What sort of people are transferring their retirement savings into QROPS (Qualifying Recognised Overseas Pension Schemes) and why?
The main people are those who are already "expatriates" - they may already be resident in continental European jurisdictions or anywhere in the world.
I'm seeing more people who have the intention of retiring or working abroad in the very near future. The main advantage of QROPS that my clients talk about is the absence of a requirement to purchase an annuity or go into what is called alternatively secured pension by the age of 75 years. By moving to a QROPS and being non resident from the UK that ruling largely falls away.
That in itself might not seem advantageous but one aspect that people don’t like about pensions is having to buy this annuity. The concern is that the capital that people have saved up during their life can be lost to their estate at death, which I’m afraid comes to everybody, leaving nothing to pass on to their heirs, their spouse, their beneficiaries.
In a QROPS that requirement to buy this annuity is not there, so people can retain the pension fund for the rest of their life and then on death 100% of that fund value - whatever’s left - can actually pass on to their nominated beneficiaries. There are even more benefits thereafter in that in many jurisdictions in which QROPS exist - places like the Channel Islands and the Isle of Man - no tax is levied on the money paid over.
Now you have got to be careful, some jurisdictions will have some form of death taxes or succession taxes (In the UK we call it inheritance tax). But at least you’ll know if you are in a QROPS environment and you have been non resident from the UK, you’ll have no liability to the UK inheritance tax on the monies that you pass down to your family.