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Move your Pension Abroad



How to Move your Pension Abroad

It seems that the legislation surrounding QROPS (Qualifying Recognised Overseas Pension Scheme) has never been far from the pages of personal finance news since the scheme's introduction in April 2006. It was a welcome change then and even through all the legislative changes since then, it remains a popular scheme today. The purpose of the scheme is straightforward. It allows those living abroad, or planning to leave in the next 12 months, to transfer their pension to an overseas pension scheme provided it adheres to the rules of the scheme. Most of the publicity surrounding the scheme has concerned the retired 'ex-pat' community who live abroad and are already receiving their pension. The scheme though is also applicable to those who are leaving the UK to work abroad.


Why do people want to transfer their pension abroad?




There are a number of reasons why people are keen to transfer their pension to an overseas fund. If someone is moving overseas to work permanently, for example, it may be better to transfer their existing pension to a new scheme provided by the employer. This will at least simplify things and overcome the complexities of contributing to and managing two different pensions in two different currencies. In the case of those already retired and living abroad, the need for a pension transfer to an overseas fund can be even more pressing. Having a UK Sterling based pension can result in currency conversion charges which erode the value of the pension payments. Income can also be adversely affected by changes in currency exchange rate between the UK and host country.


The benefits of moving your pension abroad 




The QROPS scheme was set up by HMRC in recognition of those issues described above. It makes sense for those working abroad to be able to consolidate their pensions with their new employer's scheme. It is also reasonable that pensioners living abroad should be able to receive their pension in the local currency, free from exchange charges and also free from the currency market fluctuations which can reduce their income and cause real hardship. In addition to those benefits however, many people are attracted by the potential tax savings to be made by moving their pension abroad. For many, these savings could be considerable.


Choosing to move your pension abroad




Tax savings are one of the main drivers for those considering a pension transfer to an overseas provider. In the UK, tax could be as high as 50%, but these overseas schemes are subject to the tax regime in the local country and in some cases the tax bill could be zero. This is a big step though and should be taken with care. If the pension scheme chosen does not match HMRC's rules, tax of 55% could be levied. This is also the case if a scheme on the list is subsequently withdrawn. Foreign schemes are not covered by the FSA and anyone selecting an overseas scheme should be clear about the benefits and protection they are receiving compared with those they are giving up. For many this is an excellent choice but care should be taken that the company organising the transfer are recognised by the relevant authorities both in the UK and host country.

Company’s Profile:




Expat & Offshore is an online consumer resource for those seeking information and advice pertaining to matters related to expatriate life and offshore finance. For more information, please visit - http://www.expatandoffshore.grops/


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