Transferring Private Pension into QROPS

quasimodo321

Hi all,

Imagine that John is emigrating to another country where he expects to live for the rest of his life. He transfers his private UK pension into a QROPS private retirement plan in this country. The QROPS plan has a minimum retirement age of 55 and John is 40. Also, according to the rules of the QROPS scheme, he can get 100% of the proceeds in his pension put in cash at retirement.

When John reaches 55 (after having resided in this country for 15 years) and draws his total pension in cash, would he be required to pay any income tax or penalties to HMRC?

Thanks in advance for your comments.

middlepuss

quasimodo321 wrote: »

Hi all,

Imagine that John is emigrating to another country where he expects to live for the rest of his life. He transfers his private UK pension into a QROPS private retirement plan in this country. The QROPS plan has a minimum retirement age of 55 and John is 40. Also, according to the rules of the QROPS scheme, he can get 100% of the proceeds in his pension put in cash at retirement.

When John reaches 55 (after having resided in this country for 15 years) and draws his total pension in cash, would he be required to pay any income tax or penalties to HMRC?

Thanks in advance for your comments.

Are you an alias of MovingAround? There's a similar post lower down about QROPS - whatever QROPS is. (What is it?)

quasimodo321

middlepuss wrote: »

Are you an alias of MovingAround? There's a similar post lower down about QROPS - whatever QROPS is. (What is it?)

Hi there.

No I'm not. The post below is about the immediate cost of transferring a UK pension to a QROPS scheme. My question is about the potential tax implications further down the line of making such a transfer.

By the way QROPS stands for (a) Qualifying Recognised Overseas Pension Scheme.

gfplux

There are lots of talk about QROPS with a number of "advisers" suggesting them to be a great idea for expats.
However it is also reported that some schemes have been disallowed by the UK tax authority as they were schemes set up for tax evasion.
I have heard very little from people who have gone through the QROPS process. This may be as it is early days or the "large numbers of our clients have done this" is an exaggeration.
I and probably many expats would like a lot more clarity about the whole process.
I for one have chosen NOT to take the QROPS route yet, but continue to try and understand it all as it remains IMO strangely foggy.

dunstonh

There are lots of talk about QROPS with a number of "advisers" suggesting them to be a great idea for expats.

It should also be noted that most of them are not advisers in the regulated sense.

xylophone

http://www.qropsguide.com/
http://www.hmrc.gov.uk/pensionschemes/faqs.htm
might be worth a read.

atush

Persoanlly I would suggest John consults a regulated advisor in his country of residence. To make sure any scheme is truly regulated, and that the money is safe an protected.

No point in getting your money at 55 if someone is just stealing it off you in an inregualted atmosphere. Plus there could be tax considerations in John's country of residence.

Cook_County

Giving the tenacity of domicile, poor young John may find that there is a liability to UK IHT if he dies before taking benefits - plus tax on death in his adopted country.

quasimodo321

gfplux wrote: »

There are lots of talk about QROPS with a number of "advisers" suggesting them to be a great idea for expats.
However it is also reported that some schemes have been disallowed by the UK tax authority as they were schemes set up for tax evasion.
I have heard very little from people who have gone through the QROPS process. This may be as it is early days or the "large numbers of our clients have done this" is an exaggeration.
I and probably many expats would like a lot more clarity about the whole process.
I for one have chosen NOT to take the QROPS route yet, but continue to try and understand it all as it remains IMO strangely foggy.

Thanks gfplux. I'm in the same as boat as you. There is really not much clarity around the process. I guess we'll wait and see.

Thanks also to others who have contributed.

richardmalpass

There have been some changes to the draft rules which will come into effect on April 6th. You really need to keep abreast by contacting QROPS Specialists. You cannot take 100% of your pension as a lump sum as this is against the spirit of HMRC's rules, especially after the Gaines-Cooper case ruling. The country you are in, the particularly type of pension you have, the jurisdiction in which you intend to move your QROPS to and where you wish to retire will all have a bearing on the best advice. QROPS aren't for everyone, but particularly higher rate tax payers have a lot to gain.

MovingAround

My manager had his pensions transferred into QROPS when he was transferred to Singapore few years ago. (I was transferred to SG from London last year.) His only advise when I asked him about the transfer is that unless I have huge pot of money in my pension, don't even waste time thinking about transferring it into QROPS.