What You Need To Know About QROPS In South Africa

Not long ago, British expats with pension savings in the United Kingdom had little option other than remaining in the current schemes, leaving them with very little control over their pension investment.

This has lead to inappropriate investment and benefits options given their country of residence. Pension planning for expats for is a very important aspect of QROPS

Don’t miss our in depth guide: QROPS Explained. It will prepare you to make an informed decision for your future investments.

The newly introduced UK legislation addressed these problems through the use of QROPS, established overseas and recognized by HMRC to accept UK pension savings.

QROPS offers a landscape of retirement options of expats. Click To Tweet

There are a few practical concerns that expats need to keep in mind when you think about your retirement provisions.

Just to name an example, it is challenge to handle the bureaucratic side of retirement provisions when doing it overseas.

But if it is done right, the provision might enable you to retire early-many British expats receive good remunerations for their time overseas and saving and investing that disposable income wisely can really pay off.

An Overview Of QROPS In South Africa

Once you become an expat, your UK pension schemes are automatically frozen; therefore, you can make any further contributions.

As a UK pension holder, you will be required to buy an annuity by the age of 75 so you lose ownership of the investment in return for an annual payment which is subjected to UK.

Upon your demise, the pension can be half the original amount and cannot be passed to children.

A QROPS scheme can be based on neutral jurisdiction such as Gibraltar where your pension rules allows certain benefits and greater flexibility that UK pension plans.

QROPS South Africa Explained

What Are The Benefits Of A QROPS In South Africa

  • Income payments and investments can be denominated in different currencies to reduce risks of currency fluctuation
  • Pension can be passed on to beneficiaries after death
  • Great flexibility of income payments

QROPS In South Africa Tax Planning

A QROPS offers significant tax planning opportunities. Click To Tweet

Tax deduction from UK pension contribution on death could be up to 82 percent. QROPS can reduce such taxation.

When you speak of pension, what comes to peoples’ minds is retirement income.

Do you know what a UK pension plan is? We have a detailed article to give you all the details. Make sure you check it.

But the flexibility that QROPS brings in regards to investment content and the ways assets in the scheme can be distributed brings a completely new dimension on their importance in financial planning.


BONUS: CLICK HERE to get extra insights about the benefits of transferring a UK Pension to a QROPS.

Pension Planning For UK Expats

Soon or later, you will need to choose where you want to liver after retirement.

Many expats choose a country with nice weather, delicious food or where they enjoyed living while still working. While all these factors matter, you will need to keep in mind:

        • The possibility of extra taxes
        • How you will take care of your medical bills
        • How the country you want to retire handles inheritances

Why A Retirement Annuity Is Important For You

A retirement annuity (RA) is an investment that is meant to help you save for your retirement.

Retirement Annuities contain several investments in property, cash, shares and bonds. Click To Tweet

Some companies appoint experts to help members with pension planning in South Africa. If you have extra money, you can make ad hoc payments.

Retirement annuities can only be accessed when you are 55 years and above. While this may look like a disadvantage to some people, it is actually a saving grace to many.

When you reach 55 years, you will be given a lump sum with a portion of your RA while the remainder is converted into a monthly income.

There are many reasons as to why you plan for your pension.

QROPS Africa

BONUS: CLICK HERE to get extra insights about the benefits of transferring a UK Pension to a QROPS.

Advantages Of Pension Planning In South Africa

It takes care of your family when you pass away

Your retirement annuity will be paid to your family and loved ones when you die, estate fees will not claim upwards of 50% of your beneficiaries inheritance.

Your eggs are placed in many baskets

Retirement annuity can be thought of as box containing a range of investments.

Although it feels like single investment, you are actually investing in all the main classes and a range of companies in different industries.

A retirement annuity allows you to invest up to 20% of your money in QROPS In South Africa without clearance from the South African Reserve Bank.

You are safe from creditors

No matter what, your creditors can’t touch your retirement annuity.

This is very important to small business owners

Self control

It instills self control because you can’t get your retirement annuity until you are 55 years old.

Many people, about 80%, put in the pension fund at least once when they change jobs. Click To Tweet

Putting in your money late has same impact as starting late.

You will be losing your savings and the returns you would earned from the savings over the years of your working life.

You should put your retirement savings in a retirement annuity when changing jobs.

You get to use compound interest to your advantage

When you sign up with for a retirement annuity, you will be forced to save over long periods on time.

This means that your money will start working for you when you start earning returns. When you save for 30 years, you will derive 35% of the income from your contributions.

You also need to speak to a financial advisor so that he/she can guide you on the right investment options for your pension.

Are you wondering what does a QROPS Brexit mean For UK Expats in South Africa?

Why British Expats Should Retire Or Live In South Africa

British expats wishing to retire in South Africa or living in South Africa (for example Cape Town or Johannesburg) can transfer their pension funds into QROPS in South Africa to lower their tax liability.

British expatriates working and living the South Africa can transfer their UK pension offshore to QROPS in New Zealand or Malta to avoid UK taxes.

South Africans who have lived and worked in the United Kingdom and accumulated a significant private pension can transfer their funds out of the UK.

Returning South Africans can also avoid Capital Gains Tax, Estate Tax and Donations Tax if they are looking to start a new pension plan.

South Africa has more than 214,000 British expats. The country has the largest communities of Asian, European and mixed race Africans.

QROPS Pension South Africa

Approximately 80% of South Africa’s populations are black Africans from different ethnic groups speaking different languages, but English is the most spoken language in South Africa.

British expatriates living in South Africa can take advantage of the off their offshore address to avoid UK taxes on their pension and protect their families from high taxation should anything happen to them.

One of the main benefits of QROPS is the multiple currencies that the funds can be disbursed. Click To Tweet

That means that you can hold your pension funds in Dollars, Rand, Euros and Pounds or hold the whole amount in a single currency.

In addition to this, when you die, your family would receive the whole amount as a lump sum cash payout.

In the UK, they could face a 55% tax charge after your demise and up to 45% income tax.

Benefits of QROPS In South Africa

  • Avoid UK income tax
  • Avoid UK dividends tax
  • Avoid UK capital gains tax
  • Avoid UK inheritance tax and tax upon death of 55%
  • Currency choice: Your pension funds can be transferred to a QROPS in EUR, Rand, USD or keep it in GBP.
  • Freedom of investment and ability to make higher returns
  • Family protection: Upon your demise, your pension will be passed on to your dearest or next of kin.
  • Security: Your pension will be placed in secure jurisdiction such as New Zealand or Malta, which have their own financial regulations that are tax efficient.

QROPS For UK Expats Retiring In South Africa

A QROPS allows UK pension funds to be transferred offshore to lower UK tax liability. You will also not pay your UK tax on your pension when you are in South Africa or another country. You can also receive a lump sum if you have been living overseas for five years.

If you find the information in this article about QROPS in South Africa useful, don’t miss our in depth publication about SIPPS or QROPS Explained, they will answer all your questions about pension planning.

BONUS: CLICK HERE to get extra insights about the benefits of transferring a UK Pension to a QROPS.