Things to Consider When Choosing a QROPS

Choosing a pension scheme can be overwhelming. With many schemes available today, it makes it difficult for people to decide which suits them best

Things to Consider When Choosing a QROPS

Choosing a pension scheme can be overwhelming. With many schemes available today, it makes it difficult for people to decide which suits them best. Qualifying Recognized Overseas Pension Scheme, otherwise known as QROPS, is a popular scheme that is sort by many British expatriates as well as foreign nationals who’ve lived in Britain for a long time.

 

It was introduced in 2006 mainly to allow simple transferring of pensions to another country. It has numerous advantages that make people consider it. But is it the right pension scheme for you? Keep reading to find out.

 

Apart from reducing currency risk, this pension plan provides a retirement income. It’s also not a must for expatriates to purchase the compulsory annuity. However, apart from these key benefits, QROPS also presents several disadvantages which can make one doubt whether it’s the right scheme for them. That’s why people should consider the following factors when choosing this retirement plan.

 

Regulation and Protection

 

Although one’s pension can be invested in financial products across the world, it’s essential that individuals consider whether their pension is set up in an approved QROPS jurisdiction. Some countries in which this scheme is approved offer less protection compared to what is provided in the UK.

 

If your state offers less protection, you’ll have no compensation if anything goes wrong. Or even if you’ll be compensated, it’ll be so little. Therefore, someone can end up losing so much of their money.

 

Regulations, on the other hand, ensure that people only sell legit investments and schemes. It’s therefore wise that one considers these two factors when making their choice. That’s why you should have an expert financial advisor by your side as they’ll recommend jurisdictions which comply with the set regulatory requirements.

 

Consider the Right Jurisdiction

 

If you choose the wrong jurisdiction, you’ll regret your choice of investing in this scheme. Individuals should know which countries they want to retire in as it’ll help them decide on which jurisdiction to choose. For instance, those who prefer retiring in France will not pay income tax twice as this country has a direct tax agreement with the UK.

 

Once you decide to invest in this retirement plan, you should be regularly checking for current changes in jurisdictions. Of course, this task can be overwhelming, but you’ll have peace of mind if you are sure that your investment is secure.

 

Remember that every jurisdiction has enlisted rules and regulations that investors should adhere to. If one is not sure of these regulations, they won’t know what to do in case of certain situations. That’s why you should have an expert financial advisor helping you out.

 

Final Thoughts

 

There are many benefits why UK expats should invest in QROPS. Not only will individuals collect a good amount of pension funds, but they’ll also enjoy tax relief for the time they’ll be working. Then also upon retirement, you won’t pay the British tax on pension income. But even with these solid benefits, some people worry that this deal may sound good to be too. There’s a possibility that HMRC may at one point decide to remove QROPS in the future. That’s why it’s wise you speak with a financial advisor who’s knowledgeable in this field for advice.

Updated Date: 02 October 2019, 13:01

John Thunberbold

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