Qualifying Recognised Overseas Pensions (QROPS)
If you are thinking about enjoying your retirement outside the UK, then a QROPS pension transfer offers a number of advantages, none more so then to avoid the pitfalls of UK pension tax and regulations. Recognised by HMRC, most expat UK pensions can easily be transferred into a QROPS, as long as the overseas scheme is registered with HMRC and is fully compliant with the standards of the jurisdiction it is domiciled in.
A Qualifying Recognised Overseas Pension Scheme gives you greater control of your pension at retirement and provides valuable benefits for your spouse and your children.
Premiums and income can be paid in different currencies
Consolidating all your pensions into one
No annuity purchase required
100% of your funds can be received by a surviving spouse, and or surviving offspring
Free from UK inheritance Tax after five years
Greater freedom in your choice of investments
30% tax-free lump-sum available from the age of 55
No capital gains or income taxes will be applied to the investments within the scheme.
Qualifying Non-UK Pension Scheme (QNUPS)
QNUPS is an overseas pension scheme in which cash and assets that are non-UK tax relieved can be contributed.
A QNUPS needs to satisfy similar conditions as a QROPS and broadly enjoys the same benefits, but with some added advantages:
Trustees are not required to report to the HMRC
There is no limit to contributions
Income can be in the currency of your choice
Immediate exemption from UK taxes should a death occur
A broad range of assets can be included
No need to become non-UK resident or domiciled
You do not need to have any earned income from employment in order to make a contribution
The pension fund can be used by the member during his/her lifetime and any balance can be passed on to their chosen heirs upon the member’s death.
Who is QNUPS suitable for:
Individuals wanting to save for their retirement.
High net worth individuals who wish to top up their pensions tax efficiently.
Anyone concerned about restrictions on UK Lifetime or Annual allowances.
Individuals who would like to place residential “Buy to Lets” in their retirement plan.
Foreign nationals with a potential UK IHT exposure.
Expats who retain their UK domicile status with potential UK IHT exposure
OPES International Pension Plan
OPES provides one with a flexible, tax-efficient, retirement and succession planning vehicle to protect and consolidate your wealth in a secure environment, in this instance Guernsey.
Key recognised advantages are:
Designed to qualify for an exemption from Income Tax in Guernsey, thus tax-neutral for non-Guernsey residents
Plan is not subject to EU Savings Directive and typically falls outside of your estate. On your death, your plan's asset will be passed to your Beneficiaries without going through probate
Depending on the country of your tax residency, there is no requirement to report to the tax authorities before commencing benefits
Freedom to set the level and frequency of income and lump sum benefits
Benefits available from age 50
Access to wide range of investment
Control of your portfolio
Lifetime benefits enables one to structure an income using a variety of options including an annuity, an annuity certain and/or a lump-sum
Retirement Plan for Non-resident US clients
If you hold a U.S. citizenship, you are obliged to disclose your entire worldwide income to the IRS on an annual basis, irrespective of your residency. Furthermore, as a result of the Foreign Account Tax Compliance Act (FATCA), many financial institutions have made it exceeding difficult to serve US taxpayers, even as going as far as liquidating and/or closing down existing accounts.
Another disadvantage faced is the treatment by the authorities of Passive Foreign Investment Companies (PFICs). In board terms, this is classified as any non-US entity which does not contribute income to the US, which in essence is 99% of non-US funds. Investments including PFICs are taxed at a higher rate and require onerous reporting.
The International Retirement Plan (IRP) exclusively geared for Non-Resident Americans combats most of these issues, offering the following:
Fully IRS compliant and reported pension scheme, recognised for US tax purposes
Growth made in the plan is not subject to US tax
Assets can be managed in an offshore structure without PFIC charges, reporting or restrictions
Distributions can be taken from age 50, irrespective of residency or employment status
Up to 30% can be taken as an initial lump sum with no US Federal tax
Only the growth element on the fund is subject to US tax if and when the member draws down
Income payments are paid gross