QROPS Advice

Incoming QROPS transfers from non-recognised or unregistered pension schemes still trigger tax savings for expats with offshore retirement savings.

The transfer does not pick up relief as a contribution, because fund transfers between pension schemes are specifically excluded from relief – but once in a QROPS, the transferred funds can grow free from tax in the same way as any other transfer.

Typical non-recognised or unregistered pension schemes are EFRBS (employer financed retirement benefit schemes) or offshore pension schemes that do not meet QROPS rules.

This would also include incoming transfers from QROPS schemes that have lost their special status and are no longer considered QROPS.

The good news for retirement savers is that a QROPS can provide a home for incoming transfers from a wide range of schemes that lack the same investment flexibility and tax-free growth environment.

Two rules apply to a pension investor’s annual allowance on a QROPS transfer:

§ Defined benefit or cash benefit arrangements have the transfer value deducted from the member’s closing value computation

§ The transfer is not included in the annual allowance for a money purchase arrangement as only contributions are counted for this type of arrangement, and a transfer is not a contribution.

Another bonus is an incoming transfer for a QROPS is not considered a benefit crystallisation event for the pension investor’s lifetime allowance (LTA).

But at some stage, generally when the investor takes a pension benefit, a crystallisation event is triggered and the LTA test then runs.

If the incoming QROPS transfer has originated from scheme outside the UK, the LTA is only enhanced if the originating scheme is a registered pension.

Any pension scheme member with enhanced protection transferring funds in to a QROPS can do so without any tax charge, regardless of whether the transfer exceeds the standard lifetime allowance.

Transfering your hard earned money from different schemes needs careful planning and care to make sure you are safe and that you are getting the best advice.

Contact the leading authority it QROPS transfers, QROPS.net. Visit the site here www.qrops.net