QROPS: the new SIPP for UK expats
An increasing number of UK expatriates are now turning to QROPS (Qualifying Recognised Overseas Pension Schemes) as their preferred overseas pension vehicle, due to the significant advantages they offer to their UK counterparts, such as SIPPs.
In essence, a QROPS scheme is effectively an offshore SIPP, but has significant advantages over SIPPs, including being able to take a higher amount of tax free cash and a higher level of income than that which is available under SIPPs.
Like SIPPs, it is possible to access a full range of investments under a QROPS, from all investment fund providers, and unlike SIPPs, these can be denominated in a range of currencies. Also, as is the case with SIPPs, benefits from a QROPS, whether they be tax free cash or income or both, can be taken at any time from age 55.
A major advantage of QROPS over SIPPs is that QROPS funds can be passed on free of tax to a member’s family on death, whereas under a SIPP there is a tax charge of 55% applied to any funds passed on upon the death of a member. This tax treatment makes QROPS a very favourable alternative to SIPPs and other UK based pension schemes.
In short, in the right circumstances, it is difficult to perceive any significant advantages to a UK expatriate or UK pension holder who is now living abroad to retain their benefits in a SIPP, as opposed to transferring to a QROPS.
As always though, proper advice from a professional qualified independent adviser should always be sought to ensure that the correct pension transfer advice is given.