The Benefits Of A QROPS
Moving abroad later in life can be both a dream and a scary prospect. Besides anxieties about leaving one’s usual haunts for an unfamiliar location, retirees frequently worry about what will happen to their pensions once they leave their native soil. The only choice many expat pensioners had was to pay a hefty tax in order to transfer their pensions to wherever it was they had moved to. Anxiety about one’s pension often constrained retirees in their choice of country of residence.
What Is A QROPS?
In 2006, a legislative response to this problem allowed the setting-up of Qualifying Recognized Overseas Pension Schemes for British pensioners. Retirees could transfer their existing UK-based pensions to these government-accredited schemes without incurring the heavy tax. One of the benefits of a QROPS, therefore, can be said to give retirees more freedom of movement.
Greener Pastures (Or Better Rules) Abroad
Though the UK does have many respectable, reliable pension schemes, it must be admitted that they do have their pitfalls. Rules concerning the adjustment of the schemes can be quite strict. Furthermore, you usually have to pay a high tax if you would prefer to get your pension in a lump sum. It is an ironic fact, then, that many Britons can get more favorable pension schemes in other countries, where they will have to deal with less bureaucracy and will lose less money to tax payments. When combined with the cheaper costs of living one often finds abroad, getting a QROPS can actually be a bargain, as compared to staying within the UK on a British public or private pension scheme.
It can also be said that a QROPS can benefit others besides the pension scheme holder alone. Under the QROPS, you might have an easier time transferring any leftover pension monies to your heir(s) than you might if you remained in the United Kingdom, with a UK-based pension scheme.
Getting Some Help
You need not navigate the unfamiliar territory of QROPS alone. You can get QROPS advice from both government staff and private consultants. In fact, it is probably a better idea to discuss bureaucratic and legal considerations with your pensioner before you make any definitive moves to go to another country, or even while you are still deciding on which country to move to. For all you know, the pensioner might have extensive experience with retirees who move abroad. He/she might be able to give you valuable advice on the advantages and disadvantages depending on your unique situation. If you are very fortunate, the pensioner might already have special programs or contact networks in certain overseas locations that might make your finances easier to handle wth reduced fees and costs.
Icing On The Cake
Many of the best QROPS have the benefits Britons have come to expect from some of the better UK-based schemes, and more. Here are some features you should keep an eye out for when selecting a QROPS. First, if you are married, look for a scheme that has special rates for spouses who register as a couple. Furthermore, search for schemes that allow you the freedom to choose who will manage your investments. If you do not want your new pensioner to handle these affairs, you should be able to choose to have your banker do it, or to even manage the investments yourself.
For more information, visit the HMRC website here.