Qualifying Recognised Overseas Pension Schemes\u202f(QROPS) were introduced following \u2018A-Day\u2019 in the UK. A-day was 6 April 2006, when the UK pension tax system was simplified and replaced with a single system.\u202fWith most of the earlier QROPS appearing in 2007.
QROPS were designed to make it easier for those living or planning to live overseas to move their UK pension pots into an overseas scheme. This was far easier than the previous legislation, enabling overseas transfers of UK registered pension rights. The main criteria for a QROPS transfer was simply that the pension plan overseas appeared on the HMRC recognised overseas pension schemes notification list.
QROPS offered similar benefits to UK personal pension plans. Although, tax-free cash up to 30% was allowed if the pension plan holder had been non-UK resident for five consecutive tax years ahead of retiring or beginning to draw from the QROPS. This compares to the UK limits of 25% for most UK pensions plans.
The earlier plans were linked to maximum income benefits under the previous UK \u201ccapped income drawdown\u201d legislation, the maximum income based on Government Actuary Department rates (GAD) which were broadly linked to annuity interest rates.
Since then, and following the introduction on 6 April 2015 in the UK of flexi-access drawdown (FAD), some locations offering QROPS products adopted this instead.
It’s been rare that QROPS providers have changed between capped income drawdown and flexi access drawdown, which is what changed in the UK (FAD did replacing capped drawdown for new plans following April 2015).\u202f <\/p>\n\n\n\n
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As part of the Autumn Budget 2024, the UK Government announced that they would remove the exclusion from the\u202fOverseas Transfer Charge (OTC)\u202fof transfers to\u202fQROPS\u202festablished in the\u202fEEA\u202fand Gibraltar, which will no longer apply to transfers to\u202fQROPS\u202festablished in the\u202f European Economic Area (EEA)\u202fand Gibraltar made on or after 30 October 2024. \u202f\u202f <\/p>\n\n\n\n
Prior to the 30 October Autumn Budget changes, if you had requested to transfer to a\u202fQROPS\u202fbased in the EU, Norway, Iceland, Liechtenstein or Gibraltar and the transfer was completed before 30 April 2025, there would have been no OTC applied (as long as the amount did not exceed the overseas transfer allowance of \u00a31,073,100). <\/p>\n\n\n\n
The Government also announced that from 6 April 2025, the conditions of\u202f Overseas Pension Schemes (OPS)\u202fand Recognised Overseas Pension Schemes (ROPS)\u202festablished in the\u202fEEA\u202fwill be brought in line with\u202fOPS\u202fand\u202fROPS\u202festablished in the rest of the world, so that:\u202f <\/p>\n\n\n\n
It may be the case that moving to a QROPS now is no longer possible or fraught with too many complications and perhaps less benefit than in the early years when this product became available. <\/p>\n\n\n\n
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If you have already moved to a QROPS we would suggest you review these arrangements to understand whether they are suitable for your circumstances now or your known future.
This can mean making sure the QROPS location is suitable in terms of how benefits can be taken, and whether there is any tax advantage which could be related to whether a\u202fDouble Taxation Agreement\u202f(DTA) exists between where your pension is based and where you will be living in retirement.
In addition, making sure the investment strategy inside your QROPS is appropriate and that it is being held in a cost-effective investment account is also highly important, so reviewing what you have is essential.
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From 9 March 2017 certain transfers to and from a\u202fQROPs\u202fbecame liable to a 25% tax charge called the overseas transfer charge (OTC) and whether you were liable to pay tax depended on where the\u202fQROPS\u202fwas based and your available overseas transfer allowance at the time. <\/p>\n\n\n\n
This change in 2017 also meant you may not have paid tax if you transfer to a\u202fQROPS\u202fprovided by your employer, and if you live in the country your\u202fQROPS\u202fis based in, and the transfer does not exceed your available overseas transfer allowance. <\/p>\n\n\n\n
Our experience of\u202foverseas\/expatriate tax\u202fand retirement options means we can help you negotiate this very complicated area of\u202ffinancial planning. To speak to one of our pensions experts please\u202fget in touch with your nearest office<\/a>. <\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n