What is a QROPS?
In the world of Superannuation, we are often asked the question, what is a QROPS?
QROPS stands for ‘Qualifying Recognised Overseas Pension Scheme’. A QROPS is an overseas pension scheme that is registered with Her Majesty’s Revenue and Customs (HMRC) and can accept a transfer of UK pension funds. They were introduced in 2006 specifically for the benefit of former UK residents who have accrued pension funds in the UK, and who intend to remain outside the UK permanently.
In order for an overseas scheme to qualify for ‘QROPS status’, it must meet certain strict criteria set by HMRC. QROPS is an ever-evolving technical product with onerous reporting requirements and potentially significant financial penalties if compliance requirements are not met. QROPS status attainment and compliance are not just a given at registration and HMRC continue to demonstrate that they have a high bar for providers to continue to reach. This shows the level of operational standards in which we operate and are proud that our Australian Expatriate Superannuation Fund is the ONLY Retail Superannuation Fund in Australia that is registered with HMRC as a QROPS and has successfully managed to retain this status since 2016. This means that it is Australia’s NUMBER ONE Retail Superannuation Fund for UK Pension Transfers.
UK Pension Transfer Requirements
If you are looking to transfer your UK pension to Australia then you must ensure that you transfer it to a scheme that is a registered QROPS, otherwise you will face an unauthorised member payment charge of 40% of the value of your pension. This is a significant penalty, so be sure to check that the scheme you are intending on transferring to is listed on the HMRC ROPS list.
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If you are looking to set up a Self Managed Super Fund to transfer your UK pension to, you must first apply to HMRC for QROPS registration which can be a complex and time-consuming process. You must also consider that SMSFs are ‘self-managed’, the set up and ongoing day to day management, financial reporting and administration is your responsibility. Therefore, if you are considering the self-managed route, then you must ensure that you have a firm understanding of how to manage the fund. Failure to do so correctly may result in tough penalties from the regulator that you would be personally liable for.
It is for these reasons that a number of UK expats chose our Retail Superannuation Fund as their preferred choice for transferring their UK pension. Retail funds are very similar in structure to UK personal pensions in that all of the day to day management is handled by us as the scheme provider, removing the administrative burden and compliance liability away from you. You also do not need to worry about the HMRC registration process as this is all in place with our fund.
For more information on transferring a UK Pension, check our guide.
This article does not contain personal or financial advice. It is provided for general information only and does not take into account your personal objectives, financial situation or needs. IVCM is not authorized to provide you with any personal or financial advice.
If you require financial any advice then you must make sure that you obtain advice from a suitably qualified financial adviser.