What are the pros and cons of QROPS?
Deciding how to plan your retirement abroad should involve a balanced assessment of your options.
So when you are thinking about getting a Qualifying Recognised Overseas Pension Scheme, look at the pluses and the minuses that the opportunity may present.
Pros
Tax is probably the first positive that springs to mind about QROPS. With exemption from UK inheritance tax and income tax, QROPS offer a distinct advantage to British expats over keeping your pension in the UK. Given that your QROPS can be based anywhere, you can effectively choose which jurisdiction you want to keep your pension in.
In fact, the very breadth of choice available among QROPS is an advantage that they may have over domestic pension products. As an overseas investor, you may have the chance to make lucrative offshore investments that may not be available to UK based savers.
Given that there is so much choice available to QROPS investors, you might also be able to find a pension solution that is more flexible than your current arrangements. Depending on which country you choose to base your QROPS in, the scheme may give you access to your money sooner than you think.
Cons
What could possibly be a point to consider against QROPS? You may wish to make sure that the size of your pension pot justifies the fees involved. But the main thing is that you do need to make sure that you abide by any rules and regulations that HMRC hand down about foreign pensions. The rules may change from time to time, so make sure you have an adviser who is keeping you in the loop.
For example, the most important rule about QROPS is that investors must stay resident outside of the United Kingdom for at least 5 complete tax years after the transfer. Failure to stick to this would mean a large tax bill, and what could be a worse “con” than that?