QROPS: Instant access to capital in UK pensions + pass 100% of the capital to your next of kin
Jul 21, 2011 · SpainExpat member · 5 replies · 987 views
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Jurdy and The Expatriator
Jul 21, 2011 · Expatriator
Your post has been edited. Please see above note.
Dec 7, 2011 · SpainExpat member
Having gone through The Overseas Pension Schemes (Miscellaneous Amendments) regulations 2012 in detail.
This looks on face value to stop 100% encashment via New Zealand which is mentioned by name. But we know of a scheme in Latvia who will allow 100% encashment, and I am sure that there more.
However the clause that a QROPS must be recognised for tax purposes in their country of establishment, may stop jurisdictions like Latvia being used.
What it does do is clarify the situation where a client claims to be an innocent party to a breach of the rules. As from April 2012 they will be asked to sign that they understand that if their transfer gives rise to a liability under section 208 (unauthorised payments charge) that a surcharge may be levied.
So if you are looking to try to get 100% cash out of your UK pension be warned!
John M Pye
http://www.waterstone-investment-associates.com/Mar 25, 2012 · Barry Davys
We agree with John although I think we would even put it a little more strongly.
The new law is clear that at least 70% of the fund has to be used to provide an income in retirement. There is still lots of flexibility about the options for this 70% of the fund BUT do not take more than this as a lump sum. The consequences for you and your pension fund could be dire with you loosing upto 55% of the value of your total pension fund.
QROPS are still a very helpful type of planning, especially for the family as a whole. Used as a pension, not a cash cow, they can be a great tool.
Jun 18, 2012 · SpainExpat member
Now that the dust has settled on the HMRC rule changes to QROPS, it is clear that anyone living in Spain should now only consider an EU QROPS jurisdiction.
Given that Guernsey has been effectively closed down to new QROPS transfer business. The strength of Malta as a contender for number one QROPS jurisdiction, seems to remain unchallenged.
Given that Malta has had a DTA in place with Spain since 2006, a Malta based QROPS for a Spanish resident will not create any tax issues.
If you are being offered a QROPS that is not in an EU jurisdiction, get a second opinion.