There seems to be a lot of misunderstanding as to whether individuals with frozen UK occupational or personal pensions have any options to move these offshore. So this article is will briefly clarify the present situation.

In April 2006, it was announced that individuals with UK pension rights who have or will become non-resident in the UK for tax purposes could move their pension benefits out of the UK to a Qualifying Recognised Overseas Pension Scheme - QROPS - with the Revenue's approval. Think of it, if you will, as an International Pension or Offshore Pension.

A QROPS is a Qualifying Recognised Overseas Pension Scheme that can have significant taxation and investment advantages to individuals with UK pension rights who have, or will become non-resident in the UK for tax purposes.

The rules of the scheme should, for the most part, correspond to the rules governing an authorised UK pension scheme. The trustee's of the QROPS must report to Her Majesty's Revenue Customs - HMRC - information about certain events if that individual was resident in the UK for tax purposes during the previous 5 years. The events include:

• The payment of benefits (lump sum, income and death).
• Onward transfer of the QROPS.

If the individual has been non-resident for 5 complete tax years or more HMRC no longer require information to be reported to them.

An individual may wish to establish a QROPS in a jurisdiction with favourable pension rules. Thereby it is possible to achieve significant tax and investment advantages when compared with a UK pension.

HMRC publish a list of QROPS although not every scheme chooses to be on that list.

The principal advantages of a QROPS are:

·         No liability to UK tax* on income from The Overseas Pension.

·         The ability to pass pension assets to the next generation without punitive UK tax charges (currently up to a maximum 82% of the residual pension fund).

·         The opportunity to take up to 25% tax-free cash.

·         No requirement to purchase an annuity or alternatively secured pension (ASP).

·         A wider investment choice** including: residential property, scheme loans, self-investment options (for those who are suitably qualified).

* Provided that you are not resident in the UK for tax purposes.

** Provided that you have not been resident in the UK for tax purposes during the last 5 complete tax years.

If you have a UK frozen pension then you might benefit from exploring whether you should move it offshore.

You can either email me at pedro@eanson.com or call me on 2522 5488.

Regards,