Bob Hendry from deVere-France gives an update on QROPS and how it could help British expats living in France.
What is QROPS?
A Qualifying Recognized Overseas Pension Scheme (QROPS) is a HMRC-recognized pension transfer scheme that is based in a jurisdiction outside the UK but still keeps the same standards or equivalent as a UK pension.
If you are thinking of moving away from the UK but have a local pension, then those savings are easily transferable into a QROPS, provided that the overseas scheme of your choice is registered with HMRC and fully compliant with the standards of the jurisdiction it is domiciled in. The popularity of QROPS schemes has risen considerably following the introduction of new pension rules in 2006 by HMRC.
Is a QROPS suitable for me?
If you have left the UK or are planning to leave, then a QROPS is almost certainly likely to be suitable for you. That being said, it is always essential to consult a professional and get the advice you need before taking steps to set up a pension transfer. Here at deVere Group, one of our professional independent financial advisers will be assigned to assess your financial and personal situation. That way he or she can ensure that the scheme of your choice is the best one for you and fully compliant with HMRC rules and standards.
Why should I choose a QROPS?
A QROPS provides you with more control over your pension fund investments. With a QROPS you can also combine various smaller pensions into one large pot. Additionally, you can even do away with purchasing an annuity thanks to this scheme.
QROPS will also let you bestow the rest of the fund to your beneficiaries without any deduction of UK tax upon death, as long as you have spent ten years or more living outside the UK.
What are the key benefits of a QROPS through the deVere Group?
- No need to buy an annuity
- Funds fully conferred on to heirs after death (after ten full tax years of non UK Tax residency) your pension will no longer be liable to UK income tax or death charges of up to 45%
- Your pension can be paid in a flexible choice of currency
- Up to 30% pension commencement lump sum
- Secure jurisdictions
- Investment flexibility
- Transparent charges
- Greater investment freedom
- Succession planning
- Pensions can be consolidated into one
- Free from UK lump sum death benefit charge
- Some jurisdiction allow your pension income to be paid gross.
As a resident of France, which is the best QROPS jurisdiction for me?
Following the Finance Act 2012, the QROPS jurisdiction of choice for residents of France is Malta. A highly-regulated member of the European Union, Malta has a sophisticated and transparent tax system that makes it ideal as a QROPS jurisdiction.
NEWS FLASH! HMRC give with one hand and take away with the other
Having established the QROPS in 2006 in order to provide pension freedom for UK pension holders living abroad, the HMRC have now realized that they have created a ‘cash cow’ that they are now intent on milking.
In the recent 2017 budget the HMRC have:
- Closed Qrops in certain countries altogether
- Imposed a 25% ‘off the top tax’ on others. Although this does NOT currently apply to EEA countries it does not take a financial Einstein to see that with Brexit looming, it very soon could
In view of this we are urging people who have UK personal or company pension schemes to investigate this valuable option while they still can.
For a free pension review with no obligation or to learn about QROPS and how it can help you, email Bob on robert.hendry@devere-france.fr or call +33 670 474 457
DeVere-France is a business that aims to support expats by creating, growing and safeguarding their wealth wherever they may live. Bob lives and works in the southwest of Occitanie and has lived in France for over 10 years. Prior to moving to France, he was a business financial consultant for 13 years in the UK. His role then was just as it is now, to provide sound, professional financial advice. Bob prides himself in really listening to his clients’ needs and then providing the best solutions for them.
Annette is Renestance’s 'go to' girl for all things marketing and social media. Bilingual and originally from Surrey in the UK, Annette has lived in France since 2008. In addition to her web design and marketing consultancy, Annette is the founder of Languedoc Jelly (a network of free events across the region for anyone working from home) and also Urban Sketchers Languedoc (part of a global community of people that like to draw or paint on location). A fan of all things French and Franglaise, she also has a Citroen 2CV called Beryl.
All articles by: Annette Morris
Phil
on 2017-07-13 at 12:52Remarkable article.
HMRC do not register QROPS, the recognise, a QROPS is not a registered pension scheme as far as HMRC are concerned.To suggest that QROPS operate to the same high standards as the UK is laughable. TPR and the FCA have far higher levels of supervision and control and the public have access to the FOS, which is lost on transfer.
There is no requirement in the UK to purchase an annuity and many of the benefits listed can be obtained with a UK pension anyway. Few in the UK will ever pay 45% on death, the tax can be mitigated against.
Given the numerous tax treaties with the UK , allowing the UK pension to be paid gross from the UK, there are very few reasons for anyone in France to consider a costly QROPS.
I would strongly recommend that anyone in France speak to an accountant there before moving to a trust based instrument while resident in France.
Charges offshore are far from transparent.
HMRC do not see QROPS as a cash cow, the system was being abused and they had to do something about it to deter some of the ridiculous transfers that were being transacted.
Dennelle Taylor Nizoux
on 2017-07-18 at 12:00Thanks for your comment, Phil. I’ll provide the article’s author’s response here:
Qualifying Recognised Overseas Pension Scheme (QROPS) was introduced by the UK government in
2006 following pressure from the European Union to provide pension simplicity and the free
movement of capital.
QROPS has gone through a series of legislative reviews to reach the current QROPS, or ROPS as we
know it today.
A reputable QROPS provider should indeed appear on the HMRC list to show that they meet the
strict conditions in order to qualify.
deVere France specifically offer contract based Qrops (NOT trust based) particularly suitable for
French residents.
The 2017 budget imposed draconian tax changes to QROPS. This is not because there was anything
intrinsically wrong with QROPS (after all it was created by HMRC) and of course nobody believes it
could have anything to do with the fact that the HMRC stand to generate £60,000,000 per year by
2021/22.
Among the valuable benefits at risk from the eventual closure of QROPS are:
– No longer able to leave 100% of the fund to beneficiaries
– No longer able to select currency of choice (important for non-UK residents)
– Loss of ability to decide retirement age (after age 55) and to select income level required
– No longer able to crystalize lifetime allowance and avoid future tax liability.
Unfortunately there would appear to be very few accountants in France who are either qualified or
licensed to advise on QROPS.
Finally, whilst QROPS is not a panacea for all pension ills, UK citizens living abroad have over the
last 11 years been able to take greater control over their pension and gain more flexibility and
freedom for their retirement. This unfortunately is very unlikely to continue once Brexit is finalised.
LadyReb
on 2018-06-07 at 14:11Can you advise on the legal stance of the French Government on trust based QROPS through Malta regarding tax and penalties? I know there is a Double Tax Agreement (DTA) between Malta, France & Uk so that we are protected from being taxed twice. However the law regarding trusts in France does not seem to be very clear in respect of how it relates to or applies to private individuals with a trust based QROPS. I have been researching this extensively on the internet for the past two days and have spoken to 2 financial advisers who have given conflicting advice. No one seems to have a definitive answer.
Robert Hendry
on 2019-03-25 at 09:30The main issue here is between civil and common law and trust based and contract based. This has come to light in the last couple of years whereby it would seem that the French system has a problem in the recognition and treatment of trusts, although this is only obviously a potential problem on a death claim it could be a major problem. All our pension trustees/administrators now offer both contract and trust based Qrops. They all agree that if a client is based in France and the Qrops in Malta that it should be established on a contract basis. This will then alleviate any potential future problems. I am happy to discuss this further if you require. robert.hendry@devere-france.fr 0670474457