Archive for August, 2009

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Australian Rule Changes and UK Pension Transfers to Australia

Monday, August 31st, 2009

For UK migrants looking to live and retire in Australia, looking at UK pension transfers to Australia has changed since 1st July 2007 when new restrictions, imposed by the Australian Tax Office (ATO) came into effect.

What were these changes and what effect did they have on UK pension transfers to Australia?

By way of background, in May 2006, the Australian Budget included an announcement to the end of the Reasonable Benefit Limits (RBL), which was basically a limit on how much an individual could take completely tax free from their Australian superannuation scheme. As a result the Australian government introduced a cap on how much an individual could contribute as a contribution, made from the individual taxpayer’s income after tax. These contributions are known as non-concesssional contributions.

The limit was, from 1st July 2007, $150K per annum (or $450K every 3 years).

Included in these contribution limits were transfers in from overseas pensions. This had an immediate effect on UK pension transfers to Australia where the UK pension member had in access of the Australian limit within their pension.

Global QROPS Ltd offer advice on the options for an individual who has in excess of the limit. Can an individual partially transfer from their existing UK scheme? Are there alternatives to using an Australian QROPS? These are amongst the important considerations for someone to address before leaving the UK.

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QROPS Considerations for Spanish Residents

Saturday, August 29th, 2009

Over the years many UK expat pension members retire to Spain. When retiring to Spain (or any other country abroad) it is important to consider the best course of action for any accrued UK pension rights and, since April 2006, whether QROPS are a suitable option.
Spanish legislation, UK legislation or the rules of a potential QROPS, could all be factors in how a UK expat pension member is taxed on retirement benefits in Spain.
One of the primary considerations is income tax. Pension income is categorised as general income in Spain and has banded rates of tax, starting from 24% and rising to 43%. There are also allowances available. Currently there is a double taxation agreement between Spain and the UK, meaning a UK expat pension member, who is resident in Spain, would be taxed on their UK pension income  as a Spanish resident . Should an individual transfer their UK pension benefits to a QROPS, they would need to ensure that the QROPS pays the income at 0% as Spain would apply tax in addition to that deducted at source by the QROPS from the pension income.
Tax free cash, paid from a UK scheme would be treated as earned income – if received whilst being a Spanish resident. From a tax free cash perspective, it is therefore important that an individual takes advice on their UK pension options before migrating.
If a Spanish tax resident is a beneficiary of a UK pension or QROPS member’s benefits, inheritance tax (IHT) will be charged, by the Spanish Tax authorities, on receipt of that benefit to the Spanish resident. The amount of tax charged varies depending on the Spanish tax resident’s relationship to the deceased. It is important, therefore, that an individual knows if they are a beneficiary pre-migration.

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Tax and QROPS Considerations for Migrants to France

Wednesday, August 26th, 2009

Many people migrating abroad have looked at transferring their pensions to a Qualifying Recognised Overseas Pensions Scheme (QROPS) since they were introduced into UK legislation in April 2006.

To decide whether to transfer your UK pension to an offshore pension, that has registered as a QROPS, several factors have to be taken into consideration – not least the tax implications.

However, since the UK changed its rules on overseas pension transfers in April 2006, the UK pension funds do not have to transfer to the same destination as the migrant. It is important, therefore, that the migrant knows not only the tax benefits of the jurisdiction of where their QROPS  is, but the tax system on pension income (and other benefits) of where they live now.

UK migrant’s tax resident in France, taking income from their QROPS, would need to be aware of the tax situation. For some types of QROPS that are established in a certain way, payments could be considered as a purchased annuity and, therefore, treated as reportable taxable income on an annual income tax return in France.

The annual taxable amount from a purchased annuity is banded and is dependent on the individual’s age. Up to 70% of the income from the QROPS would be subject to tax in France for those up to the age of 50 and their is a sliding scale to 30% for those aged over 69.  

UK migrants could also find their QROPS funds subject to inheritance tax (IHT) in France upon death. If the deceased is a resident of France, their estate would be expected to pay tax on their worldwide assets (including offshore pension benefits),

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Global QROPS Ltd Warning for UK Sportsman’s Pensions

Sunday, August 23rd, 2009

Prior to the introduction of UK Pensions Simplification and the Qualifying Recognised Overseas Pension Scheme (QROPS) regulations – on 6th April 2006, UK pension schemes could be set up with early retirement ages to accommodate occupations where the member would retire earlier than the standard 50 or 60.

