subject: What are QROPS? [print this page] What are QROPS? What are QROPS?
QROPS were introduced in 2006 as part of an initiative aimed at Pension Simplification, under which government approved schemes are taxed and regulated as offshore pensions by the countries that host them. Since inception, there have been well over one thousand such pension transfer schemes introduced in various countries and financial institutions all around the globe.
With regards to taxation, you are required to report back to HMRC the activities your QROPS are involved in for the first 5 years after leaving the UK. After the expiry of this period, you are not obliged to divulge information regarding your overseas pension fund to Her Majesty's Revenue and Customs. In the event that you choose to return and reside in the UK during this 5 year period after your fund has been transferred to a QROPS, you may be liable for a tax bill. It is important to note that even if you decide to remain outside the UK for the set five years or more, you will nevertheless be liable for overseas taxes.
When choosing your QROPS, it is important to seek professional advice so as to avoid investing your pension in one that has not been officially approved. This is because in the event that this happens, you may be liable to a stiff penalty and tax claim from HMRC of what should have been due. In any case, most reputable funds will not accept an application from an investor who is not represented by an adviser. A QROPS adviser will assess your current requirements and financial status in order to recommend the best scheme for you.
A QROPS is only ideal for those who intend to leave the UK for a minimum period of five years, such as expatriate pension for expatriates. Non-Britons are also eligible for QROPS, as long as they are already a member of a UK pension scheme and plan on leaving the UK for a period of five years or longer.
