If you are planning to retire abroad in luxury after spending most of your working life in the UK you will want to make sure that you can make the most of your hard earned pension. Thankfully, you will now be able to create some major benefits for your money upon your retirement overseas.

Historically UK pensions have always been shrouded in strict rules and regulations, especially for those who retire abroad. As a result many people’s pensions were effectively frozen within the UK with the holder unable to gain access to their money. However, a change in regulations in April 2006 meant a victory for retired expatriates as they could now move their pension offshore when retiring abroad.

Qualifying Recognised Overseas Pension Schemes, or QROPS, allow an individual to transfer their substantial pension to another jurisdiction upon retiring abroad. QROPS can potentially provide greater benefits to those who transfer their pension to the scheme compared to those who decide to leave their pensions in the UK.

QROPs will give you greater investment freedom and flexibility and the ability to pass on all your unused pension funds to your beneficiaries including your spouse and your children. Depending on the jurisdiction that you transfer you pension to, your payments could become gross of tax and your lump sum will be completely tax free.

To be eligible to transfer your pension into a QROPS scheme you must be between 18 and 75 and have a pension of at least £50,000 to transfer. The QROPS scheme you enter into must be recognised by HMRC otherwise you could face heavy tax penalties. You will also face a couple of the same restrictions that you would face back in the UK, for example, you are not allowed to touch any of your fund before the age of 50, or 55 from April 2010, and you must leave at least 70% of your pension to receive an income from.

It is always beneficial to transfer your pension into a QROPS scheme based offshore from where you retire to. For example if you retire to Spain, it will be more beneficial for you to transfer your pension accrued in the UK into a QROPS scheme into a neutral jurisdiction like Guernsey. This would mean that you would potentially end up saving money for you to enjoy your retirement years in luxury.

If you would like to speak to a pensions consultant who will be able to advise you further in the QROPS process, please contact us.

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