Posts Tagged ‘Overseas QROPS transfer’

UK Pension Transfer to Australia – Residential Property Investment

Monday, February 1st, 2010

The main benefits that a UK expat pension member – who is now a permanent resident of Australia – may have when considering a UK pension transfer to Australia, is the tax free income and lump sum that that the may receive at retirement age 60 from an Australian QROPS (Qualifying Recognized Overseas Pensions Scheme).

UK expat pension member in Australia, who is several years from retirement, may consider a UK pension transfer to Australia for investment reasons rather than for the benefits that they could obtain in the future.

As far as UK pension plans are concerned certain assets held in schemes are considered ‘taxable property’. These assets include residential property, fine art, classic cars, antiques, jewellery etc. Would a pension transfer to Australia (or any other QROPS scheme) therefore, allow you to invest in something that would otherwise be deemed as taxable property in the UK?

The answer to this is no. The rules on these types of investments have been clear from day one of the QROPS legislation (6th April 2006). Investments such as residential property, within QROPS, are taxable throughout the period that the individual’s membership of the QROPS. This is an important distinction to payments to members, which are more flexible outside of the QROPS reporting period.

The major advantage of an Australia QROPS is that a member can access 100% of the fund, at retirement, after the Reporting Period. Therefore, if an individual wishes to purchase a residential property after they have received their funds from the scheme at retirement, they could have the option to do so.

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QROPS and Guaranteed Annuity Rates

Saturday, November 28th, 2009

There are many UK expat pension members, that have migrated abroad, who are existing members of UK pension schemes that date back years. Many UK pension schemes, from the 1980’s and before – such as Retirement Annuity Contracts (also known as section 226 contracts) – offered guaranteed annuity rates (GARs). For those UK expat pension members with GARs, that are contemplating a transfer to a QROPS (Qualifying Recognized Overseas Pension Scheme), should take advice as to whether they will lose the guarantees and the overall impact on their retirement income.

What are Guaranteed Annuity Rates?

A GAR is the minimum annuity that a pension member is offered as pension income when they retire. The annuity rate that is offered by the scheme provider is usually more generous than the standard annuity rates available today. Typically, the older plans would offer annuity rates of 10% or more – which is unheard of today.

Expat pension members that are fortunate enough to have GAR benefits in their pension, would have to think very carefully as to whether the QROPS income that they could potentially receive would be greater than the benefits that they are giving up from their existing scheme.

Factored into the equation would be the tax position that the individual would be in when receiving income. Would a QROPS, without guaranteed annuity rates, provide greater income solely because a QROPS could be more tax efficient? Would the investments, within a QROPS, have the potential to grow to a greater fund-size pre-retirement?

Global QROPS Ltd would be able to research the best options for those expats with GARs in their pensions.

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Guernsey’s QROPS Stance

Saturday, October 24th, 2009

Since the introduction of QROPS (Qualifying Recognized Overseas Pension Schemes) in April 2006, the Channel Island of Guernsey has introduced many schemes that are available to accept UK transferred pension money.

As QROPS have evolved Guernsey, as a reputable financial centre, has been involved in discussions with the UK’s Her Majesty’s Revenue & Customs (HMRC). These discussions have taken place to ensure that Guernsey QROPS can continue as approved schemes, with HMRC, for accepting UK pension transfers.

With jurisdictions, such as Singapore, removed form the HMRC QROPS list in 2008 and other countries reviewed, Guernsey want their QROPS to be viewed favorably by both the customer and the authorities.

One of the first steps that the Guernsey tax authorities took was to restrict the maximum tax free cash lump sum payments to 25 per cent of the QROPS fund, applying to residents and non-residents of Guernsey alike. This applies to pension members outside of the QROPS reporting period as well as those within it.
 
Another major step was to ensure that any transfer from a Guernsey QROPS, made to a scheme outside of Guernsey, can only be made to another registered QROPS that, broadly speaking, imposes the same restrictions as Guernsey QROPS – such as 25 per cent tax free cash at retirement.
 
The main concern for Guernsey is that they do not want to be seen as a jurisdiction that encourages 100 per cent cash commutation from their schemes. The Guernsey tax authorities see that as something that could damage their reputation and potentially lead to Guernsey QROPS being removed from the HMRC list.
Global QROPS Ltd can advise people on the benefits of Guernsey QROPS as well as the flexible benefits of QROPS in other countries.

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