Getting Your Head Around QROPS |
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By: Dominic Donaldson Posted: 2010-02-10 05:03:54 |
| More Britons are choosing to work and retire abroad than ever before. For most that means transferring their UK pensions into overseas schemes. If you are in this position or thinking about retiring overseas, then you really need to understand one key phrase: qualified recognised overseas pensions scheme or QROPS for short. However although they offer fantastic advantages for the growing number of expats, few people really know what they are.Put simply QROPS are those schemes that the government and HM Revenue & Customs recognises as suitable for expats living, working and paying tax abroad. If you are in this situation then you can find yourself paying taxation penalties from several sources that could significantly harm your overall pensions pot. This is where these schemes come into their own.The biggest problem with living and working abroad is that you lose the right to tax relief on pension contributions to your scheme in the UK. While you cannot regain that relief there are a number of other potential benefits on offer.For example, let's imagine you retire abroad and draw from a UK based Pension Scheme. Unless you live in a country that has a double tax treaty with Britain containing specific legislation relating to pensions you could find yourself still subject to paying income tax. With those countries with no treaty with the UK, you can find yourself paying a prohibitively highSince April 2006, the procedures for overseas transfers has been simplified considerably. Now, as long as HMRC customs recognises the scheme as a QROPS, it should be possible process the transfer in the same way as a UK pension scheme while maintaining all the benefits. However, the process can still prove difficult for those who do not know or understand the territory. Many people have found the entire process far more difficult to navigate than they had previously thought.The answer is to use an approved expert. You can find them through the internet. However, be careful. In all walks of life some providers are better than others. It's important to also realise that whatever advice they give is only just that, advice - nothing more and nothing less. Even experts can go wrong so you might want to get a spread of opinion. Only then are you assured of the best outcome. So, when it comes to QROPS remember, the more you know and the more you speak to the better chance you have of getting the retirement income you deserve. |
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