Transferring Your UK Pension to an Indian QROPS
If you are moving to India from the UK, before you embark on the big decision of transferring your UK pension to a QROPS in the Asian country of India, it is hugely important that the Lifetime Allowance (LTA) is looked at very closely.
For those unaware, the LTA is the limit placed on the total value of a retirement fund that a person has been able to accumulate throughout their life whilst paying into their pension.
If you are considering a QROPS transfer to India, you should know the LTA maximum is 1.25m pounds. British Indians and UK non-resident Indians who try to transfer more than this amount will be taxed on the excess at 55% if it is a lump sum or 25% if they take it as a pension.
The government has also come under pressure to reduce the LTA again to 1m GBP in future budgets.
Who Should Think About a QROPS Transfer to India?
British Indians moving to India and British expats retiring in India should think about transferring their pensions immediately if they have a pension near to a million pounds as otherwise they could breach the limit and end up paying hefty taxes on their hard earned pension pots.
Transfer NHS Pensions to India
There are many jobs in London for Indian graduates and Indian doctors. Those who have paid into a UK pension for many years and think about transferring their UK pension overseas to India should seriously consider moving money overseas to a QROPS transfer to India.
Anyone who has worked for the NHS full time will have built up a pension scheme. If you are a British or Indian, you can transfer NHS pensions to India. Please contact us to find out more.
Financial Planning for Retirement in India
For Indian nationals who are paying or have been paying into a pension in the UK, there are many benefits in transferring their golden nest egg into a QROPS when or if they decide to leave the UK. One of which is tax-efficient benefits among many others. Moreover, these schemes are known and recognised by HM Revenue & Customs (HMRC), and QROPS in general will accept many pensions from the UK.
Anyone who isn’t familiar with QROPS will find the following interesting. QROPS stands for ‘Qualifying Recognised Overseas Pension Schemes’, and regardless of your career a QROPS transfer to India will be worthwhile and available to both British Indians, British expats moving to India and UK non-resident Indians who want to retire abroad.
Any Indian doctor who has worked in the UK or Indian engineers or Indian small business owners who have worked in the UK, but want to retire overseas can look into a QROPS transfer to India.
Pension Schemes in India. Transferring a Pension Still Requires Major Consideration
Why? You may ask. Well the answer is simple, it is because a QROPS will allow an individual to settle anywhere they want in the world and this even includes India. With the country’s growing economy and mix of modern and traditional cultures, why wouldn’t anyone want to settle in India?
There are many aspects to consider when moving a pension pot into a QROPS in India, and they will be dependent on the size of the nest egg itself and the amount of tax they will be exposed too. But the fact remains that there are benefits and guaranteed issues associated with transferring your pension pot to a QROPS in India, all of which need careful thought and consideration.
Popular pension schemes in India include the Life Insurance Corporation of India, SBI India, NPS India (National Pension System) launched by the Government of India and HDFC life in India. Not all are suitable for QROPS transfers to India though and often, if you want to target higher returns, it may be best to transfer your pension to another tax advantageous country offshore, outside the UK tax net and have your pension paid into your Indian bank. That way, you get the best of both worlds, no UK taxes and higher returns.
Money Transferred to a Pension Plan in India
How much is enough to retire in India?
Indian pension schemes often pay out low annuities which can reduce your pension income if you transfer your British pension to an Indian pension fund. A UK pension transfer to India may not always be the preferred option. Many Brits moving to India opt for a QROPS in Gibraltar to avoid UK taxation. This gives them the freedom to invest where they want in the currency they want rather than transfer to one of the new pension schemes in India.
Those seeking retirement in India and looking at pension plans in India should also ask for advice from a professional and look into transfers to QROPS in Gibraltar.
We see a lot of British Indians who choose to transfer their NHS pension to India in order to get their pensions out of the UK and make sure they get better returns whilst paying their pension into their Indian bank at retirement. This could be paid into a bank in Delhi or bank in Mumbai for example. Expats in Delhi often hold their Indian pension funds offshore in Gibraltar in GBP or USD and then choose when to have their pension paid into Indian Rupees depending on the favourable exchange rates. Many smart Indian businessman choose this option for best managing money transferred to a pension plan in India.
What to Consider When Transferring a UK Pension to India
So, if you have just decided that you are going to be moving back to India after hopefully enjoying your time in the United Kingdom, one of the things that will need to consider is whether to choose a Gibraltar or Malta QROPS.
A QROPS in Gibraltar sees the individual pay a flat rate of tax in Gibraltar and your pension funds are paid into a bank in India or an offshore bank whereas a QROPS in Malta would see your Indian pension taxed in both Malta and India – the tax is shared. If a transfer to a QROPS in India is the preferred option then there are some QROPS which are based in the Indian currency of Rupees. However, the benefits of this are not as appealing as the benefits associated with transferring your pension to Malta or Gibraltar where you have almost a free reign to invest wherever you please.
Whether you are an Indian doctor who has worked in the UK and want to transfer your NHS pension to India or you are looking for the best pension schemes in India or if you are looking for experts on the best qrops transfer to India, you have come to the right place.
Please email us for more.