We thought it would be useful to bring to your attention the attractions and versatility of QROPS for the UK non-resident who has come to live in Spain. In particular, for those who left the UK more than five complete UK tax years ago i.e. before 6 April 2006.

A QROPS is a Qualifying Recognised Overseas Pension Scheme. It is a mechanism that allows an expat with a UK pension fund to transfer their fund to an overseas location.

QROPS have become much more accessible over the last few months as we have seen new schemes and jurisdictions open up. This has resulted in more competition accompanied by a reduction in fees and greater choose and options available for our clients.

What are the key benefits of a QROPS:

Before considering jurisdictions and costs the key benefits of having your pension fund in a QROPS as opposed to in a UK scheme include:

Greater flexibility of benefits – a higher lump sum can be possible if required.
Tax efficiency - on taking benefit from a QROPS. If structured correctly income taken will be taxed in Spain at between 1.6% and 2.6%.
Protection for dependents - following the QROPS member’s death a lump sum or income is available. With lump sums no UK tax is payable whereas in a UK scheme tax at 55% will typically apply.
Greater investment flexibility.

The importance of expert advice

With schemes based in countries including Guernsey, Isle of Man and New Zealand available which is the best jurisdiction to choose? What is the best scheme to suit your particular requirements?  Well that is where expert advice is required. 

It is not going to come from those who “dabble” - arranging the occasional QROPS with a main motivation of making as much commission as possible from investments. Rather, it will come from experts who understand the UK pensions system in depth as well as the systems operational in the main QROPS jurisdictions.

Getting it wrong can be costly

There are for example two types of Isle of Man QROPS.   One of these is totally unsuitable for residents of Spain as when income is taken a non-recoverable tax of 20% will be applied.  Of the available Guernsey schemes, some are cost transparent whereas others will have you believe they are as cheap as chips (even “free”) whereas the truth is rather different.

New Zealand and capital lump sums

New Zealand schemes are generally for those with smaller funds and who would prefer to receive an immediate lump sum.  Funds that are left invested in New Zealand schemes are subject to tax at around 1.4% p.a. but the abolition of this tax expected later this year will suddenly make New Zealand an attractive longer term place to hold your pension fund.

For further information about QROPS and Pension Planning opportunities please email This email address is being protected from spambots. You need JavaScript enabled to view it.">This email address is being protected from spambots. You need JavaScript enabled to view it. (M: 697 557 324) or see http://www.prempensions.com and http://www.qrops.es quoting ref: IT0911

Additional information