Transferring Your UK Pension to a ROPS

Transferring your UK Pension Scheme to a Recognised Overseas Pension Scheme

A Recognised Overseas Pension Scheme or ROPS, formerly known as a QROPS, is an overseas pension scheme which HMRC will allow transfers into. You can transfer your UK pension scheme(s) to a ROPS if you are planning to retire abroad and live abroad for many years.

Who is a ROPS not suitable for?

If you are just working for a company offshore for a couple of years and then returning to retire in the UK, a ROPS is not suitable for you.

If you have a final salary pension and your pension is “in payment”, it is difficult to transfer as it is up to the discretion of your current UK pension custodian.

If you have a public sector final salary pension, you cannot transfer to a ROPS.

You cannot transfer a UK state pension to a ROPS.

A ROPS is not suitable for small UK pension pots of less than 50,000 GBP

Who is a ROPS suitable for?

A ROPS is suitable for expats who wish to retire offshore permanently

A ROPS is suitable for a someone who has worked in the UK and will live offshore for 10 years or more before returning to live in the UK

A ROPS is suitable for SSAS pension transfers, private pension schemes, defined contribution or money purchase schemes, private sector final salary or defined benefit schemes and stakeholder or corporate pension schemes.

What are the the ROPS rules?

ROPS, formerly QROPS are also known as “Relevant Non-UK Schemes (RNUKS)”.

The ROPS conditions – The ‘70% rule’

Draft legislation which HMRC put forward for consultation in December 2014 removed the requirement for ROPS that 70% of the amount transferred has to be used to provide a pension member with an income for life.

But, the final version was originally published on 13th March 2015, but came into effect on the 6th April 2015. The main amendments to the consultation draft of the regulations is that the 70% rule has not been removed. This means that from April, some schemes will still need to meet the 70% requirement to be a QROPS.

The rule will remain in place temporarily while the regulations are reviewed to ensure the principles behind allowing transfers to be made free of UK tax can operate as Parliament intended.

This will effect different ROPS in different ways. A Malta ROPS, formerly known as a Malta QROPS does not have to apply the 70% rule as it is in the EU, whilst a Gibraltar ROPS has to abide by the 70% rule.

What are the Benefits of a ROPS Pension Scheme?

A ROPS pension scheme:

(1) Often allows zero tax on death (Malta, NZ, Australia, Gibraltar) or a very low tax (7.5% in the Isle of Man).
(2) Reduced income tax. For example a Gibraltar ROPS has only a 2.5% flat rate income tax. If you move to Malta, you may be able to avoid tax altogether or at least reduce your income tax, but depends where you will retire and the Double Taxation Agreement involved.
(3) Allows you to transfer your pension to the currency of your choice.
(4) Allows much greater fund selection for your pension in order to maximise your pension pot.

How Do I Transfer My Pension to a ROPS?

You need to contact a ROPS specialist. They can guide you through the forms and make sure you transfer your pension to the optimal place for maximising your pension pot.