QROPdirect provides offshore pension transfer assesment services. QROPdirect specialising in QROPS advice for all expatriates






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QROPdirect has compiled the following list of FAQ's regarding QROPS Pension Transfers. Please take some time to have a browse, if your question is not covered or you wish for us to elaborate on anything further, please do not hesitate to contact us.

What is a QROPS (Qualifying Recognized Overseas Pension Scheme)?

  • A Qualifying Recognized Overseas Pension Scheme (QROPS) is any scheme recognized by UK HMRC as meeting standards and conditions equivalent to a UK pension. This approval allows anyone with a UK registered pension who is living outside the UK, or is intending to leave the UK, to transfer their pension offshore.
  • QROPS allows you to transfer your current of 'frozen' pension into a different HMRC approved scheme in a jurisdiction outside the UK. This offshore HMRC approved scheme will still be under UK pension rules and reporting requirements unless you have been a non-resident for 5 tax years years, at which point the scheme is no longer required to report to HMRC.
  • When you have been a non-tax resident for over 5 years, you obviously have greater flexibility and many of the limiting restrictions and obligations will no longer apply.
When was a QROPS Pension Transfer introduced?
  • In April 2006, the HMRC introduced the QROPS for individuals meeting certain requirements. This was a result of EU law governing freedom of capital movement, thus governing pension transferability
  • Part of UK's "A-Day" reforms - attempt at UK pension simplification
What are the key benefits of a QROPS Pension Transfer?
  • Tax efficiency
    • Tax free growth
    • No tax deducted at source (jurisdiction dependant)
  • Ability to manage a single versus multiple pensions
  • Freedom of investment choice
    • Access to Global funds with a higher return
    • No requirement to buy an annuity
  • Investment Flexibility
    • Live where you like in the world, no complex reporting structures after 5 years
  • Inheritance tax free
  • Estate planning simplification
  • Protection against possible future creditors (depending on jurisdiction of the Trust)
How do I know if my QROPS Pension Transfer scheme is HMRC approved?
  • The current list of eligible QROPS Pension Transfer schemes can be found here.
How does a QROPS work?
  • A QROPS has a nominated Trust, based in an offshore jurisdiction
  • A QROPS provides a cost effective, tax efficient and safe Trust for its clients and ultimately for their beneficiaries.
  • The Trust typically will be used to purchase an Offshore Personal Portfolio Bond, this is effectively a 'wrapper' that can hold the ideal spread of investments suitable for a pension portfolio
  • The nominated Trust ensures that these investments are properly managed
Who Qualifies for a QROPS Pension Transfer?
  • Any UK/EU expatriate citizen between the ages of 18 and 75 may apply for a QROPS Pension Transfer of an existing or 'frozen' UK/EU pension
  • Any UK/EU non-expatriate citizen provided that you have a clear intention to become an expatriate within the next 12 months
  • A QROPS Pension Transfer may also apply to ANYONE who has officially worked in the UK or any EU member country for any length of time
  • QROPS Pension Transfers for US citizens can be difficult, as most of the schemes are not available to US nationals although any other nationality may apply for a QROPS Pension Transfer
If I do not Qualify for a QROPS Pension Transfer are there other Alternatives?
  • Yes, there are suitable alternative, international pension investment solutions depending on the size of your current pension, tax and domicile status. For example, a SIPP (Self Invested Pension Plan). Please contact us for an assessment
Can I transfer to a QROPS once I have taken an annuity?
  • No.
Can I transfer to a QROPS once I have taken a payment on a final salary scheme?
  • No.
Can I transfer a UK state pension?
  • No. Unfortunately, you cannot transfer a state pension into a QROPS.
  • Having a QROPS pension will also not affect your entitlement to a UK state pension either
What UK pensions can be considered for a QROPS Pension Transfer?
  • The following recognised pensions can be transferred:
    • Personal Pensions
    • Final Salary Pensions
    • Money Purchase
    • Section 32 and Section 226
    • FURB/URB
    • Civil Service &Armed Forces
    • Protected Rights/GMP
When should I not transfer my 'frozen' pension?
  • Each instance varies and you will require the advice of a pension professional.
  • No matter what pension you have, given the large benefits, it is definitely worthwhile to discuss the option of a QROPS Pension Transfer with us.
What are the tax implications of moving my pension??
  • The transfer to a QROPS plan is tax free.
