As an Indian national, if you have a pension in the UK and either live abroad or are planning to, moving your pension fund out of the UK offers substantial benefits.
Qualifying Recognised Overseas Pension Schemes (QROPS) are the schemes compliant with HM Revenue and Customs (HMRC) rules which can accept any number of UK pensions, and dramatically alter your standard of living later in life.
As well as the tax-efficiency benefits, by transferring your pension into a QROPS you will be able to choose from a much larger range of investments, and have more freedom and control over your pension income.
The benefits
Compared to leaving your fund within the UK, the benefits of transferring your fund are vast. By transferring you can:
- Pass on 100% of your fund when you die
- Ensure your pension does not incur UK income tax
- Receive a tax free lump sum of up to 30%
- Grow your fund using a large range of investment classes, including stocks and shares, gold, and bonds
- Consolidate all UK pensions into one easy to manage pot
- Protect your pension from UK’s Lifetime Allowance (due to be reduced to GBP 1.25 million this year)
- Receive pension income in most major currencies, including rupees.
New thinking from HMRC
Throughout the schemes’ history, HMRC has refined the rules to ensure that you, as the customer, remain protected during a transfer – and also ensure the QROPS legislation is not abused.
One of the most recent announcements came after a court case concerning the ROSIIP scheme based in Singapore.
HMRC has now publically announced that it won’t take legal action (specifically against pre-September 2008 transfers), unless there is evidence suggesting “dishonesty, abuse, artificiality or any similar circumstances”.
The ruling has helped both advisors and clients alike by highlighting that as long as the transfer is made within the spirit of the QROPS legislation – that is to provide an individual with a more suitable vehicle to receive pension income outside of the UK – their pot will be protected.
Choosing a jurisdiction
If you are moving or have moved back to India, the QROPS jurisdictions of Malta and Gibraltar are two of the most stable and secure options to consider.
The choice between them depends on the size of your fund; and whether it is more beneficial to pay two smaller tax rates (Gibraltar), or one larger rate (as in Malta).
Ultimately, making the right choice will depend on you finding the right advice – which is why it is imperative you consult with a regulated, independent financial advisor.
You need to ensure your provider is not only well versed in QROPS transfers, but has experience in the transfers for Indian nationals and citizens.
An experienced IFA can therefore research your needs – including factors like the size of your fund, your current country of residence, and whether you plan to move to a different country in the future – and find the most suitable scheme for your circumstances.
To benefit an IFA experienced in the Indian QROPS market who can marry up your needs to the most suitable scheme, please complete the contact form to the right of this page.