Brexit QROPS Pension Transferring UK Pension Transfers For British Expats

QROPS Brexit Transferring UK Pension Transfer to a QROPS Pension while you can STOP Paying UK Tax on your pension income.

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Brexit Vote May Call For Early Move Into QROPS

The real possibility that rules surrounding offshore pension transfers could change following the outcome of the UK’s EU referendum means advisers considering such a move for their clients may be wise not to delay, says Darren Jones, head of technical sales for Old Mutual International, part of Old Mutual Wealth.

Following the UK’s decision to leave the EU, advisers are now considering what the implications may be for them and their clients. We are starting to see a number of advisers question the impact this could have on pensions and on tax relief, and more specifically the future of QROPS (Qualifying Recognised Overseas Pension Schemes).

QROPS were first introduced 10 years ago after EU legislation forced the UK to formalise its process of allowing people to transfer their pension to a different jurisdiction. Prior to this change, members had to gain HM Revenue & Customs approval on a case-by-case basis, a process that was complex and potentially lengthy.

Usually the receiving scheme was in the new country of residence and often employer sponsored. The member had to certify the permanency of leaving the UK and provide proof that UK work had ceased and new work overseas had commenced. Generally no pensions in payment could be transferred.

QROPS Growth

The QROPS market has grown significantly over the years. QROPS benefits include removing growth from future lifetime allowance testing, potentially reduced taxation on death of the member, no requirement to certify permanency of non-UK residency, potentially reduced taxation of income should the member return to the UK, currency flexibility, choice of retirement date and jurisdictional options to take advantage of favourable double taxation treaties.

The future of QROPS is very much dependant on what the UK government decides to do in relation to Article 50, and whether the UK will stay a member of the EEA. Market speculation around whether we will see a ‘closing down sale’ for QROPS is understandable, but it is perhaps more likely some modifications to the existing rules will be made.

QROPS Brexit QROPS Brexit Transferring UK Pension Transfer to a QROPS Pension while you can STOP Paying UK Tax on your pension income.“It is a real possibility the rules surrounding QROPS may change in the future, and advisers with clients considering transferring to a QROPS should encourage them to take action sooner rather than later.”

For example, HMRC may look to only allow members to transfer their QROPS to a jurisdiction where they live, removing the ability for members to select the most favourable jurisdiction to hold their pension.

Regulations In The Frame

The government may also want to preserve the benefits QROPS brings to the pension system in today’s transient market place. Attracting offshore investment and entrepreneurs to the UK, and giving them choice and flexibility when it comes to their pension saving will remain a priority for the government.

The Brexit vote may well encourage advisers and their clients to focus on their financial planning needs and, if a QROPS is suitable, it would make sense not to postpone this decision. Once a member holds their pension inside a QROPS it is hard to see how HMRC can make any retrospective changes and, should client circumstances change, it is likely that a transfer back to a UK scheme would remain an option.

So what does this all mean? QROPS will still have a valuable role to play in helping bring flexibility and choice to the UK pension industry, especially in today’s transient market place. However, it is a real possibility the rules surrounding QROPS may change in the future, and advisers with clients considering transferring to a QROPS should encourage them to take action sooner rather than later to ensure they benefit from the current legislation.

By Darren Jones, Old Mutual International

Source: International Adviser 4th July 2016

#Brexitqrops  #Brexit  #QROPS #QROPSAustralia #HMRCQROPSList

The Post-Brexit QROPS Landscape

International pensions such as QROPS are certainly going to feel the economic impacts of the UK’s decision to leave the European Union, but there will also be many other effects on these products, says David White, a founding partner at The QROPS Bureau.

Here White lists the main issues facing the future of the QROPS market in the post-Brexit world.

QROPS Increasing Number Of Expatriates

Those who voted Remain and who do not relish a future within a UK that is not part of the EU, may consider leaving the UK and will wish to ensure their pensions are best suited to their changed circumstances. Whilst some of these people will move to EU countries, many others will migrate to countries outside the EU.

Wherever these people move to, this trend, if it occurs, may lead to an increase in demand for international pension solutions such as QROPS.

QROPS Freedom Of Movement Of Capital

Much has previously been made out of the fact that QROPS has a long term future due to the EU freedom of movement of capital rules – the UK government has not been able to restrict the movement of capital within the EU by making QROPS overly restrictive, even if it wanted to. Once the UK is out of the EU this could change and the UK HMRC may be able to introduce further restrictions.

QROPS Lifetime Allowance Planning For UK Residents

One area which this may impact upon is the use of QROPS by UK residents for lifetime allowance planning. Once the UK leaves the EU, HM Revenue & Customs may be able to restrict the use of QROPS by UK residents, which they have not previously been able to do.

QROPS Flexible Drawdown In Malta

Following the introduction of flexible drawdown into the UK pensions regime in 2015, Malta was able to avoid the “temporary “retention of the “70/30” rule (70% of the pension scheme to be used to provide an income for life), because it was part of the EU. Once the link has been severed between the UK and the EU, Malta may have to revert to more closely following UK HMRC rules and introducing the “70/30” rule.

Non EU QROPS

As stated above many UK residents have moved and will continue to move to countries outside of the EU. Many QROPS are not domiciled within the EU and so are unlikely to be effected by Brexit.

QROPS Taxation Of Transfers

Following an exit from the EU it is possible that the UK will continue to allow portability of pensions but introduce a tax on transfers, similar to the US system.

QROPS Restrictions On Advice

The UK being a member of the EU has made it fairly straightforward for UK Financial Conduct Authority regulated advisers to advise clients within Europe under ‘passporting’ arrangements. The UK’s exit from the EU could potentially make this process more difficult.

QROPS Gibraltar

One of the major QROPS jurisdictions is Gibraltar. Following the outcome of the EU referendum, Spain has called for the UK to enter negotiations over co-sovereignty. This would be a further chapter in the long running historic dispute between Britain and Spain over the sovereignty of Gibraltar.

QROPS Transitional Period

The majority of the above potential impacts are unlikely to occur until after Brexit has taken place. During the interim period of at least two years, whilst the exit is negotiated, there is likely to be an increase in demand for international pensions solutions such as QROPS, while people have some certainty over the rules and the treatment of their pensions.

QROPS No One Size Fits All

As has always been the case the most suitable solution depends upon client circumstances and the regulatory climate at the time. The world changes, the country changes and the regulations change, and so the most suitable solution will change.

By Richard Hubbard

Source: International Adviser 7th July

UK Pension Transfer To A QROPS

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