Overseas Pension QROPS
Moving abroad and retiring abroad are often the top of a list or peoples things to do at Retirement. We can live abroad why can’t we take our pension with us, well with the freedom of trade laws you can do exactly that.
A Qualified Registered Overseas Pension Plan allows you to take your pension with you to the country you live in, here’s how it works…:
You have a pot of £100,000 with a UK provider, you are offered an annuity rate of £5000 and decide to look at alternatives. You like the idea of a drawdown as it allows you to invest the money as you wish and take an income of £6000 but that income is taxed at UK rates.
A Qrops will allow you to take £6000 income from the pot, you will be taxed at 2.5% (gibraltor tax) and the income tax of where ever you live or reside at the time of taking income. You can also take out 25% tax free cash if you want to.
What are the benefits of QROPS, will yes it may cost a bit more, usually an extra £650 per year on top of a drawdown plan. Although unlike a drawdown plan if you died and your spouse, partner or estate wanted to take the pension as a lump sum then they would be charged 55% tax, in a QROPS there is no tax to pay on this amount.
A drawdown is very similar to a QROPS but the advantage of a QROPS is the tax implications on income and the tax implications on death, i.e no 20% income tax and nil tax on death. It will cost you more for the plan itself but you may well get that money back on saved tax every year so really its a no brainer as the tax benefits on death are so advantageous.
Please get in touch and we can get you some quotes for your QROPS plan.