If you are 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. One of the avenues available to expats is to transfer out of the UK to a recognised overseas pension scheme (ROPS - formerly known as QROPS) Understanding the potential benefits of a ROPS is an important element in any retirement planning. These international pensions, although not in the UK, have to follow rules set out by the UK tax authority 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 avoids the 45% UK tax rate imposed on pension lump sums left to beneficiaries upon your death (if you die over the age of 75). QROPS pass on 100% of the remaining pot to your loved ones (or whoever you name as beneficiaries).
3) UK legislation allows full flexibility to EU based QROPS so you can take what you want when you want, once the time comes for taking benefits.
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 £1,030,000.
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) 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. Why is this an issue? If you were born in the UK you are likely still UK domiciled. Even if you have lived overseas for years. If you die whilst UK domiciled, UK inheritance tax is payable on your estate.
9) There is greater investment choice with a QROPS, allowing us to tailor a portfolio bespoke to you and your individual needs.
10) A QROPS protects your pension from future legislation changes by the UK government.
11) 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.
12) 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).
Patrick Macdonald ASCI
International Financial Adviser
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 (Self Invested Personal Pension) if you plan to move back to the UK in the future for instance.
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 us on 951 390 201.
We are part of 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. REMEMBER avoid scammers by only dealing with properly regulated entities.
We are British advisers living in Spain with the appropriate qualifications and experience to give professional advice here. Unlike UK based firms we have a deep knowledge of the pension laws and tax system in Spain. Although we are EU regulated we are not forced to charge you fees like a UK based firm (although we always offer this option). This means there is no initial fee taken from your investment - which in the UK is often 3% of the value. Also, unlike many others, we have investment advice permissions under EU directive MiFID 2.