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Overseas Pension Transfers
One area of planning often overlooked is the ability to transfer pension benefits overseas for members who leave the UK to take up residence in another jurisdiction.
The
specialist team at Fedelta Pensions Limited has, since 1985, been involved in advising clients in relation to the transfer of UK pension funds resulting in substantial taxation and capital preservation advantages. Clients have often been controlling directors of UK Companies that have funded substantial contributions to UK small self-administered pension schemes. The cessation of taxable residence in the UK is often prompted by the sale of a UK business. Transfers from personal pensions, typically for self-employed partners such as lawyers and accountants, are also permitted.
It is necessary for the overseas pension scheme to be accepted by HM Revenue and Customs (HMRC) as a Qualifying Recognised Overseas Pension Scheme (QROPS) to enable pension benefits to be transferred from the UK to the overseas scheme without triggering a tax charge.
For an overseas scheme to be a QROPS it generally must:
- Be established outside the UK,
- Be regulated in the country in which it is established, and
- Be recognised for tax purposes in the country in which it is established.
In addition, at least 70% of the scheme funds must be used to provide an income for life (i.e. no more than 30% can be paid in lump sum form) and benefits must be payable no earlier than they would have been under the UK scheme. As part of the QROPS requirements, the scheme manager of the overseas scheme must undertake to notify HMRC if the scheme ceases to be a QROPS and provide HMRC with certain information regarding payments from the scheme in relation to any member who was resident in the UK when the payment was made or in any of the previous five tax years. The full requirements of HMRC are set out in their
Registered Pension Schemes Manual.
The majority of pension transfers we deal with are for clients who have moved from the UK to the Isle of Man (see
pension planning for IOM residents), however, we also have a long track record of assisting with pension transfers to other jurisdictions such as Australia, Bermuda, Hong Kong and Gibraltar.
Fedelta Pensions Limited is Registered with the Isle of Man Insurance and Pensions Authority as a professional Retirement Benefits Schemes Administrator.