The use of QROPS in Ireland as a vehicle for the transfer of UK pensions for returning Irish expats is becoming increasingly popular. In recent times many Irish found their way to English shores in the quest for work, adventure and a chance to make their fortune. The era of ‘the celtic tiger’ saw the emigration situation reversed, with Ireland becoming a place of destination. Irish people came back in their droves given the lure of opportunity and new found prosperity; some with the intention of retiring to pastures green.
I’m coming home, I’ve done my time!
A recent survey conducted by Standard Life of more than 1,000 Irish adults, revealed that 15% of respondents were in possession of a UK pension. If you are Irish resident, have worked in the UK and built up UK pension benefits over the years, you are now able to bring your pension home and in so doing have more control over your retirement options.
Make the most of your UK pension when retiring to Ireland
Recent changes to UK pension legislation mean that returning Irish expatriates can avoid the various restrictions imposed by the UK Government on how their UK pension benefits can be taken on retirement, by transferring their pensions to a Qualifying Recognised Overseas Pension Scheme or QROPS. The scheme is an offshore pension vehicle that is designed to accept a transfer from a UK registered pension scheme. The scheme offers Irish residents the same benefits as their English counterparts when it comes to the transfer of UK pensions. Pensions that can be transferred include personal and occupational pension schemes.
Who is eligible for a QROPS pension transfer?
In order to transfer your pension out of the UK, you must have already left the country for tax purposes, or be intending to leave in the near future. Once tax resident in Ireland, you can transfer your pension fund out of the UK into a QROPS in the same way that you would transfer between pension providers within the UK. Those eligible for a pension transfer therefore include:
- A UK national moving to Ireland
- Any national who has built up UK pension benefits and is now resident or intending to become resident in Ireland
As such, an Irish person leaving the UK who wishes to transfer their pension provision to another jurisdiction will generally opt for a QROPS as the most viable solution.
The scheme offers a certain degree of flexibility in terms of how and when you can take benefits. These include:
- Benefits can be drawn from the age of 55
- You can take up to 30% of your pension fund tax free on retirement. This is higher than the current UK limit.
- A lifetime income can be provided by way of income drawdown, a fixed annuity, or a combination of both
- In most cases you are also able to draw-down a higher annual pension income than you would if you were to retire in the UK.
- The scheme helps solve the problem of currency risk by allowing you to invest your pension, and take income and benefits in a currency of your choice.
- They offer a greater choice of investment options, allowing you to access funds managed by any of the world’s leading investment groups.
- Assets held in a the scheme fall outside of your estate for Inheritance Tax purposes if you die while living overseas. This means your wealth is protected for future generations, which is in stark contrast to the potential 55% tax charge on death were you to leave your pensions in the UK.
- Investments grow free of tax (except for withholding tax on dividends)
- There is no limit on the amount of contributions/growth
- You are able to consolidate a multiple of pensions in a single scheme