If you are non-UK tax resident or are planning to leave the U.K. within the next 12 months, then you should definitely consider a QROPS Pension Transfer. QROPS are Qualifying Recognized Overseas Pension Schemes approved by the HMRC as fulfilling strict conditions. The HMRC introduced QROPS in 2006 to allow you to transfer your UK pension into a Pension Scheme outside the UK (in another jurisdiction).

These restrictions on UK Pensions include:

• You have to take an annuity by age 75 or face an 82% tax charge.
• Annuity rates in the UK are currently minimal, and this small annuity will be taxed at 21%.
• At age 50 (or 55, depending on your birth year) you can take a 25% tax-free lumpsum.
• Pension funds in the UK barely outperform inflation and in many instances have lost value in the last few years.
• There is a pension crisis in the UK, with predictions thatmore people will be drawing funds, than contributing.
  
• Should you pass away, 50% will return to the Pension Company and 50% will remain with the spouse.
  
• If you and your spouse die, 100% will return to the Pension Company, and nothing will go to your beneficiaries.
  

The government offers tax breaks to encourage people to contribute to Pension Funds, however it is apparent that through these pension limitations, the government was not so generous after all. Fortunately, in 2006, the HMRC introduced a QROPS, for anybody aged between 18 and 75 who is planning on being a non-UK tax resident. Thus, a QROPS is ideal for UK nationals who have left the UK and are living abroad.

For the first five tax years after setting up a QROPS, the QROPS Trustees are required to report to the HMRC the additions or withdrawals from the QROPS. After the initial five year period, the QROPS Trustees are no longer report to the HMRC and you will effectively have 100% control.

QROPS Resources

• QROPS Pension Transfer Comprehensive QROPS Information
• A QROPS Article covering much the same topic area.
  

If you have a UK Pension or UK “frozen” pension, definitely take the time to consider a QROPS Pension Transfer.