Qualifying Recognised Overseas Pension Schemes (QROPS) are overseas pension schemes, originally introduced in 2006, for UK residents who wish to move abroad. For an overseas registered pension scheme to be eligible as a QROPS scheme, it must adhere to the requirements of the HMRC.
Understanding what QROPS are can be quite difficult, so we have compiled some information to help you learn more about what is involved in these pension schemes.
Understanding QROPS
QROPS are pension schemes that exist outside of the UK, with the money they receive being transferred from a pension fund within the UK.
They were quite popular when first introduced as they were marketed as a form of tax relief. They were meant to assist in lowering your tax burden, subject to the terms of the pension fund in your new country of residence. However, soon many QROPS schemes were closed down either due to failure to comply with the HMRC’s regulations or due to exploitation of tax loopholes.
If you are considering transferring to a QROPS, it’s important that you get professional financial advice.
The risks of QROPS
All QROPS need to adhere to the standards of the HM Revenue and Customs (HMRC) and any schemes that don’t meet the standards will be deemed illegal. Some schemes that were originally allowed by the HMRC can later be declared ineligible, and your pension could be at great risk.
The following are some of the risks of an illegal QROPS fund;
- Unauthorised payments and pension transfers are subject to be taxed at 55%
- Transfers are subject to large commissions
- You lose the original benefits from the original UK pension fund
While the possibility of having a tax free pension or avoiding UK tax might sound appealing, transferring to QROPS can be quite an expensive endeavour. You want to make sure that you are prepared for the risks involved, and that you go with a credible fund.
Are you eligible to claim
QROPS have been mis-sold to many people, which can be quite devastating if your pension fund ends up being negatively impacted. Financial advisors might not always have your best interest at heart, and you could fall victim to someone making false claims and assurances.
Your pension fund is meant to be your savings to help you retire gracefully and comfortably. If you have been mis-sold a QROPS, there are ways you can try to claim compensation and help save your future.
To claim, you need to demonstrate;
- Your personal circumstances were not properly considered at the time
- You were not advised of the risk of QROPS
- You were recommended to make a lump-sum transfer of your entire pensions savings to your QROPS
- You were told that it was mandatory/necessary for you to transfer your pension to a QROPS
At RTR Claims we can assist you with your claim, and help take the stress out of the process. We work on a No Win, No Fee basis, so we only charge if we win your case.
Book your free consultation today, and get your future back on track.