Typically, the members concerned would be sports people who, by the very nature of their occupation, would be retiring from their sport in their mid-thirties. Prior to April 2006, if an individual wished to transfer their scheme benefits to an alternative arrangement, it may have been possible to keep the early retirement age with their transferred benefits (if the receiving pension scheme permitted this).

In the April 2006 Simplification rules, the minimum age that an individual could retire would be 50 (changing to age 55 in April 2010) – unless they were already members of a scheme that allowed for an earlier retirement age, in which case they could apply for transitional protection for their sportsman’s pension. However, even with transitional protection on sportsman’s pensions, the early retirement age would be lost on transfer – including transfers to QROPS.

Therefore sports people in the footballer’s pension scheme, the rugby player’s pension scheme or any other type of scheme, would have to think carefully when given the option of an offshore pension to transfer their benefits into. Ultimately, QROPS may provide more flexible or tax efficient benefits for those who are migrating and wishing to transfer to an offshore pension, but for a member of a sportsman’s pension, the wait to get your hands on the benefits could be longer within a QROPS.

With the correct QROPS advice, sports people could make the right decision for their pension.

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Global QROPS Ltd offer Offshore Pension options to New Zealand migrants

Thursday, August 20th, 2009

For individuals migrating to New Zealand it has always been important for them to look at their options for their UK pensions.

Since the introduction of Qualifying Recognised Overseas Pensions Schemes (QROPS) by the UK HMRC in April 2006, UK pension benefits can transfer to approved, offshore pensions throughout the world – including New Zealand.

Given the tax free nature of benefits paid from a New Zealand scheme, it would be a logical step, in most cases, to transfer UK pension funds to a QROPS in New Zealand. However, although benefits in New Zealand are tax free, the growth of the funds within the New Zealand QROPS would be taxed.

Up until recent changes in the New Zealand legislation, any income paid from a UK pension scheme to a New Zealand resident would be subject to the New Zealand foreign income tax rules. However, the changes in the legislation have meant that a New Zealand resident can receive income from a UK pension scheme (or another offshore QROPS) in certain circumstances and not be taxed.

This has opened up some key tax efficient options for New Zealand migrant’s UK pensions where previously the only way of receiving tax free benefits was to transfer UK pension funds to New Zealand QROPS.  Global QROPS Ltd advisers can recommend the most beneficial option for anyone with UK pensions looking to migrate to New Zealand.

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QROPS Rules Affecting UK Pension Transfers to Australia

Monday, August 17th, 2009

UK overseas pension transfer specialists, Global QROPS Ltd, are a UK based firm of financial advisers that specialise in advising migrants to Australia, with UK pension schemes, the options available for their funds.

UK pension transfers to Australia have been a big topic, even before the introduction of Qualifying Recognised Overseas Pension Schemes (QROPS) in April 2006, however the UK’s Her Majesty’s Revenue and Customs (HMRC) introduction of the QROPS legislation has meant that advice is crucial.

From April 2006, if an individual wished to transfer their UK pension to an overseas pension scheme, the scheme would have to be registered and approved as a QROPS with the UK HMRC. In doing this, the overseas pension scheme that received the UK pension transfer, would have to agree with the UK reporting requirements. The QROPS requirements were, essentially, for the first 5 UK tax years of the former UK pension member’s overseas residency, the overseas pension scheme would be restricted to paying pension benefits broadly in line with that of a UK scheme ie restricted to 25% tax free cash lump sum and the rest of the fund to provide income. The QROPS administrators would have to report as and when these benefits were paid.

As the Australian pension system allows for their members to take a lump sum benefits at retirement, pension transfers to Australia were appealing for UK retirees, prior to the QROPS rules, as they could get a 100% lump sum out straight away. Since the QROPS reporting requirement were introduced however, retirees migrating to Australia now need to take specialist advice about when they take the 25% tax free lump sum and what to do with the balance of their fund.

