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Qualifying Recognised Overseas Pension Schemes (QROPS)

About QROPS

People who live within or outside the UK may be able to transfer their deferred company pension(s) and personal pension(s) to a QROPS. Any pension can be transferred as long as an annuity has not been purchased or, if it's a defined benefit scheme that the pension is not in payment.

Better still, where the individual has not been resident in the UK for five complete and consecutive tax years (the tax rules determining residence will be examined in detail later in this guide), HMRC restrictions on the level of income obtainable no longer apply.

These tax laws vary from country to country but many are more favourable to individuals than those of the UK.

Given the complexity and variety of different countries' tax laws, this guide can only serve as a general introduction to the new opportunities created by QROPS. Specialist financial advisers can answer questions specific to the individual's circumstances.

Software

Until now Advisers both in the UK and overseas have had to impart their advice utilising very little in the way of supporting documentation. A combination of a lot of head scratching and mis-match of paperwork would somehow lead to an eventual recommendation, but would it be classed as best advice?

In 2010 Selectapension, in conjunction with , created a bespoke transfer analysis tool that incorporated such mechanisms taking into account jurisdictional information to actual charging structures of both QROPS trustees and the underlying investments.

Transfer Analysis is a complex subject in the UK markets let alone overseas, but for advisers to be given tools which aide advice has proven to be key for consumers looking to retire abroad. With Selectapension both Defined Benefit and Defined Contribution schemes can be analysed and the pros and cons of transferring weighed up.

Up until recently Royal Skandia were the only provider Selectapension worked with for QROPS.

However Selectapension has now teamed up with other QROPS underlying investment providers, namely AXA Isle of Man, Novia, Transact and Skandia Investment Solutions. Royal London 360 and Friends Provident International are due to be added later in June 2011, or where an adviser wishes to use an alternative investment vehicle, there is the facility within the software to build a tailored bespoke product.

In a fast developing market Selectapension has realised that there are a large number of QROPS providers emerging into the market which may need to be catered for and the adviser can quickly and easily create the provider(s) they wish to use .

The bespoking option will meet most, if not all, the Adviser's needs. The ability to build underlying investments, QROPS Trustees and jurisdictional information is an essential step within the decision making process.

Tailored Customer Report

Selectapension's unique offering comprises intuitive on-line software with complete storage of customer cases whilst providing client friendly reports.

The reports provide detailed information in relation the customer's existing pension as well as the recommended new product and includes all the facts and assumptions required as well as the comparison results.

Key Facts

Anyone considering retiring overseas and becoming resident outside of the UK for five years or more may wish to consider a QROPS arrangement. The amount of tax payable on income and capital received from a QROPS will be determined by the taxation of the jurisdiction in which the QROPS is based and also the country of the individual's residence.

You cannot transfer British Government or State Pensions to a QROPS.

Since 6 April 2008, if an individual is present in the UK at midnight, that counts as one day's residence. In practice, days of arrival in the UK are counted but days of departure are discounted. Where an individual arrives and departs on the same day, this will not count as a day's residence for tax purposes.

Individuals who have plans or policies with Guaranteed Annuity Rates (GARs) that are higher than returns available today may find QROPS do not justify giving up their GARs. As mentioned earlier, Government pensions (excluding the National Health Service scheme), British State Pensions and pensions already in payment cannot be transferred to QROPS.

Remember that the fundamental purpose of a pension is to provide income in retirement, so it is vital to ensure an individual's funding is not depleted unnecessarily by poor investment choices or unsustainable withdrawals.