Pension Transfers - Expert Partners Offer
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Save money transferring pensions abroad with a pension transfer specialist such as LifePlus. Receive tax reliefs, paying lower tax on income drawn with a QROPS today.
Under the law of the United Kingdom, any person that has pension rights in the country, regardless of their nationality, has the ability to transfer their entire UK retirement account to a new Overseas Pension Scheme.
In order for an individual to be eligible for this transfer, the pension scheme must be accepted by the government of the UK as a permitted arrangement. These permitted arrangements are called Qualifying Recognized Overseas Pension Schemes (QROPS).
Only those UK pension rights can be transferred to an Overseas Pension Scheme that has received prior approval from the UK government.
Why Transfer Pensions?
UK pension holders that live in other countries are still required to pay taxes on their pension income provided that their pension amount is kept within the UK.
If you are considering living or moving abroad, then you should talk to your bank or pension office about transferring the pension income you have to a QROPS account. Essentially, a QROPS is defined as an offshore pension scheme. This scheme has been approved and accepted by HM Customs and Revenue. This account is not only cost effective but also tax efficient.
Leaving your pension income idly sitting in the UK is a big mistake. PensionsPlus can help review your current pension plan and provide advice on the feasibility of getting your pension transferred.
Is it right for me to transfer my pension?
Every situation a person goes through is different. There are a number of factors that ultimately determine whether you should transfer your pension income or not. The most important determining factors are:
Pension Type: Almost all of the pension plans in the UK can be easily transferred to a QROPS. However, plans that you are currently taking pension from are not transferrable.
Residency Status: Place of living, whether you are going to retire overseas, come back to the UK or are simply undecided.
How close you are to retiring: In certain cases, the number of benefits obtained from transferring your pension plan to a QROPS may depend on the proximity to your retirement.
PensionsPlus can easily help you come up with a flexible pension plan that is catered to your needs and circumstances for when you retire.
The current retirement age within the UK, according to law is 55 years. The retirement age will most probably apply to the pension plan and must be met before any benefits can be reaped. However, a QROPS is different. Compared to an average UK pension scheme, it offers a great amount of flexibility, tax benefits, larger income chances and freedom of investment.
A QROPS can be used in order to obtain transfer values from a registered pension scheme in the UK. This includes the Protected Rights Funds. Individuals that are currently receiving benefits from using a Self-Invested Personal Pension Scheme or SIPP may also have this scenario applicable to them.
Most QROPS are not taxable at the source. The amount of tax applicable to any type of income purely depends on where you live and the tax laws in that region. To check out a list of approved QROPS, you can visit the HMRC’s website online.
QROPS are not for everyone. Before applying for QROPS, it is advised that expert council and assistance should be observed. Also, state pensions are not transferrable.
Below are a few of the differences that exist between a QROPS and a traditional UK pension plan:
- QROPS: The taxable amount can significantly be reduced. In certain cases, the income tax amount can be zero.
- UK Pension: Any income that is taken from a pension plan in the UK is taxable at its source.
Lump Sum Cash Amount
- QROPS: Offers a greater tax-free lump sum cash amount.
- UK Pension: The lump sum cash amount is limited to only 25% (maximum) of the total value on your pension plan. For occupational pension plans, the tax-free lump sum cash amount is determined through a formula taking into consideration your service and salary.
- QROPS: There is no type of UK inheritance tax charged upon a death.
- UK Pension: Any type of asset that is left to your beneficiaries upon your death (except the spouse) is subject to the current 40% UK inheritance tax charge.
- QROPS: The total amount of accumulated pension is passed down to your beneficiary’s tax free and in full. There is no amount that needs to be paid to the tax man or the pension agency.
- UK Pension: In the event of your death, your spouse is only eligible to receive 2/3 of the total pension amount you had accumulated. Essentially, your death will result in the death of your pension.
Benefits and Income
- QROPS: You are able to alter your income, receive an income of your choosing, change the currency of the income and receive capital amounts at any stage of the scheme. Of course, there are a few rules that are applicable to this program.
- UK Pension: You are confined to the currency and amount of income you have received.
- QROPS: You are able to receive a greater amount of freedom in your investment choices since you have complete control of your investment options and the investment currency. Investments in fixed deposit, total diversification and offshore/onshore accounts are all possible.
- UK Pension: You do not have any control over your pension fund. You are restricted to the choice of funds as specified by your outsourcing fund manager or insurance company.
- QROPS: You are able to receive complete protection from your business partners, creditors and ex-spouses.
- UK Pension: You do not have any type of confidentiality.
Protection from Creditors
- QROPS: Depending on your jurisdiction, protection from future creditors is possible in most cases.
- UK Pension: You do not have any type of protection from creditors.
Our policy clearly states that we must provide any and all possible guidance on a QROPS transfer that is defined within the regulations and laws of QROPS in the United Kingdom.
QROPS regulations in the UK provide the following opportunities:
- Lawfully avoid any type of:
- Inheritance tax on a QROPS fund account within the UK
- Income tax on a QROPS fund account within the UK
- Chose a number of beneficiary groups for your QROPS fund account. This vast array of choice is not available to a person with a traditional UK pension plan.
- Receive up to 30% of the total QROPS fund account with a tax-free lump sum cash amount.
If you have been away from the UK for a full 5 years, you are eligible to enjoy all these benefits. However, these are 5 tax years before the QROPS transfer. Even if you are absent, it still counts.
Although there are clearly some great benefits to be had, there are also some complicated plans in place; often expensive plans. These can be more tempting than many of the others provided by the policies of the UK QROPS.
We only work with true providers of QROPS. We will not work with them if they do not embody the spirit of QROPS policies and regulations and do not adhere to their standards.
We understand that this high level of professionalism is what our clients really want; it is what they require. This helps both us and our clients achieve mutual benefits.