QROPS abbr. Qualifying Recognised Overseas Pension Scheme

In April 2006, it was announced that individuals with UK pension rights who have or will become non-resident in the UK for tax purposes could move their pension benefits out of the UK to a Qualifying Recognised Overseas Pension Scheme - QROPS - with the Revenue's approval. Think of it, if you will, as an International Pension or Offshore Pension.

A QROPS is a Qualifying Recognised Overseas Pension Scheme that can have significant taxation and investment advantages to individuals with UK pension rights who have, or will become non-resident in the UK for tax purposes.

The rules of the scheme should, for the most part, correspond to the rules governing an authorised UK pension scheme. The trustee's of the QROPS must report to Her Majesty's Revenue Customs - HMRC - information about certain events if that individual was resident in the UK for tax purposes during the previous 5 years. The events include:

• The payment of benefits (lump sum, income and death).
• Onward transfer of the QROPS.

If the individual has been non-resident for 5 complete tax years or more HMRC no longer require the QROPS trustee to report information to them. However, HMRC may require the member to report/ declare certain transactions that relate to UK tax relieved funds.

An individual may wish to establish a QROPS in a jurisdiction with favourable pension rules. Thereby it is possible to achieve significant tax and investment advantages when compared with a UK pension.

HMRC publish a list of QROPS although not every scheme chooses to be on that list.