What You Need To Know About Your UK Pension In South Africa

Qualifying Recognized Overseas Pension Scheme or QROPS is a designation by Her Majesty’s Pension Scheme Customs or HMRC of a Designation Overseas Pension Scheme or ROPS that accepts pension transfer from UK pension schemes, without the transfers being taken as a benefit crystallization event.

This means that

British Expats can transfer the pension to Qualifying Recognized Overseas Pension Scheme. Click To Tweet

and the interesting thing is that they can do so without being charged any tax on transfer.

This also means that they don’t need transfer to their country of residence, but they can choose a jurisdiction with pension tax rules which could be beneficial to them.

Understanding A QROPS Pension Scheme

If you are planning to relocate from the UK to another country or you are already in another country overseas, it is important that you explore your options of transferring your UK pension into a Qualifying Recognized Overseas Pension Scheme.

There are a few requirements that you need to keep in mind if you are looking to take advantage of a QROPS:

  • You must be between 18 and 75 years of age
  • Your pension must be occupational or private. Note that state pension cannot be transferred through the scheme.
  • Your UK pension must have a transfer value over £25,000 or £100,000 if USA is your country of residence
  • You must be annuity-free
  • Those with final pension scheme are required not to have taken the payment
  • You are either living abroad or you will be relocating in the next 6 months

QROPS UK Pension Scheme

It is important that you get specialist advice because each transfer is as individual as you are.

You will need to find a good financial advisor with an extensive experience in this field.

What Are The Benefits Of Using A QROPS

Transferring UK pension into a Qualifying Recognized Overseas Pension Scheme comes with a number of benefits that could be very attractive to British expats.

The QROPS benefits include:

  • QROPS can be passed to family members and loved ones tax free
  • Possibility of transferring the pension you have accumulated in the United Kingdom into one QROPS
  • You will pay less tax when claiming your pension

Retirees can pay any required income to finance their retirement and unlike a UK pension scheme, it is very much possible to transfer the pension to heir upon one’s demise.

The tax efficiency and flexibility of transferring UK pension into a QROPS is something that expats should take advantage of.

However, it is important that you choose the trustees, jurisdictions and other parties correctly.

If you are looking to transfer your UK pension into a Qualifying Recognized Overseas Pension Scheme then you are definitely making a good decision.

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

UK Pension Transfer

An increasing number of people are leaving the UK in favor of other countries. Click To Tweet

One of the most pertinent challenges facing such people is the need to transfer their retirement funds to the new country of residence.

The good thing is that the HM Revenue & Customs (HMRC) has given such people an opportunity to transfer the funds to an overseas pension scheme.

Having said that, it is worth exploring the requirements and conditions of effecting such a transfer.

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

How To Transfer My UK Pension To A QROPS

To start with, the overseas pension scheme must be a qualifying recognized overseas pension scheme (QROPS).

A QROPS is a pension plan that is set up outside of the UK but is regulated by authorities of the country in question.

Such a QROPS must notify HMRC and detail its conformity and competency to transfer UK pension funds. By extension, it must inform HMRC when it ceases conformity to HMRC.

Second,

HMRC, through its website, has provided a comprehensive list of QROPS schemes. Click To Tweet

Generally, this entails providing the name of the scheme and the territory or country in which it is located.

The list is updated twice every month. One can seek further information on the same from an investment adviser or from the UK pension scheme administrators.

Third, there are various forms that one must fill out and forward to HMRC in order to effect the transfer.

Failure to which will translate to an unsuccessful application.

These are the following:

  • APSS251 (Notification to HMRC)
  • APSS251a (Change of Details)
  • APSS251B (Change in status and notification of fund value)

QROPS UK Scheme Transfer

Fourth, one must meet the income, residency, and employment conditions and requirements of the receiving scheme.

However, there are opportunities available for a personal pension plan.
Lastly, there are certain requirements that one may face regarding taxation of their retirement funds.

