HISTORICALLY, Guernsey was the only option for expatriates transferring their pension scheme abroad.
This is now changing with the establishment of new QROPS – Qualifying Recognised Overseas Pensions Scheme – jurisdictions and a greater awareness of the issues involved.
It means clients can now get a bespoke solution.
To be effective, a QROPS must be held somewhere that works efficiently with the tax system of the country where the pensioner lives – for example, in a country which has a double taxation agreement with their place of residence.
Until recently, expatriates wanting to move their QROPS to another jurisdiction have had to pay hefty transfer fees.
But now, Gibraltar-based pensions administrator STM Fidecs has launched a multi-jurisdictional QROPS which allows UK expatriate pensioners to move their pensions between several countries without incurring additional fees.
Portable QROPS means that retired expats who relocate can take their pension with them free of charge, unlike many schemes which have extra costs hidden in the small print. With transfer fees potentially running into the thousands, it represents a significant saving.
STM director, David Erhardt explained that STM plans to have a network of QROPS in numerous jurisdictions up and running by mid-2011. “We are setting up similar arrangements in Guernsey and Switzerland and will add other jurisdictions as needed,” he said.
Multi-jurisdictional schemes can offer pensions in countries such as Malta, the Isle of Man, Guernsey, Switzerland, New Zealand, Jersey and Gibraltar.
The important thing to remember is that one QROPS does not fit all. Clients often need to respond to changes in QROPS legislation in different jurisdictions or changes in the tax regime either where they are living or where their QROPS is located.
Multi-jurisdictional QROPS makes it easy to transfer funds across international borders without the huge costs associated with some schemes.
The QROPS is a step forward towards the creation of pan-European pensions, which don’t currently exist, but look likely in the future.
“Setting up a multi-jurisdictional QROPS is a sensible choice for expats,” continues Erhardt. “It provides the freedom to move the scheme around without eating into the funds whenever a transfer is required.
“As cross-border QROPS schemes look set to become far more common in years to come, acting now could help save money for retirees straight away.”
Why have a multi-jurisdictional QROPS?
As a retired expat, you may want to move to another country for all sorts of reasons. The multi-jurisdictional QROPS provider may be able to offer the following benefits:
No fees to move your QROPS between several jurisdictions
Your pension pot isn’t reduced by extra costs
Hassle-free management – no need to close one QROPS and open another
You can move your pension fund to where you need it.