROPS (or QROPS then) were designed to enable British expats move their pension funds to an overseas jurisdiction where they could enjoy minimal tax rates, greater income potential and increased financial freedom. ROPS are pension schemes outside the UK that are recognised by HMRC and regulated in the local jurisdiction.
Trusteeship and administration is provided in sound and robust jurisdictions such as Malta, Hong Kong, Gibraltar, Australia, New Zealand and Guernsey.
Benefits of a QROPS:
Benefits can be drawn in your new place of residency and subject to local tax rates, which could be very low or even nil.
QROPs are generally not subject to inheritance or income tax in the UK and they are often based in locations with a lower tax rate than the UK. You can take income from your pension in a more tax efficient way and may be able to access a larger tax free lump sum, too – as much as 30%.
Once transferred, your money is no longer subject to UK taxation and, on death, your entire remaining pension fund is passed to your beneficiaries tax free.