Choose With Care For a Rewarding Retirement

by David Tamplin on 27 Mar, 2014

When it comes to choosing a provider for your Qualifying Recognised Overseas Pension Scheme (Qrops) the question of where they operate is just as important as how they operate. Some jurisdictions are regulated to a very high standard, offer enticing tax benefits and are painstakingly careful to comply with the conditions required by HM Revenue & Customs (HMRC).

Others might have less attractive tax rates but additional benefits that make them more suitable for an investor’s needs. And then there are those whose Qrops legislation have either fallen foul of UK regulations or are in danger of doing so in the future.

All pensions are not equal

With such variation in the jurisdictions it is clear that all Qrops providers are not equal, but deciding on one that is right for you can mean negotiating a minefield of information. An independent financial adviser (IFA) will be an essential aid in guiding you through the key factors that need to be considered. The question of whether the scheme complies fully with the regulations affecting Qrops pensions is obviously the biggest and needs to be looked at with care.

Although HMRC publishes an updated list of Qrops providers every month, this alone does not guarantee that a scheme meets all the requirements. If, on later inspection, HMRC discovers it does not comply it will be de-listed, potentially leaving its pension holders facing draconian penalties for transferring into an unapproved scheme.

Even the well-known offshore investment centres can be affected. More than 300 schemes in Guernsey found themselves de-listed in 2012 when HMRC discovered that residents were not entitled to the same tax benefits that non-residents enjoyed.

Avoiding uncertainty

This uncertainty about where the HMRC axe might fall next makes it crucial to choose a scheme that has been carefully drawn up to be well within the official guidelines. In Malta, for instance, the legislation regarding pension schemes was drafted in close consultation with UK

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tax officials and as a result it is now regarded as one of the world’s best jurisdictions for Qrops pensions. An IFA will be able to advice on which schemes are reputable and well established enough to provide a safe and profitable home for your money for many years to come.

Once you are sure a scheme complies with the regulations the next major factor to consider is the tax benefits on offer. In some jurisdictions you will pay zero tax on income at source and will not be charged capital gains on any growth in the investment. In some a tax free lump sum of up to 30 per cent of the pot can be taken on commencement of the pension. You should also be able to leave the full outstanding balance to your beneficiaries in the event of your death. And, lastly, ask your IFA about the investment flexibility the scheme offers. The best schemes should put you in control of your money to ensure the best possible quality of life in retirement.

Company’s Profile:  Whichoffshore provides professional expatriate information on offshore estate planning, QROPS pensions and more, in order to help British expatriate make the most of their money. For more information, please visit www.whichoffshore.com/

About the Author

David Tamplin


David Tamplin has been writing for Uk Money Market for 3 years and is the current editor of the site. He has an insurance background and achieved his ACII professional insurance exams in 1993.