Around 400,000 Britons move abroad every year and now they can take their pensions with them in a far friendlier format. With the relatively recent introduction of new rules governing the treatment of pensions for those who expatriate, there has been something of a revolution in the offshore pension industry and qualifying registered overseas pension schemes
If you’re thinking of moving abroad, you’ve already expatriated or you’re a higher rate taxpayer wondering if you’d be better off financially to leave the UK and save and invest offshore for example, here are the top 8 benefits of QROPS – or Qualifying Registered Overseas Pension Schemes.
According to Scottish Widows, up to 66% of higher rate taxpayers that they surveyed recently are thinking of moving abroad in retirement. What’s more, increasing numbers of us are aware that we can potentially earn more, pay less tax and ultimately be better off if we relocate overseas to live and work and/or retire. And for once, the government is in support of us and wants to give us an even greater financial incentive to leave!
Okay, so that’s not entirely true, but new rules governing the way expatriates can handle their pensions can be highly tax and flexibility advantageous depending on your own personal circumstances. The top 10 benefits of the new schemes available, which are known as QROPS, are: –
1) No requirement on the pension scheme holder to buy an annuity upon maturity of the policy
2) Reduced or even zero IHT liability if the policyholder dies in drawdown
3) Potential to pay reduced levels of income tax
4) Ability to have a higher tax free cash lump sum payout
5) Greater investment flexibility
6) Policyholders have the right to invest in residential real estate
7) Ability to access funds after five years
8) No HMRC reporting requirements on QROPS after five years
Whether one of the Qualifying Registered Overseas Pension Schemes is right for you is something that you should determine with the assistance of an international financial advisor. This article does not constitute advice and you should be aware that your taxation liability may be determined by your country of residence and that if you do take all of your pension after five years and/or in the form of cash, you could find you spend all your money before you die and have nothing left to live on in retirement!