The questions you need to ask your pension provider
If you are planning to retire outside the UK then you may benefit from transferring your UK pension to a QROPS (Qualifying Recognised Overseas Pension Scheme) from your current UK pension provider.
However, there are a number of questions which you need to consider before you go ahead with the transfer. By discussing these issues with a specialist QROPS adviser and your current UK pension provider, you will be able to make an informed decision based on your individual and personal circumstances.
If you have contributed to a private or occupational UK pension, you could move the pension fund offshore via a QROPS. This could give you greater flexibility and the opportunity for growth. There are also potential tax advantages.
Thinking through your options will also mean that you are able to avoid falling foul of any regulations or tax issues which may ultimately cost your money or reduce the size of your pension benefits.
Is a QROPS suitable for me?
There is no obligation to transfer your pension if you are moving, working, or retiring abroad. You may not wish to move out of a UK final salary scheme, particularly if the benefits are guaranteed by your current pension provider. You can check the extent of your benefits with your UK scheme administrator.
However, for many people there are clear advantages when considering whether you should transfer your pension when you move abroad and put it into a QROPS scheme. Your adviser can talk through the options.
What are the advantages of making a transfer?
By moving from a UK based pension scheme to a QROPS in the country where you are living, working or retiring, you won’t have to worry about problems arising from taxation, currency fluctuations and constantly changing pension rules, from a UK pension.
Your pension will instead be administered by a recognised scheme set up in the country to which you have moved from the UK.
Are all pensions eligible for transfer?
You can’t make a transfer of your UK State pension under the QROPs rules. Nor can you transfer your pension if you have already bought a fixed income product (e.g. an annuity), or if you are already drawing your pension from a final salary guaranteed payment. You are also not allowed to take your funds from the NHS, Teachers’, Civil Service, Armed Forces, Police or Firefighters’ schemes.
However, if you have both a State Pension and private or workplace pension, you are allowed to transfer that part of your retirement savings which comes from your private or employer’s pension, subject to certain rules and regulations.
What is the best age to make a transfer?
This depends on your personal circumstances, and bdhSterling can advise you on what to do. It may be that you need to wait until you meet the QROPS transfer requirements to transfer to certain schemes, for example in Australia.
By taking specialist advice, you can decide whether it is better to leave your funds in the UK or make alternative, interim arrangements. It does depend on which country you are planning to move your money to, what your personal tax position is and the status of your existing fund.
You may need to request extra information from your current UK pension provider in order to make this decision. You can also discuss your options in detail with your specialist QROPS adviser at bdhSterling.
For example, if you have a number of different pensions pots it could be beneficial to consolidate your multiple savings schemes into one pot that will be simpler to manage and monitor.
What are the costs involved?
There will be set up charges involved in establishing a QROPS and making a transfer. However, you may reduce overall charges as a result of making the transfer, particularly if you are in an old-style private pension scheme or if you have a number of different pension schemes all with their own different charging structures.
In addition, you may find that by consolidating your pension savings and transferring them to the country where you are living, you are better able to refine your investment choices in order to suit your current lifestyle and attitude to risk. You may also be able to avoid currency costs and fluctuations, therefore giving you more security over the value of your funds and benefits and enabling you to plan ahead with confidence.
How do I know which schemes are safe to make a transfer into?
Your adviser can recommend a scheme and country with high levels of investor protection that is comparable to the UK.
Making the right decision is important and it essential to take advice on how best to make the QROPS transfer, when to do it, how your personal circumstances will be affected by taxation issues, and what to do with your funds if they can’t be transferred straight away.
If you would like to further discuss the questions you need to ask your pension provider or want more information about transfers into QROPS schemes, contact bdhSterling for advice from our experienced pensions advisers.