QROPS And In-Specie Transfers

Posted by Paul Davies on 08/01/10 13:54

Like any UK registered pensions scheme, Qualifying Recognized Overseas Pension Schemes (QROPS) have rules and regulations regarding permitted investments.

For many UK expat pension members, pension funds are often left in the UK because of the nature of the investment within the pension scheme. For example, UK Small Self Administered Schemes (SSASs) and UK Self Invested Personal Pension Plans (SIPPS) can have more diverse investments than a UK personal pension or standard employer’s scheme could have.

It would not be uncommon for a SSAS or a SIPP to have commercial property or shareholdings as an investment within the scheme. UK expat pension members with these types of schemes and investments may be deterred from transferring out of their UK scheme to a QROPS because it may require the investment to be cashed in first and, with the property or equity market at a low, this could lead to an overall loss for the fund.

What is an in-specie transfer to a QROPS?

In-specie transfers could be an alternative solution to divesting a pension investment in order to affect a transfer. Under this method, assets are transferred directly from one pension scheme to another. This means that any legal ownership of the assets, such as property, can be transferred from the transferring pension scheme to the receiving pension scheme.

Theoretically, at least, the same principle can apply for transfers from UK pension schemes to QROPS – however, additional points need to be considered. 

As you would be dealing with a different jurisdiction for QROPS, would that particular regime allow investments such as property or shares? Furthermore, would those types of investments receive the same tax breaks in overseas schemes as they would in the UK?

Global QROPS Ltd can provide advice and guidance on QROPS matters.