Having provided pension services for a number of years, Moore Stephens has introduced a QROPS trustee, administration and accounting service in the Channel Islands.
Clive Barton, Partner commented, "Being part of one of the world's leading accounting and consulting networks, with in excess of 600 offices located in over 98 countries, we are the only international firm in the Islands providing QROPS. Our service, was developed in response to clients who want the benefits of QROPS but from a provider with the stature of Moore Stephens who is known for providing a quality service at a competitive price."
What is a QROPS?
A QROPS is a Qualifying Recognised Overseas Pension Scheme set up outside the UK, which is both regulated and recognised for tax purposes as a pension scheme in the country in which it is established. It is also fully approved by HMRC.
For Whom is a QROPS suitable?
A QROPS should be considered by non-UK residents who retain benefits within a UK pension plan, it may also be appropriate for UK residents with accrued pension benefits who intend to leave the UK permanently in the near future.
What Are the Key Benefits of a QROPS?
There are a number of key benefits of the QROPS:
- no requirement to purchase an annuity;
- no tax on the pension assets within the scheme;
- pension income paid gross, subject to the QROPS jurisdiction;
- pension payments can be made in a currency of your choice rather than sterling;
- following death, all remaining funds within the scheme can be distributed to chosen beneficiaries;
- freedom to make additional contributions with no lifetime limit / annual allowance;
- increased flexibility, including potentially higher income, when drawing pension benefits;
- wider choice of investment management.
When Can a QROPS be Transferred?
UK pensions can be transferred into a QROPS at any time, as long as the UK pension fund has not been used to buy an annuity. It is also possible to transfer a fund from which benefits are currently being taken through income drawdown.
What Investments Can a QROPS Hold?
During the reporting period (see below) a QROPS operates in a similar way to a UK Self-Invested Personal Pension (SIPP) and can invest in an extensive selection of assets and investment vehicles including but not limited to:
- cash accounts
- fixed interest securities
- mutual funds/collective investments
- commercial property
Investment is not, however, restricted to UK markets and investments can be made in foreign currencies.
Can a QROPS Invest in Residential Property?
Direct investment in residential property is not permitted with UK tax-relieved pension funds regardless of your country of residence or the period of time that an individual has been non-UK tax resident.
In Guernsey it is not possible to release 100% of the pension fund. It is permitted to have 25% of the pension fund as tax-free cash (proposed to be changed to 30%), should this not have already been drawn from the fund before transfer.
The Five Year 'Reporting Period'
The QROPS administrator must provide HMRC with certain information, including any changes that would cause the scheme to fail the QROPS test and payments made to members. The reporting requirement continues whilst the member is resident in the UK and also applies where the member has been resident earlier in the tax year in which the payment is made (or treated as made) or in any of the five tax years immediately preceding that tax year.
After the member has completed five full tax years of non-UK residency, irrespective of when the QROPS is established, the reporting period falls away providing significant advantages.
Opportunities After the Reporting Period
Under current legislation, once the Reporting Period no longer applies, the QROPS fund can be transferred to an alternative pension vehicle which does not have to be registered with HMRC and does not need to comply with the information reporting rules applicable to a QROPS.
Such a structure, known as a qualifying non-UK pension scheme, would offer increased flexibility, including no investment restrictions, therefore enabling investment in residential property, fine wines, antiques and other tangible assets not allowable in a QROPS. The funds within the structure would also benefit from an exemption to UK Inheritance Tax and pension benefit taxes, even in the event that the member subsequently regains UK resident status.
Despite this increased flexibility, it is not possible to release the pension fund as a tax free lump sum.
Moore Stephens - a Unique QROPS Provider
Clive commented "Moore Stephens is a 'one stop shop'; and this is an additional offering in our suite of services. We are able to assess the suitability of a QROPS based on the client's circumstances, and assist with the transfer in of an existing UK pension plan - Moore Stephens will be able to provide tax advice in the UK and comment on the tax treatment of the QROPS fund in the client's country of residence. We can even assist with the appointment of investment advisers drawn from a panel of tried and tested firms, if necessary."
He continued "Moore Stephens has been providing trust and corporate services in the Channel Islands for over 40 years and currently administers structures with assets in the region of US$10 billion. We have structured ourselves so that each client has a co-ordinated client care team. Our success in delivering services to clients is because of these teams and the integrated working relationships that our employees have with other offices in the Moore Stephens International network. We believe clients will choose us as their QROPS service provider as they consider us to be a proven safe pair of hands who will assist them with a comfortable and stress free retirement."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.