QROPS And The UK Lifetime Allowance
Posted by Simon Harvey on 14/10/09 14:56
Each time an individual brings new benefits into payment under a UK pension scheme it is known as a benefit crystallization event (BCE). Each time benefits are taken, the ‘crystallized’ value of the benefits must be tested against the individual pension member’s available lifetime allowance.
How does this affect someone looking to transfer to a QROPS scheme? In short, a transfer of a UK pension fund to a QROPS is a BCE. If the crystallized value of the pension funds are above the remaining lifetime allowance available, a lifetime allowance tax charge will apply to the excess amount.
In some cases, such as when an individual can apply for enhanced protection, a UK pension fund value above the lifetime allowance can be transferred to a QROPS without penalty. However, an individual, who has funds approaching the lifetime allowance would, be wise to take specialist advice before transferring to QROPS.