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Deciding which clients are suitable for Qrops/Qnups

This article is part of
Guide to Qrops and Qnups

“Determining the route ahead of whether to switch from a UK registered pension scheme to a Qrops is a complex process and those interested should seek out a financial adviser proficient in international tax, visa and financial planning,” says Geraint Davies of Montfort International.

“This is not just financial planning that results in a pension moved ex-UK, but a complete switch in thinking to options for those who end up living ex-UK long term.”

Amin Malik, director of Delta Financial Management, notes that Qrops and Qnups are generally used by individuals to either move funds out of a UK registered pension schemes and/or used as a savings vehicle to boost the funding of their pension.

“Qrops are mainly used by non-UK residents or those who later intend to retire abroad. Qrops members use such schemes to transfer their respective pension benefits in a UK registered pension scheme.

“Qnups are mainly used by UK residents to supplement their existing pension arrangements in the UK. But, Qnups are also considered by Qrops members for subsequent transfers after the end of the reporting requirements.”

Mr Davies counters that “It is technically possible [to effect transfers] but could in certain circumstances lead to an unauthorised payment charge.”

He notes: “One should not be able to switch straight from a UK registered pension scheme to a Qnups.”

Mr Davies says it is crucial to note also that as a client will not necessarily have to emigrate immediately to transfer to a Qrops, this implies that “all advisors in the UK need to factor it into all their retirement advice. Otherwise they are not considering the clients circumstances fairly.”

He says: “Qrops are potentially suitable for anyone who might find themselves resident ex-UK, considering residence ex-UK, a non-UK national who might return home, anyone who might work ex-UK, married to a non-UK national.

“Advisors should always check their clients plans as it would be dreadful if they had their retirement plans in the wrong country as there can be serious tax consequences just for starters.”