QROPS in Ireland are proving to be the ideal solution for British expats seeking to access their UK pension plans early. An estimated 300,000 UK nationals currently live and work in Ireland; many of these have retained UK pension benefits which they accumulated whilst working in Britain.
UK rules governing pension transfers have been simplified since the introduction of legislation in 2006, enabling the transfer of the value of accrued pension entitlements from Britain to another jurisdiction. The legislation was passed by the UK tax authority, HM Revenue and Customs (HMRC), in order to comply with an EU directive that pensions be free to move across European borders. It is the requirement of HMRC that any UK pension transfer should be made to a Qualifying Recognised Overseas Pension Scheme or QROPS.
What makes a scheme a QROPS?
The criteria outlined by HMRC for an overseas scheme to qualify as a QROPS include:
- The pension scheme must be established outside of the UK
- It must be recognised for tax purposes in the country where it is located
- It must be regulated in the country in which it is established
Eligibility for a QROPS pension transfer
These schemes are specifically designed to allow anyone, not intending to retire in the UK, to transfer existing and frozen UK pension plans into a more appropriate retirement vehicle. As such, British expats living in Ireland, or wishing to retire there, can take advantage of their offshore status and transfer their UK pension to a pension structure that is better suited to their needs.
Those eligible for a UK 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
The establishment of a QROPS offers a certain degree of flexibility in terms of how and when you can take benefits.