This week we are talking about QROPS increased flexibility – facts and myths? There are lots of websites that target expats encouraging them to transfer their UK pensions offshore. Every week, we will look at the most popular reasons, often cited as 10 Reasons to use a QROPS by overseas websites for moving a UK pension to a QROPS, one by one. How many of these reasons for moving to QROPS are valid?
This is our seventh article and today we focus on the extensive use of QROPS increased flexibliity.
The reason given for transferring to a QROPS is increased flexibility, compared to UK alternatives. We will compare QROPS with the UK equivalent, the SIPP and look at QROPS increased flexibility.
QROPS increased flexibility?
From April 6th 2015, the UK introduced flexible access for UK pensions.
You can read about it here HMRC Pension Flexibility
Does the statement “QROPS increased flexibility” hold any water? The HMRC website states
“From 6 April 2015, from age 55, you can access as much of your savings from your defined contributions pension scheme (also known as ‘money purchase schemes’) as you want under new ‘pensions flexibility’ rules.“
You cannot get more flexible than that. For those QROPS not in the EU, there is a requirement for “Income for Life”, meaning that only 30% can be accessed as capital and the rest must provide income within preset guidelines. Not flexible at all in these cases.
QROPS from 2017
From April 2017, all QROPS ( ROPS ) outside the EU will be allowed to have the same flexibility as UK pensions. However, the schemes must be approved by a local pension regulator or they will be removed from the HMRC list.
At time of writing, Gibraltar would not meet this criteria and will have to adopt its rules to meet the requirement to stay on the HMRC list.
Assuming, by April 2017, QROPS outside the EU meet the criteria will “QROPS increased flexibility” now be correct?
No. The clue is in the comment “the same flexibility as UK pensions”.
There may be genuine reasons for considering a QROPS but increased flexibility is not one of them!
This is the seventh article about 10 Reasons to use a QROPS- the facts and the myths and we will be publishing more soon
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published in 14th December 2016
- HMRC QROPS list- Suspended
- 10 Reasons to use a QROPS – the facts and the myths – 45 % UK pension tax (2)
- 10 Reasons to use a QROPS. Facts and Myths, Leaving UK Pension Legislation Behind (8)
- Guernsey Pension. QROPS and Flexible Access Rules 2016
- New Zealand QROPS pensions – do they stack up for those not living there?
Share this story