QROPS Qualifying Registered Overseas Pension Scheme
If you’ve worked in the UK at any stage of your career you’ve probably built up a pension fund in the UK. Now that you’re back living in Ireland you may wish to bring your pension home and have more control over your investment options, both now and when you retire.
HMRC introduced legislation in April 2006, allowing any UK pension to be transferred to another country once the receiving pension has been approved by HMRC. This is known as a Qualifying Recognized Overseas Pension Scheme (QROPS).
Pension advice.ie can organize QROPS transfers to bring your UK pension money to Ireland ( with an Irish registered life company) and into your own name. This is called a QROPS Buy Out Bond.
Are there any tax implications when I drawdown my benefits from the buy out bond?
Once you have not been resident in the UK for any of the last five years when the payment is made, then there is no immediate tax liability. However, QROPS must report payments within ten years of the original transfer date to HMRC regardless of the member’s residency status.
Scenario 1. I’ve been a tax resident in the UK in the last six UK tax years If you’ve been a resident in the UK in the tax year when the payment is made or in any of the five preceding years, then any benefit arising from the buyout bond, will be reported to HMRC and you could be subject to UK unauthorized payment charges to HMRC.
Scenario 2. I haven’t been a tax resident in the UK in the last six UK tax years If you haven’t been a tax resident in the UK in the last six tax years then there are no UK tax implications of transferring or withdrawing benefits from the buy out bond.
I want to transfer my UK pension to Ireland. What do I do next?
Step 1: Discuss your options with Pension Advice.ie to make sure transferring is the right decision for you. Pension advice will complete the paperwork with you for the Buy Out Bond QROPS. Pension Advice.ie will make sure there will be no UK tax implications as outlined above.
Step 2: Pension advice.ie will request a transfer options form from your UK provider that includes the option to transfer overseas.
Step 3: These transfer options need to be signed and processed by the trustees of the UK scheme.
Step 4: The Irish Pension provider we choose together will receive the transfer from the UK and convert it to Euro for you. It will now be managed in Ireland moving forward for you. The Pension will now be in your own name and under you control.
What are my retirement options once I’ve transferred my UK pension to Ireland?
On retirement, you can take a cash lump sum and with the balance, subject to Revenue rules,
You can
- Buy a guaranteed pension income for life (an annuity)
- Invest in an ARF /AMRF Fund
- Draw down the entire fund as taxable cash
- Choose a combination of these options.
If you qualify for an ARF, here’s a breakdown of some of the reasons why you might transfer your UK pension to Ireland.
- Flexible access to the fund, You are no longer only restricted to a set income
- You can choose how and when you want to access your retirement fund – Early retirement.
- Death benefits – The taxation rule in the event of death in Ireland compares favourably with the UK where death taxes can be up to 73%.
- Convenience – Enjoy the ease of having your pension administered in Ireland.
- Reduced currency risk – Reduce the risk of potential currency issues with Brexit looming in the UK.