Dispelling Some Qrops Myths

By Author: mark harris
Total Articles: 57
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There are many situations where it is highly beneficial for an individual to transfer their UK pension into a QROPS scheme. However, some myths concerning the eligibility and benefits persist which can make it difficult for individuals to take the right decision.

A pension often represents a significant portion of an individual’s wealth and savings. That is why it is important to consider all possible scenarios before making the decision to transfer a UK pension into a QROPS.

Here, we aim to dispel some of the common myths about QROPS to help you make the right decision.

It is often argued that QROPS schemes do not offer protection to the investor. However, as each scheme must be approved by HMRC, there are strict guidelines in place under which it must operate.

Another myth is that you cannot take income from a QROPS if you are already in income drawdown mode as part of your UK pension scheme; again, this is not always the case. In many cases, it is possible to transfer your existing scheme into a QROPS because these are precisely the circumstances in which you will benefit more from a transfer ...
... to QROPS as income tax will be paid at rates prevailing in the country you are residing in at present.

Under the UK income drawdown death benefits, the account is subject to a 35% tax charge which rises to 82% after the age of 75. Under a Qrops, death benefits can be passed on free of tax.

A QROPS is a fully approved scheme and HMRC will only permit the transfer of a UK pension scheme into a QROPS that is fully approved by them. You can take expert advice on the most appropriate scheme for your income circumstances.

Further, any income that you take from a QROPS need not be reported to HMRC once you have been a non-UK resident for full five tax years.