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QROPS for the UK Expat in Spain
We thought it would be useful this week to remind you about the attractions and versatility of QROPS for the UK non-resident who has come to live in Spain. In particular, for those who left the UK more than five complete UK tax years ago i.e. before 6thApril 2006.
QROPS have become much more accessible over the last few months as we have seen new schemes and jurisdictions open up. This has resulted in more competition accompanied by a reduction in fees and greater choose and options available for our clients.
A REMINDER OF THE KEY BENEFITS OF A QROPS
Before considering jurisdictions and costs the key benefits of having your pension fund in a QROPS as opposed to in a UK scheme include:
1.) Greater flexibility of benefits – a higher lump sum can be possible if required.
2.) Tax efficiency - on taking benefit from a QROPS. If structured correctly income taken will be taxed at between 1.6% and 2.6%.
3.) Protection for dependents - following the QROPS member’s death a lump sum or income is available. With lump sums no UK tax is payable whereas in a UK scheme tax at 55% will typically apply.
4.) Greater investment flexibility.
THE IMPORTANCE OF EXPERT ADVICE
With schemes based in countries including Guernsey, Isle of Man and New Zealand available, which is the best jurisdiction to choose? What is the best scheme to suit your particular requirements? Well that is where expert advice is required.<
It is not going to come from those who “dabble” - arranging the occasional QROPS with a main motivation of making as much commission as possible from investments. Rather, it will come from experts who understand the UK pensions system in depth as well as the systems operational in the main QROPS jurisdictions.
GETTING IT WRONG CAN BE COSTLY
There are for example two types of Isle of Man QROPS. One of these is totally unsuitable for residents of Spain as when income is taken a non-recoverable tax of 20% will be applied. Of the available Guernsey schemes, some are cost transparent whereas others will have you believe they are as cheap as chips (even ‘free’) whereas the truth is rather different.
NEW ZEALAND AND CAPITAL LUMP SUMS
New Zealand schemes are generally for those with smaller funds and who would prefer to receive an immediate lump sum. Funds that are left invested in New Zealand schemes are subject to tax at around 1.4% p.a. but the abolition of this tax expected later this year will suddenly make New Zealand an attractive longer term place to hold your pension fund.
Costs (where transparent) are tumbling and are becoming much closer to the fees associated with a UK-based self-invested personal pension. With set up costs of between £540 and £800, and annual costs in a similar range a QROPS as a long term home for your UK pension fund is much more accessible now.
For further information about QROPS and Pension Planning opportunities please contact us today via clicking the link Here and leaving a few basic details on the form at the foot of the page.
More Blogs By Stephen Ward BA (Econ), ACII, APMI, APFS, AIFP
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- Beyond the tipping point - where next ?
- New Zealand QROPS - good news for all concerned
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- Changes re New Zealand QROPS - Things are becoming clearer
- QROPS Jurisdictions in Focus : A Round-Up
- QROPS Jurisdiction in Focus : Isle of Man
- Could this happen to your UK pension fund?
- Maximising the outcome from your UK Pension fund
- What is a Funeral Plan and Why would I need one ?
- Should I Take Out Life Insurance ?
- Working for a UK Employer in Spain
- Claiming Child Benefits
- Claiming UK Benefits in Spain
- Repatriation : Moving Back to the UK
- Currency Exchange Jargon Explained
- Voting by post in Spanish elections
- Should I Pay Voluntary National Insurance Contributions to the UK ?
- SIP Cards and Means Tested Prescriptions in Spain
- NIE Number
- How can I claim my Winter Fuel Allowance ?
Blogs From Premier Pension Solutions SL
- QROPS – All Change From April 2012
- QROPS : Stop press - major changes on their way!
- Do you have a UK pension fund? How secure is it?
- Quantitative Easing - good or bad (or both) for your UK Pension Fund?
- Did Your Pension Fund Fall By 15 Percent in August ?
- New Zealand QROPS : Only Available For A Further 12 Months ?
- QROPS Jurisdictions in Focus : New Zealand
- QROPS Jurisdiction in Focus : Guernsey
- QROPS - the realities of giving and receiving advice
- QROPs - Choice of adviser and choice of jurisdiction
- Why not spring clean your pension ?
- New Zealand QROPS - some of our FAQ's
- Access Your UK Pension Fund Before It Falls In Value !