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QROPS for expats in France

If, like many expats in France, your personal pension fund is one of your largest assets then you鈥檙e sure to want to give it the potential to generate the best retirement income possible.聽You may also have an existing QROPS scheme which have been fashionable and popular up until recently.聽We talk to financial manager Jennie Poate about the QROPS 鈥 Qualifying Recognised Overseas Pension Scheme (now known as ROPS) and how it may benefit expats in France.

QROPS 鈥 What is it?

QROPS is an overseas pension scheme that meets certain requirements set by His Majesty鈥檚 Revenue and Customs (HMRC). A QROPS must have a beneficial owner and trustees, and it can receive transfers of UK Pension Benefits.

The jargon explained:

In a nutshell what it means is that you can transfer your UK pension out of the UK and into an overseas pot which may be more tax efficient if you choose the right scheme. Since the UK Government introduced a new 25% OTC or Overseas Tax Charge on pension transfers to QROPS 鈥 you need to make sure you pick the right QROPS/pension scheme that is right and cost effective for you.

In December 2016 the UK government removed all French pension schemes from its list of recognised QROPS. For expats in France, though your choice of countries for QROPS has narrowed if you want to avoid paying a 25% charge (and who wouldn鈥檛 want that?) if you transfer to a QROPS within another European Economic Area (EEA) of jurisdiction for instance Malta or Gibraltar, you will still gain tax-efficient benefits. 聽If you鈥檙e an expat in say Australia, a non-EEA country, by transferring to a QROPS within Australia, you won鈥檛 be subject to the 25% charge.

What are the benefits of QROPS for expats in France?

Transferring your UK pension to a QROPS means that funds in your QROPS aren鈥檛 included in your Lifetime Pension Allowance (LTA) so growth in the fund is exempt from LTA tax penalties which has now been abolished although the labour party have indicated that this may well be reinstated in some form or another if they gain power at the next election. So, these rules are an ever moving beast. And, there are certain caps in place.

QROPS can be used to manage estate planning as funds may be distributed according to your wishes.

How do you choose the right QROPS

Get expert advice. Before you decide to transfer your UK Pension into a QROPS, we鈥檒l meet with you free of charge and provide you with excellent information so that you can make an informed decision. There are lots of factors we consider. We aim to save you tax and maximise your income and protect your assets. A QROPS transfer may not be right for you and if that鈥檚 the case, we鈥檒l tell you that and we鈥檒l see if there鈥檚 something else that鈥檚 more suitable 鈥 or not.

Is a QROPS still the right option?

A QROPS may still be potentially valid in three scenarios:

  • For those who want to shed UK domicile and have a need to rid themselves of any links that might tie them to the UK;
  • For those who are planning to be long term expats, because if they die 10 years after transfer and at that date they have been non-UK for 10 years too, then they can pass on benefits free from tax on the scheme benefits at source if they die after age 75. Whereas, with a UK SIPP there would be UK income tax on any nominated beneficiary who wants the cash rather than the pension per se.
  • For those who transfer up to the OTC (Overseas Transfer Charge) and retain the balance in a UK scheme, there might be an opportunity to take 25% PCLS (Pension Commencement Lump Sum) from the ROPS and another 25% PCLS from the UK scheme 鈥 however, this loophole might be closed in the upcoming clarification due from HMRC.

We are however finding more and more clients who are resident offshore who are looking at more low cost options for their pensions and away from QROPS.

If you鈥檇 like to find out more or have questions about how to maximise your investments, contact Jennie for an obligation free consultation at: jennie @ abc-eu.com

This communication is for informational聽purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

ABC-EU are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL). ABC-EU is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) 鈥 Licence No. 386/20. ABC-EU is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) 鈥 Licence No. 5101

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