Any member of a UK registered pension scheme (whether UK resident or resident abroad) has the potential ability to transfer his/her benefits to an overseas pension scheme - provided that the registered pension scheme rules so permit and the rights do not derive from an insured annuity contract.
Normally, a request to transfer pension rights will be prompted by the member residing or intending to reside abroad and by the desire to ensure that all financial resources are coordinated into formats which reflect and optimise the new lifestyle.
Unless pensions transfers from a UK registered pension scheme are made to an overseas pension scheme which has QROPS status, HMRC will treat the transfer as "unauthorised pension payments" and, as a result, substantial tax penalties will be incurred. HMRC maintain a list of approved QROPS in a considerable number of territories across the world - not all of which will be capable of receiving such transfers.
Clearly, moving pension resources out of the UK could lead to tax abuse. As a condition of QROPS approval, the QROPS administrators accept responsibility, during the first five full fiscal years of non-UK residence, to monitor, ensure and enforce that all transactions within the QROPS essentially mirror the UK rules – otherwise heavy UK tax penalties can be applied. At the end of this 5 year period, the relevant members maintain responsibility - and personal liability - for ensuring that residual ongoing HMRC requirements are met.
It is therefore very important to ensure that both the QROPS provider and the members are aware of HMRC requirements, as emerge from time to time – and the ongoing role of a skilled UK adviser is paramount. By contrast it is also essential to ensure that continuing monitoring takes place both of local requirements in the member’s territory of residence and in the domain where the QROPS is located. New local conditions and regulations may dictate a review of structures.
Monaco residents - and residents of a number of other (but not all) - can derive considerable benefits from QROPS arrangements - provided that they are organised with trustworthy providers, located in appropriate territories and structured so as to offer maximum benefit and investment flexibility. QROPS may not, however, be appropriate for US citizens or residents of certain other territories and expert advice is needed in these cases.
In conjunction with our parent firm we offer a unique specialist independent advisory service to assess the need for and the selection of a QROPS.