A dozen reasons why choosing a QROPS investment is best for expat retirees

Published:  12 May at 6 PM
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Surveys show that many expats working abroad, as well as those intending to retire overseas, are not considering all options as regards investing their pension pot.

Now that annuities have been exposed as a poor deal and there’s no restriction on taking out your savings, moving your pension offshore via a QROPS is an important part of today’s retirement strategy. Standard UK pensions are restrictive as regards choice of investments, with QROPS offering far more funds, commodities and markets in more varied currencies than exist in UK-based pensions.

The standard 25 per cent tax-free drawdown is increased to 30 per cent in a number of overseas QROPS jurisdictions, giving more flexibility, and those with UK pension plans who are still working internationally can transfer the funds overseas to a QROPS and benefit in the same way as can retirees. The UK’s financial regulator has advised all FAs that QROPS should be included in all future retirement planning for their clients.

Another advantage of a QROPS is that pension benefits can be paid in a number of currencies direct into foreign bank accounts, thus removing the risk of negative exchange rate fluctuations. The product isn’t limited to wealthy retirees and overseas professionals, as some providers offer schemes for retirement savers investing less than £100,000.

QROPS are policed by HM Revenue and Customs and regulated in the jurisdiction where they’re based, and there’s a huge choice of 42 financial centres offering a total of 3,300 investment schemes. Those who fear their total funds will break the £1.25 million lifetime allowance can avoid penalties by switching to an offshore pension.

Importantly, unspent funds on death are not subject to UK inheritance tax and can be willed to a spouse or family member, and the funds grow free of UK taxes although tax may need to be paid in the country of residence. Third-party QROPS give holders the freedom to move between countries without needing transfers.
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