QROPS / UK pension planning for British ExpatriatesWherever you are in the world
QROPS / Pension planning for British Expatriates
Pension planning for a British expatriate can be difficult. Often pension as are left behind in the UK and it isn’t until retirement that options are considered. Below are some of the difficulties an expat will face before and on retirement;
- Accessing specialist pension advice from appropriately qualified and regulated advisers.
- A lack of UK product providers willing to deal with a British expat.
- Understanding how UK pension legislation affects them as non-UK residents.
- Potentially having to use a commission driven overseas financial adviser who additionally may not be appropriately regulated or qualified for UK pension advice.
- Having to accept the exchange rate risk between Sterling and the currency where they are resident.
Cross Border Financial Planning delivers a fee based pension planning service with all of our advisers being appropriately qualified and regulated in the UK through the Financial Conduct Authority (FCA). We provide pension planning solutions to British expats wherever they are in the world that help them plan for retirement, mitigate currency risk and draw benefits in a tax efficient manner. We also work with specialist cross border tax advisers who can explain the tax implications in the country where you are resident when taking income / lump sums from UK pensions or QROPS (Qualifying Recognised Overseas Pension Scheme).
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a pension plan, as defined by HMRC, which enables a UK based pension to be transferred outside of the UK.
The key benefits of a QROPS are;
- Income is paid gross (without tax) from the majority of QROPS jurisdictions therefore you only pay tax locally in the country where you are resident. The only exclusion to this is Gibraltar where income is paid after 2.5% local tax.
- Death benefits are paid free of UK tax.
- Should you return to the UK, a QROPS can still be used to deliver pension benefits.
- QROPS can be used as a wider tax planning tool to manage your lifetime allowance and estate planning for non-UK residents.
- Funds may grow in a QROPS in excess of the UK lifetime allowance without being subject to the additional LTA tax charge.
- Investments may be made in the currency of the country where the member is tax resident thereby mitigating exchange rate risk.
Which is the best QROPS jurisdiction for me to use?
There are various QROPS jurisdictions available and they all have their own tax considerations. Malta is a commonly used jurisdiction as it allows gross (without tax) income payments to be made to a resident of another country should Malta have an applicable double taxation treaty with them. It’s important that advice is sought as the double taxation treaty still may result in unexpected taxation when a Malta QROPS is used.
It may be more appropriate for you to use a QROPS that operates in the country where you live, if available.
At Cross Border Financial Planning we can help you identify which QROPS jurisdiction is appropriate for you. Our solutions also carry the flexibility that should your country of residence change and therefore your QROPS is no longer as tax efficient, it can be transferred to a more appropriate QROPS jurisdiction without penalty.
How is the investment in my pension created and managed?
Cross Border Financial Planning can help you utilise a UK pension or a QROPS, whichever is the most appropriate. What they have in common is that there will be an underlying investment structured for you and your pension planning objectives. It will also need careful ongoing management to ensure it stays appropriate for you and performs well.
As a non-UK resident you will likely be spending another currency in retirement rather than Great British Pounds (GBP). Fluctuations in currency will often effect how much pension income you receive. To help you mitigate currency risk our investment solutions can be denominated and invested in three major currencies – GBP, Euro and US Dollar.
Cross Border provides full ongoing servicing of the underlying investment within your UK pension / QROPS to give you the best possible chance of meeting your retirement objectives.