Why would an Individual Transfer a Pension Abroad?

There are many reasons as to why an individual may consider that the best option for their UK retirement fund is to transfer their pension abroad, to a QROPS.

The main reason to transfer a pension abroad would be the benefits of a QROPS are potentially more attractive than the restrictive benefits available from a UK scheme.

With this in mind, what are the main reasons as to why an individual, who is migrating, would consider a transfer of their pension abroad to a QROPS? The following are the most common considerations:

• The QROPS could have no requirement to purchase an annuity.
• There may be little or no tax on pension payments to the member, from QROPS, in certain jurisdictions.
• The QROPS may be able to provide 100% lump sum payment, to the member, on retirement.
• Death benefits in some QROPS are less restrictive than UK schemes.
• The transfer of a pension abroad could reduce an individual’s UK inheritance tax (IHT) liability.
• The investment options available in a QROPS may be more varied than those offered by UK schemes.
• Individuals are more comfortable with their money, including their pensions, in the same country as they are resident in.

One further consideration for a transfer to a QROPS, which could also apply to an individual who is not migrating, is to remove the individual’s possible future liability to the UK Lifetime Allowance.