A QROPS (or Qualifying Overseas Pension Scheme) is a personal pension scheme set up outside of the UK (and regulated as a personal pension scheme in the country where it is established), but recognized by UK HMRC. Currently, a popular jurisdiction for QROPS is Malta (a member of the European Union).
QROPS can, in certain circumstances, have tax benefits for expatriates by removing the pension assets from the UK tax regime.
However, given the pension flexibilities and UK tax changes introduced on 6 April 2015 in the UK, some of the original benefits of a QROPS over a SIPP for expatriates have diminished. For example, in the past a Malta QROPS enabled a person to draw their pension from age 50 and take a 30% cash lump sum. However, these benefits are no longer available in order for a QROPS to continue to qualify for UK purposes.
While expatriates living in the US can feel that as they no longer live in the UK, they should only consider a QROPS pension transfer, we at Florin Pensions feel it is important for our clients to understand both the risks and benefits associated with SIPPs and QROPS to make an informed decision regarding what type of pension transfer they undertake.
In addition, for US residents/taxpayers, there are potentially significant US tax implications associated with undertaking a transfer from a UK pension to a non-UK based pension which should be fully considered with your tax advisor.
If you would like to learn more about QROPS, feel free to contact us for an initial consultation.