When is a third country QROPS the best expat choice

Published:  18 Apr at 6 PM
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Since 2006, expats planning to emigrate and those already living abroad can transfer their pension pot in to a QROPS, with pension savers allowed to base their investment outside the UK.

As long as the product provider has complied with HM Revenue and Customs’ regulations, savers can base their QROPS in a choice of worldwide financial jurisdictions. Once the transfer has been made, and the member has resided overseas for five years, the fund follows its base country’s legislation, rather than the UK’s.

As a result, QROPS offer taxation and investment benefits as well as high degrees of flexibility, allowing retirees to make the most of their personal pension provisions. Those living in a country without QROPS provisions can easily take advantage of the scheme’s benefits.

However, it’s wise to take into account several reasons when selecting a third country QROPS. Firstly, financial or political instability in your chosen country is a negative, as are language barriers and a lack of currency or investment options.

Some QROPS jurisdictions allow the tax-free drawdown at 30 per cent, but most comply with the UK’s 25 per cent of the fund. A few jurisdictions are expensive as regards QROPS maintenance compared to the majority, although competition in the third country QROPS industry should eventually result in lower maintenance and setup costs.

Jurisdictions with high wealth and inheritance taxes are best avoided, and any clues suggesting a lack of knowledge of QROPS and the reporting requirements are red flags indicating financial danger. Another warning sign is the lack of a pensions regulator, indicating the possibility your chosen QROPS may not comply with UK legislation.

Gibraltar and Malta are popular jurisdictions for expats looking for third country QROPS, as both enjoy political stability, English-speaking advisors, a good relationship with HMRC and solid legislation. Above all, care should be taken as regards your choice of advisor, with checking necessary registrations, qualifications and the local legality of the firm all essential.
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