Qualifying Recognised Overseas Pension Schemes (QROPS)
Produced in partnership with Sean McNulty of Blake Morgan

The following Pensions practice note produced in partnership with Sean McNulty of Blake Morgan provides comprehensive and up to date legal information covering:

  • Qualifying Recognised Overseas Pension Schemes (QROPS)
  • Why use a QROPS?
  • What is a QROPS?
  • Condition 1—establishing that the scheme is a ROPS
  • Condition 2—information undertakings
  • Notification to HMRC on ceasing to be a QROPS
  • Undertaking to HMRC relating to the overseas transfer charge
  • Notification to HMRC of payments made by QROPS
  • Provision of information to member on accessing flexible benefits
  • Provision of information to receiving scheme on transfer from QROPS where member has accessed flexible benefits
  • More...

Qualifying Recognised Overseas Pension Schemes (QROPS)

Why use a QROPS?

In practice, many Qualifying Recognised Overseas Pension Schemes (QROPSs) are personal pension schemes or retirement annuities that are marketed for non-UK residents.

The main characteristic of a QROPS is that it is the only type of overseas arrangement into which a ‘recognised transfer’ can be made from a UK registered pension scheme. This limitation is embedded in the Finance Act 2004 (FA 2004) which defines, at s 169, a ‘recognised transfer’ as a transfer of sums or assets under a registered pension scheme to another registered pension scheme or a QROPS. For further information, see Practice Note: International pension transfers.

The transfer and consolidation of pension benefits is a key motivation for using a QROPS over any other type of overseas pension schemes.

Historically, QROPSs have been popular with UK expatriates because they are similar to a UK registered pension scheme, but without many of the investment constraints, regulatory requirements, currency risks and, until 6 April 2017, tax charges, applicable to such schemes.

The advantageous UK tax treatment of QROPS benefits had led to their abuse for tax-avoidance purposes, something which the government has increasingly clamped down on by:

  1. restricting the eligibility conditions applicable to a QROPS. For further information on these conditions, see What is a QROPS? below

  2. introducing an overseas transfer charge of 25% on transfers to a

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