Impact of Brexit on UK Pensions
With the vote for Britain to leave the European union now confirmed it is essential for non-UK resident holders of UK pensions to remove their pensions from the UK as soon as possible.
The starting gun for Brexit has now been fired and expats will need to transfer their pensions to a QROPS before the rules are changed and they lose the right to do so forever.
QROPS stands for Qualifying Recognised Overseas Pension Scheme. It is a designation by Her Majesty’s Revenue and Customs (HMRC) of a Recognised Overseas Pension Scheme or ROPS (itself a UK Treasury designation) that will accept transfers from UK pension schemes without those transfers being considered a benefit crystallisation event (just a complicated bit of jargon that means that it’s a transfer that leads to the scheme member taking a benefit which might be liable to tax).
Simply, this means that people who have a UK pension but that no longer live in the UK can transfer their UK pensions to any scheme that’s a QROPS and they can do so free of any tax liability on transfer. Importantly, this means that they don’t have to transfer to a scheme in the country in which they happen to be living, but can choose a jurisdiction with pension and pension tax rules which could be more beneficial to them.