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Qualifying Recognised Overseas Pensions Schemes (QROPS) – Why’s and Wherefores

Monday, August 17th, 2009

With Qualifying Recognized Overseas Pensions Schemes (QROPS) becoming an increasingly important topic, both the UK IFA and their clients are looking for guidance and information on how QROPS work and their suitability.

 Members of the Global QROPS Ltd team have been at the forefront of advice on the transfer of overseas pensions for many years and have been experts on QROPS since their inception on A-day (6th April 2006).

Global QROPS Ltd are looking to work alongside UK IFA’s to ensure that their migrating clients receive the best overseas pension transfer options.

The expertise that Global QROPS Ltd provide has been used by IFA online in the article QROPS. Why’s and Wherefores. Written by Global QROPS Ltd director, Paul Davies, the article examines some of the issues that a UK IFA (and their client) would need to consider.

http://www.ifaonline.co.uk/retirement-planner/feature/1356395/qrops-whys-wherefores

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Rule Changes for Pension Transfers Overseas

Friday, August 14th, 2009

On 6th April 2006, the UK Her Majesty’s Revenue and Customs (HMRC) introduced new rules to be followed for a UK pension to be transferred overseas – The Qualifying Recognised Overseas Pension scheme (QROPS) regulations. Prior to 6th April 2006 a UK pension could be transferred abroad providing the individual could produce the relevant documents.

These documents included a UK P45, a letter confirming overseas employment and evidence linking the overseas pension scheme to the member’s new employment in the new country. The individual would also have to make a written declaration that they had no intention to return to the UK.

Once all of the requirements were received by the transferring UK scheme, the pension transfer overseas could take place. After the transfer was completed, the member’s pension funds were immediately subject to local rules, which, depending on the jurisdiction of the scheme, could mean early retirement or 100% immediate encashment.

Post 6th April 2006, the HMRC rules changed the emphasis from the individual to provide the evidence, on the day of transfer, to the overseas scheme to provide reporting requirements for at least 5 years of the individual member’s overseas residency. The overseas scheme would have to register and be approved as a QROPS by HMRC, in order for the transfer to take place in the first instance, thus removing all of the responsibility for the individual to provide any evidence.

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Meet Global QROPS Ltd at Down Under Live

Thursday, August 13th, 2009

Global QROPS will be exhibiting at the Down Under Live Migration Seminars on the 19th & 20th of September 2009. The event is being held at The National Motorcycle Museum in Birmingham.
The show is run in association with the UK’s market leading magazine for migration, Australian & New Zealand Magazine.
If you would like the opportunity to meet one of our advisers and have a face to face discussion about your situation then please do not hesitate to contact us for further details. Global QROPS can provide advice on all financial aspects regarding your migration, including your UK pension, property, financial assets and tax position.
The show also provides the opportunity to meet representatives from State Governments, Registered migration agents and other migration experts.
Please click here for further details. http://www.downunderlive.co.uk

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Qualifying Recognised Overseas Pensions (QROPS) and the USA

Wednesday, August 12th, 2009

Amongst the most popular destinations, for the many people who migrate from the UK each year are Australia, New Zealand, Canada, Spain and France. Included in the list of the top destinations would also be the USA. As with any other destination, a USA migrant, with accrued UK pension scheme benefits, would look for suitable advice on Qualifying Recognised Overseas Pension schemes (QROPS).

Unlike most of the popular destinations for people leaving the UK, the USA has more complicated issues when it comes to QROPS. For an individual looking at Her Majesty’s Revenue and Customs (HMRC) list of QROPS, they would see over a dozen USA QROPS listed. However, although the USA schemes have been registered as QROPS, this does not mean that they can accept UK pension transfers.

The United States Internal Revenue Service (the IRS) are not as flexible as some jurisdictions when it comes to accepting overseas pension transfers into their schemes. Therefore, although USA individual retirement arrangements (IRA’s) and 401K schemes appear as QROPS on the HMRC list, they would not be able to receive a migrant’s UK pension fund as a transfer in. As a result, a UK pension member that is ultimately looking to retire in the USA, would have to look at other jurisdictions – outside of the USA – for their QROPS.

Migrants should be aware that not all QROPS jurisdictions are tax friendly for USA residents and advice or guidance would need to be taken.

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