MAGNA: Wealth Management


Are there any reasons why I shouldn't transfer to a QROPS?

Yes, although in general the arguments are often in favour of transferring UK pension funds to a QROPS. However, if you have pension plans with benefits such as guaranteed annuity rates, and you only wish to take income from the pension, then you need to consult us to determine the best course of action.

Can I transfer protected rights funds into a QROPS?

Yes. HMRC form CA1881 is completed to enable HMRC to register which scheme the transfer is made to. When transferring protected rights you must understand that in certain circumstances any protection associated with UK pensions legislation may be foregone.

Can I transfer benefits in payment into a QROPS?

Yes, if the member has been UK resident during any of the last five complete tax years then UK rules will continue to apply until the five year point. If the member has not been UK resident for the last five complete tax years then UK rules will not apply and there will be greater flexibility of income. Annuities in payment and pensions in payment from occupational final salary schemes can not be transferred.

Can I transfer my occupational final salary scheme into a QROPS?

Yes, as long as your pension benefits are not in payment, but this will be a lengthier process and may be more costly. It involves obtaining a transfer value from the trustees of the final salary scheme before comparing the available benefits and deciding if this is beneficial for you, based on your own priorities and objectives.

What other investments are allowed?

The scope of investments is enormous. You can invest in collectives (OEICS and Unit Trust Funds), Guaranteed Funds, Insurance Company Funds, direct Equities, Shares, Cash Funds, Commercial Property, Gilts, etc. or appoint your own Discretionary Fund Manager. These investments can all be tailored to reflect your personal risk profile, and can be changed at any time. Please ask our advice on this important issue.

Can I transfer investments held in my UK registered pension scheme into a QROPS?

If your investments are held in an insurance company based scheme then the funds must be converted to cash prior to transfer. If your scheme is a SIPP or a SSAS then it may be possible to transfer the existing assets to the QROPS, providing the receiving scheme administrators and trustees are willing to accept them.

How long does it take to transfer my UK pension fund to a QROPS?

The process will normally take between six weeks to two months. However where the transfer is from an occupational pension scheme the process will take longer.

My pension fund is of substantial value. What are the tax considerations on transferring to a QROPS?

A transfer to a QROPS will be considered a benefit crystallisation and will give rise to a tax charge if the amount transferred exceeds the individual's lifetime allowance, which is currently £1.25 million in the 2013/14 tax year. If necessary we can apply for registration of fixed protection, prior to transfer, which may remove any possibility of a tax charge.

After transferring to a QROPS can I access my fund as a lump sum?

Normally you would be able to take 25% of your fund as a cash lump sum when you start to take pension benefits. Under our recommended schemes provided you are over 55 years of age, and have been non-UK resident for five complete UK tax years this may be higher. You also have the option to transfer into other pension schemes and take benefits in accordance with scheme rules in that jurisdiction. EU legislation permits free movement of capital between states. Should you become UK resident after this time then you will again be subject to UK pension legislation. There may be taxation consequences depending on your country of residence. If a subsequent transfer to takes place to an international pension scheme the trustees may levy an early withdrawal charge.

What costs are associated with transferring to a QROPS?

This will depend on your individual circumstances and the type of scheme being transferred. Typically the larger the fund the lower the overall cost in percentage terms. Total costs will be between 1.75% to a maximum of 4% of the transfer value, on fund values between £25,000 and £2 million, plus additional fund management charges and annual administration costs. We believe that our recommended QROPS arrangements represent very good value.

If you have any further questions that are not covered here, please call our office on 0044 1789 490363 and one of our advisers will be able to discuss your specific query.

Call us on:
01789 490920
International clients:
+44 (0) 1789 490920
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