Will I have to purchase an annuity if I transfer my UK pension into a QROPS?
  • Transfer to a QROPS is not subject to taxation unless it exceeds an individual's lifetime allowance. In the UK, this lifetime allowance is currently at £1 650 000 (2008/2009 tax year) and will rise to £1 850 000 from 2010/2011 tax year. If your pension exceeds this amount you need to specifically discuss this with a pension expert.
How will withdrawals from a QROPS Pension Transfer be taxed after the initial period?
  • This depends on where you are a tax resident of the time and the existence of a Double Tax Agreement, i.e. prevention of taxing the same income twice. Please contact us to discuss.
  • For a list of current HMRC Double Tax Agreements (DTA) click here
Will transfer to a QROPS attract any tax?
  • The transfer to a QROPS plan is tax free.
Will I have to purchase an annuity if I transfer my UK pension into a QROPS?
  • No but if your QROPS is correctly setup, you can if you want to.
What investment flexibility and choice will I have with a QROPS?
  • One of the biggest benefits of a QROPS is the investment flexibility. The better schemes offer greater flexibility and the degree of choice and flexibility depends on the scheme you choose
  • You may also appoint an investment adviser to make the decisions with you or for you, it all depends on what you are looking for. The best option would be to discuss this aspect with us.
Can I manage my own QROPS assets?
  • Some schemes will allow you to manage the assets with total freedom, while others have certain restrictions.
  • You may also appoint an investment adviser to make the decisions with you or for you, it all depends on what you are looking for. The best option would be to discuss this aspect with us.
What happens if I move around the world?
  • No matter where you move in the world, nor how often you may move, your QROPS plan stays in the neutral offshore jurisdiction that you have chosen.
  • You can make contributions &receive income in any currency.
If I transfer my UK pension to a QROPS can I access my fund as a 100% lump sum?
  • No. Schemes and advisers in certain jurisdictions that are offering 100% will be &are being shut down by the HMRC, for example Singapore. Members are being levied heavy surcharges and penalties for this.
What jurisdiction should you transfer your QROPS to?
  • It should also have strong investor principles such as the UK.
  • The jurisdiction should offer significant improvement in investment and benefit options available. E.g. some jurisdictions require you to purchase an annuity, and place major restrictions on the funds you can go into.
  • You should ensure that it is in a tax-efficient, secure jurisdiction for your QROPS Pension Transfer.
  • A jurisdiction such as Guernsey would be optimal, as they offer both tax efficiency and flexibility.
Why is Guernsey one of the best options?
  • Guernsey is an independent, well regulated and internationally accepted jurisdiction with a firm framework of legislation in the financial services sector.
  • Pension providers on the island have worked closely with HMRC to ensure a robust QROPS offering for both its resident and international clients.
  • It is a neutral jurisdiction which allows tax-efficient structures. This means that income and capital gains from the assets within your plan are not subject to Guernsey tax. Therefore, the assets within your plan grow in a tax efficient environment.
  • You can choose your QROPS Pension Transfer to be denominated in a hard currency (Pounds, Dollars or Euros).
  • Although Guernsey is completely independent from the UK, they are a Crown dependency and their rules and regulations are extremely similar to those in the UK. Due to this relationship it is extremely unlikely that the HMRC will rescind Guernsey as a QROPS Pension Transfer jurisdiction. They have already done this with Singapore, due to their indifference in this regard
What will happen to my QROPS Pension Transfer upon my death?
  • A QROPS Pension Transfer ensures that all remaining assets upon your death are distributed to Named Beneficiaries.
What are the costs associated with a pension transfer to a QROPS?
  • Initial, non-fee based assessment of your pension
  • If you look at the costs in terms of a percentage of the absolute fund value, then larger the fund value, the lower the charges
  • There are generally three costs that you need to be aware of in most QROPS schemes.
    • Setup cost
    • 1% Annual management charge (QROPdirect)
    • Underlying Fund Management
  • Remember, that if you consider the benefits of a QROPS, these costs are insignificant. You need to take cognizance that with many pensions they are in a very low or even negative growth, and that upon death 50% or more of the funds generally return back to the life company
What is the minimum value I can transfer to a QROPS?
  • Different schemes have different charging structures and as a result they are only worthwhile provided that a certain tax-efficient threshold is reached. We have found that the minimum value is in the region of GBP50 000. Remember though that you can combine more than one pension to reach a higher value threshold. Therefore, whatever the value of your pension or other assets is, there is a solution for you.
