All ex-pats that were concerned there would be more changes to the rules and taxing of QROPS offshore pensions in the Autumn Budget, can breathe a sigh of relief for the moment.
Philip Hammond, the Chancellor of the Exchequer, has not made any specific or direct changes to the rules regarding QROPS when he announced the Autumn Budget in 2017.
If you are unsure what this means or need a refresher, we have given a recap of QROPS’ status.
Who Is Allowed To Transfer Money To A QROPS?
Any ex-pat British citizen with a UK pension fund can transfer their money into a HMRC QROPS scheme. That includes any individuals who are from other countries that spend time in the UK who have returned home now or moved on and ex-pats who are living overseas permanently.
What Type Of Pensions Can Be Switched Into QROPS Schemes?
Apart from civil service, public and state pensions, any workplace and personal pensions can be switched into QROPS schemes.
Even if it is defined as contribution or benefit.
Will I Be Expected To Pay The Transfer Fee Of 25%?
The new overseas transfer fee is calculated as being 25% of the amount switched into a QROPS scheme. Ex-pats and all other non-residents who have rights to a pension fund in the UK are legally obliged to follow the same rules.
They can transfer funds from their UK pension into QROPS from the same area in Europe, regardless of where they live, as long as they reside in the EU or European Economic Area.
This means that an ex-pat currently living on the coast of Spain is allowed to transfer their QROPS to Gibraltar or Malta. However, an individual living in the EEA is not permitted to switch their pension funds into a QROPS that is located outside of this zone.
Individuals living outside the European Economic Area are only allowed to transfer pension funds into QROPS schemes located in the same country they are currently residing. This includes:
- South Africa
- New Zealand
- Isle Of Man
- China (any QROPS located in Hong Kong)
As this list will undoubtedly change in time, the most current details are published on HMRC’s website and updated regularly.
Transfers refer to both moving funds from a British pension to a QROPS scheme and moving funds from one QROPS to another.
If a multinational non-government organisation or employer runs the overseas scheme, like EU QROPS for example, they could be exempt from the overseas transfer fee.
There is also a 5-year residency rule that may be applicable.
A five-year residence rule may also apply.
Pension And QROPS Freedoms
The same pension freedoms they expect from a UK pension scheme in principle can be offered to those saving for retirement through a QROPS.
That being said though, there are many countries with QROPS schemes that need to alter their pension laws to enable savers to access their funds earlier at 55 years old.
Currently, only savers with QROPS based in Malta are able to do this.