Forget the glossy brochures and time sifting through technical information and get to the nitty gritty – what can a QROPS do for you?
Well, you gain all the benefits of a UK personal pension and then some.
Four key points to think about are these:
30% tax-free lump sum
While your UK pension is capped to pay a 25% cash lump sum, most QROPS will go that extra 5%.
So, if two expats are sitting around a pool in Thailand, one has a UK pension and the other has switched to a QROPS, our QROPS saver picks up the extra cash for nothing.
For a pot of £100,000, the QROPS pays a tax-free lump sum of £30,000, compared to £25,000 paid by a UK pension provider.
Whether you are a hands-on investor who likes to take control of your pension savings or someone happy to leave a fund manager in charge, there’s a QROPS out there for you.
Part of the QROPS transfer process is gauging your appetite for risk.
QROPS have access to far more investment opportunities than a typical UK pension. Instead of a restriction to UK markets, bonds and funds, investors now have the whole world to choose from.
Money transfers between the Pound and foreign currencies are a pain for expats.
UK pensions pay in Sterling, which has to be switched to a local currency somewhere along the line. That transfer means a bank or broker is taking a slice off your money.
Add to that fluctuating exchange rates, predicting when a currency is strong or weak against the Pound is almost impossible and the result can be you have less to spend in the bank.
QROPS can be denominated – jargon for set up – in many different currencies. Pension payments are made directly into a bank saving time and hassle.
If you have money left in your QROPS when you die, your estate pays no inheritance tax in the UK.
If your beneficiaries are UK resident, they might have to pay income tax, depending on your age when you die – the key age is whether you are over or under 75 years old.
A QROPS won’t make you a superhero or more attractive, but transferring your pension overseas can improve your wealth.