What is QROPS?

A Qualifying Recognised Overseas Pension Scheme, or QROPS is an overseas pension scheme that meets certain requirements set by the HMRC (Her Majesty's Revenue and Customs). A QROPS listed provider in Canada can receive transfers of UK Pension Benefits. The QROPS programme was part of UK legislation launched on 6 April 2006 as a result of EU regulations in regard to human rights requirements of the freedom of capital movement.

The HMRC website lists all providers that hold QROPS status.

https://www.gov.uk/guidance/check-the-recognised-overseas-pension-schemes-notification-list

Who is QROPS for?

A QROPS can be appropriate for Ex Pats who have left the UK to emigrate permanently and intend to retire abroad and have either Personal or Company pension benefits built up in a UK pension fund. State Pensions cannot be transferred, but defined contribution, defined benefit pension schemes, SIPPs and SSAS can be transferred abroad.

A QROPS is designed to operate broadly in line with UK pension rules and somebody who has transferred their pension to a QROPS should be in a similar position as they would have been if the transfer had not taken place, particularly in regards to not allowing withdrawals before the age of 55. A QROPS must be recognised as a pension scheme under the country's legislation where it resides while still complying with the rules set out by HMRC.

QROPS may be useful in the following circumstances:

• Where the Lifetime Allowance may be close to being reached.
• To litigate foreign currency exchange.
• For those approaching the age of 75, who want the whole fund disbursed in one payment to family upon their death, without tax (if the jurisdiction does not tax such benefits).

QROPS schemes have to report to HMRC any payments made to the member for ten years from the date that the transfer took place.

A 25% tax charge may apply to pension transfers made to QROPS unless one of the following conditions are met:

• Both the individual and the QROPS pension scheme are in the same country, or
• Both the individual and the pension scheme are in countries within the European Economic Area (EEA) or
• The QROPS is an occupational pension scheme provided by the individual’s employer

If the individual’s circumstances change within 5 tax years of the transfer, the 25% tax charge could still be levied.