For example, payments that are derived from an may attract tax depending on when one was a UK resident. One may receive tax benefits as well depending on some circumstances.

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

How To Transfer My UK Pension To A QROPS From South Africa

An increasing number of British pension holders are choosing South Africa as their retirement haven. Click To Tweet

QROPS benefits include and not limited to receiving pension income with your preferred currency, selecting an ideal investment option from a variety of assets, flexible rules, and the ability to pass down the fund to your loved ones.

South African residents who are considering QROPS ought to put into consideration pension planning opportunities which are provided by Malta and Gibraltar who are members of the European Union.

This is because they enjoy the freedom of European legislation and are therefore not vulnerable from being delisted by HMRC. Guernsey used to be a popular choice of pension funds planning, but unfortunately, it was de-registered by QROPS.

The value of a solid pension plan cannot be underestimated. When making pension decisions pertaining a transfer to a QROPS, it is advisable that you seek more information from the UK pension provider or a financial adviser.

UK QROPS Pension Scheme

In addition to that, it is important to liaise with professionals of the overseas pension scheme. Typically, transferring your takes around three months from initial application to completion.

Overall, being informed about the transfer process plays a critical role in effecting a successful transfer of the pension plan.

If you are trying to understand your options for transferring your pension, have a look at our in depth article on QNUPS.

This is a non ministerial department under UK government responsible for the collection of taxes, payments from state support groups.

HMRC works mainly around four operational groups.

The groups are:

  • Personal tax
  • Benefits and credits
  • Business tax
  • Enforcement and compliance

QROPS UK Pension Scheme

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

The department of HMRC is responsible for the collection and administration of any direct taxes which includes income tax, corporation tax; variety if capital taxes such as inheritance tax and capital gains tax and various indirect taxes including VAT or value added tax, stamp duty land tax and excise duties along with environmental taxes like the climate change levy and Air Passenger Duty.

Other different aspects of the HMRC department’s responsibilities comprise of National Insurance offerings, the circulation of child benefits and fringes and some other common forms of state’s support together with the payments of Tax Credits, Child Trust Fund, enforcement of the national least wage, managing anti-money laundering and registrations for Money Service Businesses or MSB as well as the collection and publication of the trade statistics of -in-goods details.

UK Pensions

HMRC is also a law enforcing department looking for crimes and subsequent solutions in the genre of basic and general fiscal crimes.

They track crimes like drug trafficking, human trafficking, illegal immigration, alcohol and oil smuggling, diamond and other precious metal smuggling etc.

They look for the previous crimes and criminals associated with them and track their activities. They work alongside customs department to prevent such kind of crimes.

The specialty of HMRC is that they look for patterns in the crimes of smuggling and trafficking and can track the criminals even before the commencement of such crimes.

The HMRC And QROPS

QROPS is the acronym of Qualified Recognized Overseas Pension Scheme. Click To Tweet

This program was launched in 6th April 2006. QROPS works alongside HMRS and provides the pension and other financial benefits to the qualified beneficiaries living or working outside the country’s borders and offer them some very easy financial lenience.

To qualify as a beneficiary of QROPS, HMRC must clear the accounts of the applicant of any charges and anomalies. The practice of QROPS is becoming more and more popular among the British Expats in the recent times.

The main reasons behind that particular popularity being the investment and currency flexibility, the advantages in tax deductions, and the option of having a beneficiary, to whom the amount will be transferred in case of the primary account holder’s death.

The program of QROPS is mostly beneficial for the British who were born in the mainland and then moved abroad for career reasons and then wish to retire there.

UK Pension Explained

They can apply for their QROPS account to build up a UK based pension fund from which, they will be financially benefited upon retirement.

A QROPS needs not be established in the particular country where you are retiring, rather you or your associates can move your pension fund to a more tax efficient authority.

This will give you the chance to have your retirement fund paid into the specific country of your living or your choice.

Read more about transferring your UK pension to a QROPS in South Africa, or whether a SIPPS or QNUPS would be a better option.

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