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The Qualifying Recognized Overseas Pension Scheme (QROPS) is an overseas-based pension scheme available in financial centers outside the UK. It offers more investment opportunities and tax advantages than traditional schemes.
One of the most popular reasons why Non-Resident Indians (NRIs) transfer pensions from the UK to India is because transferring pension funds accumulated in a developed economy like the UK can be done through QROPS and it becomes more tax efficient.
Unlike the old UK pensions, QROPS provides flexibility in how you access your fund, leading to more income and avoiding compulsory annuities.
QROPS can provide you with the opportunity to pay less tax on your income and withdrawals than UK pensions, depending on which country the holder lives in.
QROPS can help protect your pension from UK inheritance tax, allowing you to pass on more wealth to your beneficiaries.
More than one UK pension can be combined into the same QROPS, making them easier to manage and potentially more cost-effective.
There are 4 top pension schemes available at Tata AIA, which are registered as QROPS with HMRC. They are:
Annual Charges: Current charges for the management of the scheme.
Initial Transfer Fees: Fees charged when funds are transferred into the QROPS.
Investment Fees:These charges are for the investments that are in the scheme.
Advisory Fee: Fees for professional advice about financial services.
The UK Pension Company deducts a 25% fee as an Overseas Transfer Charge in case the person living outside India initiates the transfer. However, if the person within 5 UK tax years settles in India post-transfer, this amount becomes eligible for a refund from HM Revenue and Customs (HMRC). Conversely, exemption from the 25% charge is also available under the following situations:
Eligibility Criteria
The eligibility criteria for QROPs are easy to meet. Here’s what it looks like:
The Transfer Process
It usually takes from 5-8 weeks to transfer your UK pension over to a Qualified Recognized Overseas Pension Scheme (QROPS). Timelines, however, can depend on how quickly your current pension provider responds. Here's a general overview:
How long does it typically take to transfer a UK pension to a QROPS?
The transfer process usually takes 5-8 weeks. However, the exact timeline can vary depending on the cooperation of your existing pension provider.
What is the first step in transferring my UK pension to a QROPS?
The initial step involves contacting a financial advisor to initiate the transfer process.
Do I need to provide any authorization for the transfer?
Yes, you will need to grant your financial advisor the authority to communicate with your current pension provider on your behalf.
Can any UK pension be transferred to a QROPS?
Not all pensions are eligible for transfer. Your pension provider will assess your fund to determine if it qualifies for a QROPS transfer.
How do I choose a QROPS jurisdiction?
You will work with your financial advisor to select the most suitable QROPS jurisdiction based on your individual circumstances and preferences.
What happens after I choose a QROPS?
Once you've selected a QROPS, the necessary paperwork will be completed and submitted. Your pension provider will then transfer the funds to your chosen QROPS.
What are the potential benefits of transferring to a QROPS?
QROPS can offer tax efficiency, a wider range of investment options, and the ability to receive income in your preferred currency.
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