QROPS stands for Qualifying Recognised Overseas Pension Schemes. It is a foreign pension scheme authorised by Her Majestys Revenue & Customs (HMRC) to consider transfer of pensions from the UK. It is most talked about among expats. It offers them great financial advantage when they want to reside abroad after their retirement.

A number of UK private pensions can be moved to QROPS, some of which are personal pensions, stakeholder pensions, occupational pensions and self invested personal pensions. An expat usually has two options in front of him. One is to obtain an overseas pension and the other one is to continue to extract his current pension in the UK. If he is satisfied with his existing pension, he could get persuaded to stick to it. However, if the expat has already bought a pension scheme and is presently receiving payments from it under the work related final salary scheme, it cannot be carried forward to his qualifying recognised overseas scheme.

QROPS is mainly attractive because of the tax benefits it offers. If the HMRC has approved the overseas scheme for the transfer of pension, no tax on it is required to be paid. During the first five years after the pension is moved, the scheme managers have to provide an account of the working of the scheme to HMRC. All the activities of the scheme have to be reported to HMRC. The expats would be eligible for the same benefits that are available for UK residents. Post the 5 year reporting period, the HMRC will have no control over the pension scheme and will now come under the purview of the scheme provider in the respective jurisdiction. The taxation related effects will depend on the country in which the expat is residing. Some of the qualifying pension schemes permit around 30% of the lump sum amount of pension value to be removed tax free.

There are a lot of costs which are involved with a QROPS transfer. This also depends on the size of the fund, the kind of QROPS chosen and the benefits available under the schemes. The usual norm is - bigger the pension fund, lower will be the charges. Normally, anywhere between 0.5 to 1% of the fund value is charged. However, depending on the fund value and structure, there could be annual maintenance charges levied.

Get in touch with your QROPS adviser to consider whether the transfer is possible and if yes, what are the different schemes available, the costs involved and the tax structure.