  • In the event of you being unable to secure the minimum investment, i.e. GBP50 000, we could look at transferring your pension into a SIPP (Self Invested Pension Plan).
How long does it take to setup a QROPS Pension Transfer?
  • The length of the process varies. It can be a couple of weeks or it can take a few months - depending upon complexity and number of pension trustees involved.
Is my plan subject to EU savings tax directive for European citizens?
  • A QROPS Pension Transfer plan is currently not subject to the EU Savings Tax Directive
Do I have to first liquidate my assets held within my UK registered pension scheme before transferring them into a QROPS?
  • If the pension scheme is a SIPP or a SSAS, it may be possible to transfer the existing assets 'in specie' to the QROPS. In this case please contact us.
  • For most other pension schemes you will need to liquidate your assets before transferring to a QROPS.
Does the HMRC in the UK require the QROPS pension fund to report payments?
  • The HMRC requires that all QROPS providers notify them of any payments from transferred pensions for the relevant member. This does not apply unless:
    • Has not been resident in the UK for that year or any of the preceding five tax years.
Will a QROPS Pension Transfer accept the transfer of a protected rights fund?
  • Yes, provided that the QROPS trust is willing to accept it.
  • If you are transferring your protected rights it is necessary to state that you understand that all protection associated with UK pensions legislation is being given up.
Can I purchase residential property with my QROPS fund?
  • Yes - If you have been a UK resident at any time in the last five tax years.
  • If you have a QROPS and have not been at any time resident in the UK for the last 5 tax years, then the operation of the QROPS trust is subject to the legislation associated with the jurisdiction where the QROPS is based.
  • Some of these jurisdictions do permit investment into residential property although most frequently this will be only permitted through indirect ownership that is through a corporate structure or property fund.
What happens if I have a QROPS Pension Transfer and return within 5 tax years?
  • If you are returning to your home country within 5 tax years, then you will need to report your QROPS to your governing tax authority and although it can remain offshore, it will fall under domestic rules and regulations.
Will the QROPS declare any payments made from the scheme to the HMRC?
  • During the first 5 tax years, the QROPS trustee is required to let the HMRC know of any payments, withdrawals, or transfers made from the QROPS Pension Transfer.
  • After the first 5 years, the QROPS trustee is no longer required to let the HMRC know of any payments, withdrawals, or transfers made from the QROPS Pension Transfer.
During the first 5 tax years of a QROPS Pension Transfer scheme do I also need to declare payments?
  • Yes - during the first 5 tax years, the QROPS trustee will report any payments or transfers made to HMRC. You must also fill out a self-assessment return (available from HMRC) and declare any payments or transfers.
  • If you have setup a QROPS Pension Transfer you should return your completed form to the tax office that is currently dealing with your affairs, or that which was dealing with your affairs immediately before you left the UK.
What is the minimum age I can draw benefit and how much?
  • From 55 years old
  • You can take up to 25% lump sum of your fund, tax free
  • 75% minimum, remaining funds need to provide 'income for life'
Is it possible to set up a QROPS Pension Transfer myself?
  • No - it is only possible to set up a QROPS Pension Transfer through a recognized intermediary.
If a client has been a non-UK resident for less than 5 years &transfers to a QROP, then dies prior to completing this 5 year period - is the pension proceeds automatically subject to 35% inheritance tax (IHT)?
  • No - the Finance Act of 2008 protects all QROPS Pension Transfers since April, 2006 from both inheritance tax and capital gains tax.
What does QROPdirect charge for setting up a Pension Transfer?
  • We offer a non-fee based initial consultation/assessment of your pension requirements
  • An annual, 1% management fee of your pension fund
  • The above is in addition to any specific 'once-off', set-up costs &subsequent, annual Trust fees
How do I go about getting a QROPS?
  • Do you qualify for a transfer to a QROPS? (See Do you Qualify? section &FAQ)
  • Your private pension funds amount to something in the region of GBP50,000
  • You are interested in taking advantage of the benefits of making a QROPS Transfer
  • . Your next step should be to contact us for a pension transfer assessment
What is a QROPS Jurisdiction?
  • This is the location in which the pension trust is held and therefore, the pension fund is governed under those laws of the land.
  • Those laws could affect the fund's performance, e.g. tax & income laws.
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