The sci-fi sounding QROPS actually stands for Qualifying Recognised Overseas Pension Scheme. QROP Schemes are recognised by the HMRC and allow expats to carry their paid up UK pensions to almost all overseas locations. Although these schemes are based in a jurisdiction outside the UK they still keep the same standards or equivalent as a UK pension.
Who are they for?
Over the course of your working life you may have had the opportunity to work in one or more countries contributing to differnt pension schemes. Or perhaps you are a foreign national that lived and worked in the UK building up a pension pot and have decided to return home. Whatever your circumstances it may be worth considering the benefits of transferring your UK based funds into a Qualifying Recognised Overseas Pension Scheme.
Benefits of QROPS
The schemes offer significant advantages when it comes to tax liability, investment flexibility and growth potential. They can also make retirement planning much easier by consolidating a number of pension schemes under one roof as well as bringing out-of-date arrangements up-to-date. Many users have also used them to avoid the need to purchase an annuity. With up to 500,000 Britons leaving the UK each year there has been a big demand for overseas pension benefits which led to the birth, development and significant growth of QROPS.
Figures from the HMRC showed that in 2014/15 QROPS hit a high of 20,100 transfers with a value of £1.76bn. There was then a fall to 13,700 transfers worth £1.5bn in 2015/16 and a further fall in 2016/17 6o to 9,700 transfers worth £1.22bn. This trend may continue as from March 2017 many QROPS transfers became subject to a 25% charge. This trend is a clear sign of the market maturing as financial advisers increasingly start to view them as just one part of a retirement plannng strategy rather than a sole situation.