Being resident in Spain (or thinking of making the move)it is important to consider the options available to you in terms of your UK pension. For various reason (below) it is wise to consider the potential benefits of a 'qualifying recognised overseas pension scheme' or QROPS for short. These international pensions are set up specifically to follow rules set out by HMRC in the UK but they can offer more flexibility for people living in Spain. Here we itemise some of the main points to consider:
1) A QROPS transfer enables you to take your pension outside the UK tax regime so no UK tax at source (although you may still have to pay tax on your pension income in Spain).
2) A QROPS does not have the potential 45% UK tax on your pension if you die before the age of 75 - 100% of the remaining pot is passed on to your beneficiaries.
3) UK legislation allows full flexibility to EU based QROPS. Malta - one of the best QROPS jurisdictions for Spanish residents has changed its local laws to also allow the same flexibility.
4) You can consolidate all your pensions into one, easy to understand, qualifying overseas scheme.
5) There are no lifetime allowance restrictions with QROPS. In the UK the allowance is being reduced step by step and is currently £1 million.
6) You can choose to have your international pension in Euros therefore removing your exposure to currency fluctuations.
7) Is is no secret that many members of UK final salary pensions have decided to leave their schemes and take the (often) generous cash transfer values on offer. In such cases a QROPS, for those residing overseas, could provide the perfect transfer solution.
8) UK inheritance tax (IHT) is payable, in some circumstances, upon death with a UK pension. With a QROPS no IHT is payable.
9) If your pension is the only asset left connecting you with the UK, transferring it to a QROPS may help to prove you are no longer UK domiciled.
10) There is greater investment choice with a QROPS, allowing your adviser to tailor a portfolio bespoke to you and your individual needs.
11) A QROPS protects your pension from future legislation changes by the UK government.
12) If you are in divorce proceedings or company liquidation your UK pension could be at risk. A QROPS, being based outside the UK is better protected.
13) Brexit! Many UK nationals living abroad in the EU have fears about the Brexit effect on their pensions. Once the UK has left the EU the UK government may put a stop to QROPS transfers (as it was the EU who effectively forced them into allowing them in the first place back in 2006).
Is it for you?
Very possibly if you have a UK pension and are resident in Spain. However there may be circumstances when a different option is more appropriate - such as an international SIPP if you plan to move back to the UK in the future or a QNUPS for advanced succession planning for example.
Also, there were a raft of legislative changes to UK pension law in 2015 and then again in 2017 (to transfers overseas) so more than ever it is vital to get qualified advice from a regulated company in order to make the right decision.
For a free, no obligation assessment of your own circumstances and further information please call Blacktower in Spain on 951 390 201.
We are a reputable international financial management firm. We are not a data broker passing your information on to other firms etc. We are licensed and authorised throughout Europe to give financial advice and arrange pension transfers. When you call us you will speak directly with the qualified, experienced adviser who will assess your pension(s) and give you a personal recommendation bespoke to your circumstances. You are under no obligation to follow our recommendation and we do not charge for your pension evaluation. So, for an initial chat why not give us a call or send a message on the form below.