The ability to easily move your pension out of the UK has been with us since April 2006. Her Majestys Revenue and Customs (HMRC) set the rules up to ensure that the UK is internationally compliant, and a member retiring overseas can take their pension with them. To keep a control on how you may take benefits, HMRC allow UK pensions only to transfer to an overseas pension that has QROPS status. The QROPS certificate determines the rules within which your pension scheme must act.

Due to some very considerable benefits (in comparison to the restrictive UK pension regime), QROPS has been marketed heavily throughout the region. I am continually being asked by clients whether they should transfer to a QROPS, if so what one should they do; and if they have already transferred have they done the right thing?

There is no simple black and white answer to the question of whether a QROPS is appropriate, and similarly this applies to which QROPS is most suitable. Individual circumstances and objectives will dictate what the most appropriate advice may be. If you are considering a QROPS transfer some of the factors that need to be taken into account are:

• Fund size, whether you are going to ever return to the UK, income requirements, residency of spouse and children, whether you are UK domiciled for Inheritance Tax (you probably are if you pension remains in the UK), time of non residence, investment objectives, other wealth, currency, security and protection, any guarantees applying to your UK pension, and the impact of local taxation in Spain.
• This is by no means an exhaustive list, and all of your personal circumstances need to be taken into account before the most appropriate advice can be given.
• There are a large number of QROPS trustees offering differing benefits and with this come different risks levels, both in terms of how HMRC may view these arrangements, how they may be viewed by the tax authorities in Spain; and the level of asset protection that exists. Jurisdictions that are competing for your transfer include Luxembourg, Guernsey, Gibraltar, New Zealand, Ireland and The Isle of Man.
• If you are looking to set up a QROPS, or would like to discuss your existing arrangement; it would seem appropriate to discuss your options with a specialist who understands both the benefits and risks of all the options available to you, and how HMRC view these arrangements. This article is not aimed at putting you off QROPS, as the flexibility and tax benefits available could mean the greater risk is not acting at all. What it is intended to do is to ensure you seek robust advice to ensure you understand which QROPS would best meet your overall financial objectives.

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©Philip Teague